Around the globe crowdfunding and
digital marketing is increasingly being seen by entrepreneurs, artists and creative types to be the new black as far as
business finance is concerned. Weather you have a
business plan or not, finding
start-up funding today is no longer the dreaded journey that puts many of starting in the first place.
Brought about by the lack of bank finance in recent years and spurred on by the successes of entrepreneurs line Mechanical-watch restoration expert
Leo Padron who nurtured a dream to sell a timepiece of his own design but had little inkling of how he'd raise the money for it.
Jess Fleming from
http://www.twincities.com writes:
Then the Minneapolis man heard about "crowd funding," which is exactly what it sounds like: a funding appeal to the masses, with modest cash donations from hundreds or thousands of "backers" adding up to big bucks.
For his crowd-funding campaign, Padron used Kickstarter. It is one of several online services for hosting such efforts and giving them the visibility they need to draw pledges from those who like what they see.
Roughly half of such Kickstarter campaigns fall short of predetermined cash objectives by set deadlines. When that happens, the campaigns are classified as failed, the pledges are nullified, and campaign organizers walk away with nothing.
Padron's
Kickstarter worked.
The Venezuela native asked for $20,000 during his two-month campaign and got $98,022 in pledges from 264 supporters for the "Vuelta," a "reboot of the gentleman's mechanical-wind timepiece" with a waterproof leather strap and a transparent bottom for watching the internal mechanism in motion. ("Vuelta" means "turn" or "turnaround" in Spanish.)
In fact, Padron met his funding goal in two days, assuring him money -- minus the 5-percent Kickstarter cut for successful campaigns -- regardless of what happened afterward. His campaign didn't become a superstar pulling in millions (as a number of others have), but Padron is thrilled.
"I am humbled," said the watch expert, who notes that feedback from his Kickstarter backers have led him to make Vuelta-design improvements. The watch, in two variations, ships later this year.
Though tech-related crowd-funding pitches often get the most publicity, these run the gamut from food-related, fine-arts and publishing efforts to scientific research, disaster relief and grassroots journalism.
Those contributing to such campaigns are typically moved to do so because they admire the projects, and because the campaigns offer perks or incentives that give backers an elite status.
Such incentives get pricier, fancier or just-plain-cooler the more moolah is contributed. The designer of a tech gadget might offer samples of the device to those contributing the largest sums of money, for instance, but only a Web thank-you or a T-shirt to those chipping in small amounts.
On Kickstarter, the service approves which campaigns can go forward, and about 75 percent do. The campaign creators set the dollar targets -- a decision fraught with uncertainty and angst since it can be anyone's guess whether the amounts ultimately prove too steep for success.
WILLING TO PAY
Kickstarter is the best-known crowd-funding site, but other such services are getting visibility as this style of fundraising hits the mainstream.
When an elderly Greece, N.Y., school-bus monitor recently became famous for being taunted by children, with the incident shown on a Web video that went viral, a campaign via Kickstarter rival Indiegogo raised more than $700,000 to allow the woman to retire.
Indiegogo differs from Kickstarter in that campaign creators get whatever amount is pledged.
St. Paul chiropractor Susan Clarke had raised less than $3,000 on Indiegogo as of last week to self-publish her book, "Clarke's Dictionary of Transactional Analysis."
This is far short of her goal to raise $15,000, but it puts her in a better financial position than an earlier Kickstarter campaign that didn't hit its $30,000 target and therefore yielded her nary a dime. What's more, an out-of-the-blue order for 20 copies of the book got her an extra $1,400.
Clarke credits her crowd-funding visibility for this: "There's potential there for finding people in your niche who are willing to pay."
Figuring out why some crowd-funding campaigns succeed and others fall flat can be difficult.
An in-development iPhone game called "Bumpin' Uglies" got star billing on major technology sites like Mashable yet fell far short of its $65,000 goal. (Twin Cities developers are forging ahead with the project regardless.)
Yet, virtually unknown developer Don James of Burnsville was successful in a recent campaign (following an earlier, failed effort), raising $1,023 for his "Core of Innocence" adventure game for the PC, with a goal of $400. He'll use the cash to get hardware and software for his team.
Elements of successful Kickstarter campaigns include doggedness, creativity and chutzpah.
