WHAT are your options if you have a great idea for a new business but don’t have the funding? Previously, you had two choices: you could apply to your bank for a loan, or ask family and friends to lend it to you. Now, there’s a new alternative: crowd-sourced funding via the internet.
Kickstarter (www.kickstarter.com) is one of the oldest crowd-sourcing websites; it celebrates its fifth birthday this month.
It was set up by a New Yorker, Perry Chen, after he unsuccessfully attempted to stage a concert in New Orleans.
“I tried to bring DJs to play a show during the 2002 Jazz Festival,” he says. “I found a venue, but, in the end, the show never happened — it was just too much money. The fact the potential audience had no say in this decision stuck in my brain.
“I thought: ‘what if people could go to a site and pledge to buy tickets for a show’? If enough money was pledged, they would be charged and the show would happen. If not, it wouldn’t.”
Seven years later, this idea became a reality with the launch of www.kickstarter.com. On April 28, 2009, 40 people pledged $1,084 to seven projects.
On Kickstarter, you outline the project for which you require funding. You set the funding goal and a deadline. If people like the project, they can pledge money to make it happen. If the project reaches its funding goal, the backers’ credit cards are charged when the deadline expires. If the project falls short, no-one is charged. If it does go ahead, backers get rewards, which vary depending on the project.
At the time of writing, $1,077,532,001 had been pledged by 6,015,234 people to fund 60,288 projects.
These include films that have won Oscars, albums that charted in the US top ten, restaurants, video games and satellites. They also include projects by entrepreneurial Irish people. Food blogger and author, Niamh Shields, from Dungarvan, who now lives in London, funded her latest cookbook, Project Bacon, via the website. “I went down the traditional publishing house route with my first book, Comfort and Spice, and I’m glad I did, because I learned how the whole book publishing process works,” says Niamh. “But when it came to my second book, I’d met very successful, self-published authors and thought that option could give me the independence and creative integrity to write the book I wanted.”
Niamh raised £24,611 on Kickstarter and is now writing recipes and taking photos for the book. She hopes it will be published in the summer. “It’s been an enormous challenge, but I love a challenge,” says Niamh. “It’s been intense, in that there is so much to do. I’m giving it my all and working late every night. But it’s so positive and rewarding, because I’ve had amazing support, which is allowing me to create the book that I want.”
Americans Jonathan and Amanda Kennedy came to Galway in 2012, to build upon their love of the Irish language and music. They used Kickstarter to create an international, online language exchange system, called Comhrá le Chéile.
“We attracted investors with a variety of rewards, from small gifts, such as bumper stickers and fridge magnets, to a download of an EP that we made with friends in Ireland,” says Jonathan.
“The highest level of reward included having a tune composed in honour of the investor and one family pooled $500 together to get that particular reward.”
They raised €6,000 and, in February, they began their first eight-week session of conversation groups.
“It’s going very well and we’re pleased there has already been so much interest,” says Jonathan.
“As far as pros and cons go, it’s difficult to think of any negative aspects of our experience with Kickstarter.”
Sara Breitenfeldt, who lives in Cork City, is an avid knitter. She started her own company, Smudge Yarns, with the help of Kickstarter in 2012.
“It stemmed from two things,” she says.
“The recession made finding ‘normal’ employment opportunities very difficult and, as a knitter, I found it curious how impossible it was to find yarn made from actual, local sheep, despite the countryside being covered with the creatures.”
Sara set a target of €850, which would allow her to buy fleeces and a spinning wheel. “I set the deadline for 30 days and, much to my shock and delight, I made €850 in only eight days. I had more than €3,000 after 30 days, plenty to start my business supplying Irish wool and hand-spun yarn.”
Máirtín de Cógáin had a dream to make a musical travelogue of Cork. “I wanted to use the lyrics from my album, From Cork with Love,” he says. “But everyone I spoke to said music DVDs never make any money and going to the bank was not an option.”
In July, 2012, he tried Kickstarter. “It seemed a bit cheeky, asking people to back me in this endeavour. But within 30 days Kickstarter had not only given me the capital to proceed with the project, I also formed a closer bond with those interested in what I do. They still come up to me at gigs to let me know how proud they were to be part of it.”
Máirtín raised €18,000, which allowed him to film, edit and package the From Cork with Love DVD. “It was all done in 2013,” he says. “And it was such an exciting experience. It was a great way of letting fans get involved in my work.”
It’s not just people starting their careers who use Kickstarter. Legendary rocker, Neil Young, used the website to raise funds for Pono, a new digital music device he is producing with the help of Cork-based PCH International.
PCH International was founded by Liam Casey in 1996, with corporate headquarters in Cork and operational headquarters in Shenzhen, China. Thanks to the support of music fans, who pledged $6,225,355, Pono is now entering production stage.
Perry Chen’s failed attempt to stage a concert has resulted in a website that has funded cookbooks, Irish-language classes, a yarn-spinning business, a musical travelogue, a new digital music device and more than one billion dollars worth of other creative projects worldwide.
The next time you have a brainwave, remember that you may not need to resort to your bank manager. Try crowd-sourcing online, instead.
- Pebble aimed to raise $1m and raised ten times that amount. A customised watch that allows you to download new faces, use sports and fitness apps and get notifications from your phone; so many people were interested that it raised $10,266,845.
- Ouya is a new kind of video games console built on Android. It aimed to raise $1m and got backers so excited it raised $8,596,474.
- Veronica Mars (starring Kristen Bell, above) had her own TV show and now, thanks to her fans, she has her own movie. $5,702,153 was raised on Kickstarter to fund this movie which was recently released in cinemas.
- Rock star Neil Young was dissatisfied with the quality of digital music players and wanted to create something better. In partnership with the Cork-based PCH International, he designed the Pono music player and music fans all over the world pledged $6,225,355 in support.
- Torment: Tides of Numenera is a computer role-playing video game that has raised $4,188,927.