CROWDFUNDING
on how much is donated.
Meaghan Fitzgerald, the head of marketing at social network 23snaps in London, says giving $75 to fund the “Veronica Mars” movie made her feel involved in getting the film made. The creator of “Veronica Mars” raised $5.7 million through Kickstarter last year to turn the former TV series into a movie. Producers sent backers frequent updates on how filming was going. She’s also gotten a copy of the movie, a poster, a T-shirt and a copy of the script. She’s says happy with what she got, even if the movie earns millions.
“It’s very clear what your reward is,” she says. “There’s no miscommunication.”
People who want more from their funding dollars may have an option soon. The Securities and Exchange Commission is working on rules to allow startups to raise money by selling stock to small investors through the Internet for the first time. That would give small-time investors real ownership in businesses that they fund.
Entrepreneurs turn to crowdfunding sites because bank loans are hard to get, saysMelinda Emerson, founder of Philadelphia-based Quintessence Group, which helps businesses with their social media strategy. Many small-business owners get wrapped up in crowdfunding success stories, but the sites don’t always manifest a pot of gold.
“What happened to Oculus is rare, and really hard to do,” says Emerson.
Little Boo Boo Bakery, which sells marshmallows in flavors like chai, vanilla bean and lemon lavender, fell short of its goal of raising $5,000 on Indiegogo. Co-ownersHannah Scarritt-Selman and Kieran Delaney got $2,106, mostly fromfriends and family.
The money was still enough to pay for startup costs. “We were a little disappointed, but we were really happy to have any money,” says Scarritt-Selman.
TracyMcMillan had better luck. She turned to Indiegogo to help raise money to finish a smartphone app she was launching called Localeikki that helps active people find nearby places where they can run, bike or walk.
McMillan, who lives in Flagstaff, Ariz., beat her $10,000 goal by $143. About 70 percent ofwhat she raised came from people she knew. But her app also appealed to strangers like Amy Halseth, a runnerwho donated $100 after she came across the campaign through a Facebook post. She had never met the app developer.
“I know it sounds selfish,” says Halseth, a clinical trial researcher for a pharmaceutical company inMinneapolis. “But I really just wanted the thing to be built so I could use it.”
And Oculus donorHousknecht? He says he’ll continue to fund projects on Kickstarter, but hewon’t donate quite as easily.
Hey says he’ll first ask businesses if they have plans to sell their companies to larger ones.
“I’m going to be a little more leery.”