They go by many different names: Kickstarter, IndieGogo, Rockethub, Crowdfunder, Wefunder, to name just a handful.
While their criteria and focus vary, the goal of these online crowdfunding vehicles is essentially the same: to raise seed money for business start-ups, independent films and an ever-expanding range of creative and humanitarian projects.
In Greater Victoria, inventors and filmmakers alike have taken to this relatively new form of fundraising, in which many people donate – from small amounts to large – primarily because they believe in the idea.
Langford resident Kevin Larsen has developed a baby monitor app for smartphones called Uberwatcher. His crowdfunding campaign with Kickstarter aims to raise $89,000 to fund the first production run of 1,000 units.
“To put it simply, it’s almost a no-brainer, for us anyway,” he says of his decision to test the crowdfunding waters. “What Kickstarter allows us to do is essentially pre-sell our product before we actually make them.”
With 25 days to go Uberwatcher had raised about $3,000, meaning Larsen and his supporters have a long way to go.
Diversifying the call for funding, largely through social media, is a key to any successful crowdfunding campaign, says local entrepreneur and film producer Victoria Westcott, who gave a TedX talk on the topic in late 2011.
She and filmmaker sister, Jennifer, used Kickstarter in early 2011 to help fund their short film, Locked in a Garage Band. It took an intense final few days of campaigning on Twitter to push the fund to its goal of $20,000 by the deadline mandated by Kickstarter.
“I think (for) anyone who is making any kind of creative project … one of the first questions the team asks themselves is, ‘Do we need to crowdfund?’ And most do,” she says.
The sisters beat the bushes before the online campaign started to build momentum. Even then, it was slow going until the final day.
While some might consider such fundraising “online begging,” Westcott says it’s important the distinction is made early on through a campaigner’s overall web presence.
“When people think it’s begging is when they think it’s 100 per cent friends and family. That’s what fairly weak campaigns have,” she says. “(You have to be) targeting strangers, people who love the project, love who you are as a creator and what you’re trying to accomplish.”
Westcott is sometimes approached for advice on crowdfunding by charity organizations. “I always have to say ‘no’ and tell them, ‘this isn’t where you’re supposed to be.’”
Brock Smith, professor of marketing and entrepreneurship at the University of Victoria’s Gustavson School of Business, says most investors are pretty savvy these days. As such, people looking to raise capital need to address head on why potential funders should trust them.
“The better requests are those with strong ‘reasons to believe’ that the project will be completed if funded and the value will actually be created,” he says. “Having a good track record, being embedded in a community and having credible people supporting you are just some of many possible ‘reasons to believe’ that the person or organization requesting the funding is legitimate.”
The funding websites, the two best-known of which here are Kickstarter and Indiegogo, also provide resources for campaigners to help ensure they can fulfil their promises if the funding campaign is successful.
Like any venture or project that requires money to be successful, crowdfunding doesn’t necessarily provide a long-term solution.
Former Tall Tale Books owners Drew and Kate Lorimer faced cash-flow problems and appealed to the public for help in June 2011. Their online “hero society” campaign – more than 300 people signed up and paid a $10 monthly fee that doubled as an in-store credit – helped keep their store open for another 18 months.
“It was almost like the book-of-the-month club,” says Drew, who took a job at B.C. Pension Corporation after the store closed last January. “It was a way to raise the money monthly, which would help, but we hoped it would lead to more regular visits from people. Unfortunately, it wasn’t enough to solve all our problems.”
Larsen admits it’s been slow going so far, but he holds out hope his company’s campaign will be successful and truly help “Kickstart” his new venture.
For a list of Victoria-based projects on Kickstarter, visit kck.st/1eMAAvP. For the local projects on IndieGogo, visit bit.ly/1eTwL8W.