Posted 5/6/2013 12:00 am
Updated 8 months ago
Kickstarter, based in New York City, is a crowdfunding platform that allows individuals to seek donations for their projects in exchange for rewards.
Since its founding in April 2009, the company says, more than $594 million has been pledged by more than 3.9 million people, funding more than 40,000 creative projects.
The projects generally focus on the arts: filmmaking, record-producing, novel-writing. But some of them focus on consumables. Among those are two projects based in Little Rock: Stone’s Throw Brewing and Treatsie.
Ian Beard of Little Rock joined with fellow home brewers of beer Theron Cash, Shawn Tobin and Brad McLaurin to start a brewery. Beard, who works for the Old Statehouse Museum, had noticed other breweries raising money on Kickstarter and had himself donated money to a friend to produce a film.
“We reached the point where our finances were starting to get a little stretched,” Beard says. “So to do everything we wanted to at the level that we were hoping for, a little help from our friends was needed and Kickstarter presented itself as the best opportunity to do that.”
The Kickstarter campaign originally was to outfit a tasting room at the young entrepreneurs’ business, Stone’s Throw Brewing, which, as an LLC, they had already funded. Their entry read: “We can brew the beer, now we need a place to serve it! Your help will build a tasting room at the brewery.”
The brewery, at the corner of Ninth and Rock streets in Little Rock, offered Stone’s Throw Brewing logo stickers to $10 donors. Givers of $100 or more were promised “a reservation for the first pint sold out of our new tasting room,” in addition to a few other freebies. And those who pledged $2,000 or more — two of those so far — will get the opportunity to hang with the guys and brew their own recipe.
The beer-brewing partners sought to reach $10,000 in donations in 20 days. They met their goal in three and a half.
So with their campaign set to continue to Wednesday, they set a new goal, what’s known in Kickstarter parlance as a “stretch” goal. If they reach $19,000 they will double the company’s brewing capacity with the purchase of a bigger fermenter.
As of last Thursday, they had 154 backers who had pledged $14,405.
“We had also considered Kiva,” Beard says, a crowdfunding nonprofit that was launched in Little Rock in March. The partners chose Kickstarter because it “offered more on the publicity end of things. We could have tried to get a traditional loan or something, but even people who contributed to that — they wouldn’t be engaged in quite the same way as with Kickstarter. Not only are you pledging and helping to meet your goal, but also you get something for it that engages you in the project itself.”
“It was a way to get people to buy into the project without actually giving them any equity,” Beard says. “They’re now rooting for you because they’ve already bought into what you’re trying to do.”
In exchange for providing the portal, Kickstarter collects a 5 percent fee from the project’s funding total if the project meets its goal. In the United States, Amazon Payments process the pledges, and those processing fees range from 3 to 5 percent.
If a project doesn’t meet its funding goal, no one is charged.
“The money’s nice and definitely needed,” Beard says, “but I think the thing that we’re getting most out of it is just the buzz that it’s generating and just all these people who are now rooting for us and are on our side because they have contributed to the project as well. It’s as much a community-building activity as it is a fundraising platform.”
Treatsie — or “Treatsie: the Couture Candy of the Month Club” — is a venture put forth on Kickstarter by Keith Hoelzeman and Jamie Walden. (Hoelzeman’s wife, Amanda, is managing editor of Arkansas Business Publishing Group’s Little Rock Soiree magazine, and Walden is a former reporter for Arkansas Business.)
The pair attracted 90 backers and $7,266 compared to their $5,070 goal. A $10 pledge gets donors a handwritten thank-you note and a Treatsie sticker. The four backers who came in at $350 apiece will get a number of rewards including a one-year subscription to the sweet-treat club.
Hoelzeman and Walden chose Kickstarter because of its large customer base and the ability to perform real-time market research.
“Typically, the rewards include a beta version of your product,” Walden says. “And that was a real point of interest for us with Kickstarter because people who typically participate in Kickstarter projects tend to be early adopters, which carries a number of benefits. One, they have a higher likelihood of being vocal brand advocates. And two, they have a greater tolerance for products that still need refining.”
These backers/early customers can provide extremely valuable feedback and “prepare you for jumping the gap to mainstream customers,” Walden says.
“It really allowed us to tap into a network that we didn’t have exposure to,” he says.
Kickstarter Tips: Culled and condensed from the crowdfunding front.
- Make sure you have good rewards packages at the top and bottom pledge levels.
- Build your social media presence beforehand and use it heavily. Post early and post often, and remember to ask people to share or retweet your posts.
- Line up community partners as part of your campaign and rewards packages. This allows you to cross-promote each other, and gives you access to their contacts as well.
- If you can get any press before or during the campaign, that’s a huge bonus. We had articles in the Arkansas Times and Sync in the weeks leading up to our launch, which created a lot of buzz, led to more social media followers and helped us line up some of our community partners.
- Prepare for the inevitable mid-Kickstarter campaign lag and have a plan ready to boost momentum.
- Don’t get so caught up in the funding aspect of a Kickstarter campaign that you forget how valuable the backer feedback is to testing and refining your product.
- Set a goal that can cover your expenses. It sounds simple, but there are horror stories out there of people who have successful campaigns and can’t fulfill their promises to backers.
- Have a prototype of your product. It helps to show that you’ve thought things through. It doesn’t have to be perfect.