A RABBI INVENTOR
Saying "no" to Moshe Weiss, an irrepressible, infectiously enthusiastic St. Paul rabbi, would seem impossible. But Weiss' first Kickstarter campaign, focused on an iPad audio accessory dubbed the SoundBender, fell far short of its $7,500 target in late 2011.
So, Weiss just tried again.
For his second Kickstarter campaign, also focused on the clip-on plastic doodad that amplifies the sound coming out of an iPad speaker, he knocked his goal down to $4,500 and increased the campaign's duration from four to six weeks. He also lavished more attention on the design of his Kickstarter page.
And if donors canceled their pledges, Weiss would chase them down and ask them to please, please reconsider. "What's up?" he'd say. "I want you back. What can I do to get you back?" A majority of the dropouts re-pledged, he said.
"Kickstarter is an amazing experience -- if you utilize it properly," Weiss said. "It is amazing the connections you build with people. Your backers become your friends."
Weiss is in the thick of a third Kickstarter campaign to fund a revised SoundBender tailored to the third-generation iPad but, as of last week, had already exceeded his $4,500 funding goal.
Weiss also has completed a couple of successful campaigns via crowd-sourcing site Kicktraq.
IT'S A JOKE, BUT...
April Fool's Day is traditionally replete with gag announcements from tech companies about products and services that will never see the light of day ... except sometimes they eventually do via crowd-funding campaigns.
The Littlest Black Book from Minneapolis-based Pad & Quill is one such product. It's a device case that looks like a fine leather-bound book when closed. But, unlike other P & Q cases that protect such large gadgets as the iPad and the MacBook Air, the Littlest Black Book encases Apple's super-small iPod Nano music player.
"It was, at first, a total farce," said Pad & Quill founder Brian Holmes, who initially made only a handful of the things for giggles. "I did not know if anybody would want to buy a case like this, but let's make a video, let's make it funny and put it up on Kickstarter" to see what happens.
The month-long campaign, launched March 31, asked for $4,500 and got $7,211.
The Littlest Black Book is now available for $34.99. It's hardly one of the company's leading sellers, Holmes said, but it has been priceless for publicity. He has Kickstarter to thank for that.
Julio Ojeda-Zapata writes about consumer technology. Read him: twincities.com/techtestdrive and yourtechweblog.com. Reach him: jojeda@pioneerpress.com or 651-228-5467. Follow him: ojezap.com/social
LOCAL EXAMPLES OF KICKSTARTER SUCCESSES
FILM
What: "Death to Prom," which producer/cinematographer Jeremy Wilker calls a "gay, teen romantic promedy. Think 'Pretty in Pink,' but the main character is dead."
Why Kickstarter: This is the second successful Kickstarter I've done. The first was in October 2009 for "Triumph 67." We were going for $10,000 and raised $12,000, so we felt confident we could do it again.
Amount: With more awareness of our crowd-funding and our track record, we figured we could go for $45,000. To be honest, it came down to the last minute, but we pulled it off. That was the amount we needed to start shooting, not the whole budget. On "Triumph," no one got paid, so it was important to me, probably more than to anyone else, that we pay people. I want people to be able to make a living making films here, and I felt like on some level I wanted to prove myself and give back by paying people a decent wage.
Incentives: Every contributor gets his or her name in the credits, which will be long because we had 400-some donors. One thing we put in there that I thought was a funny, goofy thing was giving away two walk-on roles. We put that at the $1,500 level, thinking no one would pay that, but those two went really fast. I thought, "Dang, I should have cast the whole film that way. Make people pay to work with me." We've also given away some of the wardrobe -- there's a lot of fashion in the film. Most people do a poster or DVD -- we did on the first one. But that ends up costing a lot of money, and if you can personalize something to the project, it is a deeper connection than if it's just merch.
Experience: I would do it again. I've done it twice, so I'm not going to be able to go back to that well too soon. I think I'll have to wait a year so. I don't wear out our welcome. You can't constantly be doing Kickstarter, begging people for money, I don't think.
-- Chris Hewitt
DOCUMENTARY
What: Dawn Mikkelson says her documentary, which has the working title, "Smooch," "tells the stories of people from around the world who have forgiven the unforgiveable." The Kickstarter campaign was to pay for our crew to go to Cambodia in the fall to tell the story of Kilong Ung, a survivor of the Khmer Rouge genocide. He lost many family members and was a slave laborer as an adolescent. He escaped to the U.S. as a teen and then, as an adult, returned to Cambodia to visit family. On that trip, he had the opportunity to kill a former Khmer Rouge leader but he turned that into an opportunity to forgive, instead."
