Field Notes: Crowdfunding – Relying upon the ‘Wisdom of the Crowd’ to Secure Capital

Field Notes: Crowdfunding – Relying upon the ‘Wisdom of the Crowd’ to Secure Capital

Crowdfunding is a hot topic among Iowa small business owners right now, in part because of the passage of the Jobs Act this past April which makes it possible for individuals to invest in small businesses without the  rigorous Securities and Exchange Commission  (SEC) compliance typically associated with equity investment.

While a few crowdfunding sites have emerged already, like and Fundable, it isn’t really clear what the final Job Act regulations will look like- and we won’t know for another six months when the SEC sets forth the specific rules.  There are plenty of crowdfunding sites however already up and running, based largely on donations and they have captured the attention of many Iowa small business owners.

Some Iowa business owners, like Anne Ashby of Lorenz 2.0 of Iowa City and David O’Shields of New Light Media in Cedar Falls are jumping in with both feet on existing sites that look for contributions in exchange for feeling good or cool prizes or gifts.

Anne Ashby seeks to raise a few thousand dollars to support the growth of her trendy downtown shoe store in Iowa City at Indiegogo, one of the larger online crowdfunding sites.  Her pitch isn’t online quite yet but supporters have rallied around her in recent weeks helping to formulate and refine her crowdfunding strategy. Watch for her online.
In Ames, a project called Art Vendsought $800 last year to retrofit a used vending machine, stock it with unique local art and sell it in and near downtown Ames. While not a unique idea (it was first posted on as a cool new business idea back in 2007) it turned into a great community project for the place that supports a gigantic red cardinal. (note: Panthers eat birds…and hawks for that matter)
In Des Moines, a hip thinking chick named Abbie Durkee came up with My Alibi Clothing: a line of sportswear for women who ride bikes including padded ‘bloomers’ that are worn under biking shorts. Beautifully constructed My Alibi Bloomers sought to raise $25,000- and did- with only 213 unique financial backers and more than 1,000 Facebook likes in less than 30 days.   Abbie closed her pitch last week with 103% of her goal and an average of $103 per backer.
David O’Shields of New Light Media in Cedar Falls, Iowa just launched a campaign at Kickstarter to fund his new documentary film, called Southern Like Me.   O’Shields is adocumentary film producer who most recently completed an award winning documentary about the tallgrass prairie, entitled “America’s Lost Landscape: The Tallgrass Prairie. David’s pitch is honest, simple and straightforward on his Kickstarter page.   He says; “Southern Like Me” will explore the nature of southern identity and what it means to be a Southerner in 21st century America. As someone born and raised in the South, I have struggled for most of my life to define my own southern identity.  As a child, and later as a young adult, I always felt different than other folks living in the south.  I loved living in Alabama and Florida, and yet I never seemed to fit in or be totally comfortable with the traditions and customs of southern life.  And I was totally at odds with the prevailing belief structure of mid and late 20th century southern culture.  Why?  What made me different from others?  I have now lived in the Midwest for the past 25 years; yet I still consider myself to be a proud, but conflicted son of the South.  Why?  What is so unique about “southernism” that it remains an integral part of one’s very being years or decades after leaving the south?   Southern Like Me? will be an honest, fair and respectful journey of discovery”.

After uploading his Kickstarter page on June 8th, O’Shields has already raised nearly $3,000 of the $10,000 he seeks to begin filming.   The kick however, of Kickstarter is that if you raise anything less than the goal you’ve established by the time your pitch period is over (usually about 30 days) you collect nothing. So David could raise $9,999 but still come away empty handed if he hasn’t hit his $10,000 goal by July 5th. Stay tuned.

Kickstarter is currently one of the more popular crowdfunding sites online. It was created in 2008 by a trio of young men living on Manhattan’s Lower East Side. They managed to attract angel investment and venture capital (rather ironic, since their business model is tied to giving small ventures an alternative to such funding).  Since inception, Kickstarter has helped more than 23,000 ventures obtain mostly small amounts of capital totaling $230 million dollars.  Earlier this year a single project on Kickstarter raised more than $1M (it was a phone app) and more have followed in the past few months. Game on, America!

The Jobs Act will certainly broaden the spectrum of investment and hopefully attract individuals who would like to invest in Iowa small businesses but would like a return on their investment beyond gifts and feeling good. This is a step in the right direction, although investors will need to be wary of where they invest their money and do some due diligence. The small business community will surely be better off with these new sources of capital awarded through the wisdom of the crowd. Much more to come.

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