The Mahoning Valley has seen a number of crowd-funding efforts succeed recently, and I’m hearing from a number of organizations and small businesses that are wondering how they can take advantage of this approach to fund their own initiatives.
First of all, what is crowd funding? It’s an approach to pooling money to invest in a project. The money draws from interested stakeholders who may not otherwise be connected to each other or directly involved in the project’s direction or execution. Some of the websites that have popularized the concept include ArtistShare, Kickstarter, and GoFundMe.
Secondly, what kinds of projects get funded on these sites? A survey of Kickstarter.com, which has been the main vehicle for local projects of late, finds projects for every taste, from funding a documentary on Dungeons & Dragons to helping a clothing brand add a new product line to turning a prototype smart-watch into a mass-produced gadget.
Here are some of the local projects that have been funded this year:
The Lemon Grove restaurant in downtown Youngstown recently moved out of its rented digs into a newly purchased storefront on the same block that used to be Rosetta Stone Café, at 110 West Federal Street. Called “Project 110,” the campaign exceeded its $10,000 goal, with 174 backers receiving a variety of goodies according to their pledge amount. The gifts-for-dollars concept should be familiar to anyone who’s ever encountered a pledge drive for public media. The Lemon Grove project accepted bids of $25, $50, $100, and up to the total amount. In return, it offered a locally designed T-shirt at the $25 level, free coffee for a month for $50, all the way up to naming rights for a room in the building. (Each of the incentive tiers included the rewards from the lower levels.)
Youngstown State University and the Youngstown Business Incubator teamed up to fund a 310-foot mural designed “to showcase the metamorphosis taking place within the city.” Seeking to raise $7,350, the project enticed backers with offers of memorabilia, like stickers and posters, plus a tour of the YBI by its CEO.
Local theater and musical organizations have likewise funded productions through smaller targets of between $1,000 and $1,500 in exchange for sponsorship recognition, CDs, or walk-on stage roles.
In all, Kickstarter says it has hosted nearly 30,000 successfully funded projects for a total of $297 million raised, with a 43.88% success rate. The site advises, “Most successfully funded projects raise less than $10,000, but a growing number have reached six and even seven figures.”
One notable project, showing a prototype smart-watch expected to retail for about $150, set a goal of $100,000 to go into mass production. The project ended up garnering an astonishing $10,266,846, with nearly 69,000 customers bidding for first dibs on the “Pebble” watch for iPhone and Android.
So, what makes a successful crowd-funded project?
A video seems to help. I saw one young songwriter create a campaign to raise the $7,000 he needed to attend an arts school to which he had been accepted. He created a great video with a catchy, original tune, and within mere days exceeded his goal, due to supporters virally sharing his video and request through social media.
A name helps. Having proven your trustworthiness through a prior production can help engender confidence in your ability to follow through on the promise represented by the project.
Enticing rewards can help. A sweet reward for your pledge can make the difference between whether an interested party will commit $25 or $50. And, of course, each pledge adds up.
Most of all, think of what’s in it for the crowd. How will your successfully funded project affect their lives, and how can you convince them to become evangelists for your cause and spread the words to your friends?
The bottom line for crowd-funded projects, as with any kind of online action, is getting the word out. You’ll need every contact at your disposal to spread the word to their contacts. The viral nature of the social web is at the heart of crowd funding success.
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