Why Kickstarter: For me, raising money at this stage has always been about community support, in the form of fundraising events, potlucks, etc. This is the time to build the base around a project, as these are the people who really care about what you're doing. Historically, these have always been in-person events, so the online component was new and exciting. I had monitored the success of similar campaigns for a while and felt like we had a good chance of reaching our goal. We chose Kickstarter over IndieGogo because the all-or-nothing element of Kickstarter helps reassure donors that their donation will go toward the actual project.
Amount: Our goal was $10,000 and we raised $12,981. I was surprised we passed our goal by almost $3,000. I think that has something to do with momentum. People want to be a part of something exciting, part of a larger community or movement, and this is a great way to do just that.
Incentives: From listing donors' names on our imdb.com page (the smallest incentive) to a private screening with the director at the venue of your choosing in the continental United States. The more popular incentives were signed copies of a book written by Kilong Ung and digital downloads of the film upon its completion. That said, the No. 1 and No. 2 incentives were the IMDB listing and no reward at all. No. 1 was probably because it was the lowest amount to donate ($5 per person) and "no reward" was often, but not always, friends and family that just wanted to support us.
Experience: It was a great experience and I would absolutely do it again. There are things I would do differently, but for the most part, it was an exciting experience that reminded me of the power of community.
-- Chris Hewitt
ART
What: Franconia Sculpture Park used Kickstarter this summer to raise funds to help create a permanent tribute to artist Michael Richards. Richards was a guest artist at the park in 2000 and while there created "Are You Down?," a multilayered sculpture meant to raise awareness of the Tuskegee Airmen, a group of African-American pilots who fought in World War II. A year later, the New York-based artist died in the Sept. 11, 2001, attacks while working in his studio in the World Trade Center. "Are You Down?" originally was made from fiberglass resin and recently recast in bronze. Franconia wanted funds to reinstall and create an intimate space for the piece for a Sept. 11, 2012, dedication.
Why Kickstarter: After failing to get funds for the project from other outlets, Franconia founder and CEO John Hock turned to Kickstarter. The site had been on his radar for a while and he believed "Are You There?" was a good project to test the water. "We had three or four projects we had been considering doing Kickstarter with, but this was on the front burner," says Hock.
Amount: Franconia wanted to raise $13,980 and ended up getting $14,603 from 94 backers. Twenty-four hours before the deadline, "Are You Down?" was thousands of dollars away from reaching its goal, which made Holt a little nervous. At the last minute, he reached out to some folks asking them to donate to the project. "In the last 24 hours, there were some phone calls made," says Holt. "If you don't hit the goal, you don't get the money, and a lot of people just wait to see what happens. My backup plan was I was just going to put it on the Franconia credit card."
Incentives: Holt offered a variety of incentives, including bumper stickers, private tours and miniature bronze "Are You There?" figures.
Experience: "Because it was Michael Richards, people who don't normally give to Franconia gave to this," says Holt. "It was access to new people. You're only limited in who you can get the word out to. We were networking with a bunch of organizations in New York City, Chicago and locally. We also announced it through our newsletter and on Facebook and Twitter.
While Holt isn't thrilled with the cut that Kickstarter takes, he said Franconia will use the site again. "I think to get people's attention it has to be something noble and exciting that is almost impossible to find funding for elsewhere," says Holt about what kind of project is a good fit for Kickstarter. "I don't think I'd do it to buy new refrigerators for the Sculpture Park."
-- Amy Carlson Gustafson
MUSIC
What: St. Paul singer/songwriter Johnny Solomon's band Communist Daughter has used Kickstarter twice. Last year, the group's (now former) manager set up a project to raise money to put Communist Daughter on the road. More recently, a production team launched a campaign to pay for a music video for the group's new single "Ghosts."
"The band didn't have control over the specifics (of the first one)," Solomon said. "We let someone else put it together, and then we were left with the ball. I was perturbed about how convoluted it got. But it was our mistake not to be the ones in direct charge of it from the beginning." In the end, the money raised did help the group on several fronts, including the release of an EP, but Solomon ended up signing on with a new manager.
The video project, however, ran much more smoothly, although the band wasn't directly involved. "We were watching from the outside," he said. "We gave them permission (to use our name), and we helped get the word out. We're also going back and making sure everybody got their awards packages, too."
Why Kickstarter: "The one thing I like about it is that it's a new revenue stream at a time when there are so many revenue streams being cut off," Solomon said. "I really appreciated seeing how many people were willing to spend the money and who didn't care what the rewards were."
Amount: The band pulled in more than $8,000, while the video production team raised about $3,000.
Incentives: For the band's own Kickstarter project, it offered a series of posters, CDs, vinyl and concert tickets. Two folks contributed $500 and earned a year's worth of free admission to the band's concerts and a box filled with merchandise. The video shoot awarded many of the same items, with one $1,000 backer earning a "co-executive producer" title in the credits.
Experience: If Solomon does another fundraising project, he said he's likely to use Rockethub, a service similar to Kickstarter that's more focused on promotion, not just collecting money. "Kickstarter is really popular," he said, "but getting noticed on it is getting harder. Not that Kickstarter did anything wrong, I just think Rockethub has a better format."
-- Ross Raihala
TECHNOLOGY
What: Elija Parker of Pine Island, Minn., wanted to raise funds for the Timelapse+, a timer device for triggering SLR cameras without direct user intervention. It automates certain sorts of camera work, such as time-lapse photography.
"It can tell the camera to take a picture every three seconds for three hours," Parker said. "It is designed to work with any camera that has a remote shutter port; that's most SLRs and some advanced point-and-shoots."
Why Kickstarter: "It was low-risk for me and reasonably low-risk for my backers," Parker said. "I didn't have to spend $20,000 of my own money."
Amount: "I figured I could just barely break even if I sold $20,000 worth of orders to cover my upfront costs," Parker said. "My goal was to put the amount as low as possible to come out at zero (in the end). It was worth a try. A mention on Engadget.com brought in $15,000 overnight and basically gave my project a jump-start. By the third day, I had exceeded my goal, which really blew me away. Every time I refreshed the screen, the amount was higher. I really connected with the backers. They believed in the project and contributed ideas before it was completed. It's really a collaboration."
The campaign raised $165,730 from 1,248 backers in six weeks.
Incentives: These ranged from website thank-yous in exchange for $1 pledges to various versions of the Timelapse+, with or without add-on accessories, for pledges between $99 and $299.
Experience: "This has opened a lot of doors for me. I have other Kickstarter ideas," Parker said. "It's inspiring ... and I'd love to do it again."
-- Julio Ojeda-Zapata
RESTAURANT
What: Cynthia Gerdes, owner of Angel Food Bakery above Hell's Kitchen restaurant in Minneapolis, turned to Kickstarter to buy a "mega oven" for the bakery and add delivery and online ordering.
Why Kickstarter: "Everything they did was spot on, I felt very comfortable using their systems from A to Z," Gerdes said. The other really cool thing about Kickstarter is it gives you a chance to personally connect with people. A lot of them had questions. It really generated excitement for us. They have no idea that we have surprises down the pike for them. We will almost treat them as investors. We will be taking great care of them."
Amount: Gerdes was looking to raise less than $8,000 but hit that mark within 48 hours and told people not to stop giving because she would use additional money to add delivery and online ordering. In the end, the project raised more than $18,000.
Incentives: Baked goods, including doughnuts shaped like the letters in "Happy Birthday." For a $100 pledge, a backer could reserve one of the bakery's seven seats once a month for a year and receive all the baked goods they could eat during that sitting.
Experience: While Gerdes had a positive experience with Kickstarter, she offered this piece of advice for anyone thinking of funding a similar project: "I would warn people that it takes an inordinate amount of time to take care of those backers who so kindly fronted us some money. It took us well over 100 hours to make sure our 350 backers were taken care of."
In South Africa also today this new form of funding is taking hold. With crowdfunding being introduced to the country by the already well known,
StartMe crowdfunding platform, entrepreneur, artists and creative spirits are embracing the opportunity of sourcing finance from the crowd. It will be down to you and I to ensure that these businesses find the finance they need by becoming part of the crowd who provides funding.
08:21
ben
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