Crowdfunding doesn't work for everyone

Molly M. Fleming, The Daily Record Newswire

Deanna Layman and her business partner, Charissa Morrison, turned to the crowd in 2014, looking for financial backers for their pie shop, Viva La Pies.

The women launched a Kickstarter.com page in April. By late May, they had only raised $3,231 toward their $15,000 goal.

"We were definitely disappointed," said Layman. "But as they say, timing is everything."

The women had babies that fall; not having the shop gave them time to spend with their newborns. Layman said they are operating as a home bakery, doing orders online, catering weddings and other events. They've also been meeting with restaurants about getting their products in their venues. If that happens, then they'll have to move into a commercial kitchen.

"We're still going strong," she said.

Viva La Pies hasn't been the only crowdfunding idea to fail. Less than 41 percent of approved Kickstarter projects get fully funded, and 20 percent of projects are rejected from the website. In total, there have been 165,987 unsuccessful Kickstarter projects, and 95,966 successful ventures, according to the site's statistics. This doesn't include the totals from other crowdfunding sites.

Peerbackers.com co-founder Sally Outlaw, whose website provides consulting to entrepreneurs seeking crowdfunding, said most unsuccessful crowdfunding ventures don't realize the front-end work required.

"I think a lot of people go into it with the idea that, 'If you post it, they will come,'" she said. "But it's not eBay. People don't seek out projects."

She said she compares it to a political campaign, in that candidates use multiple avenues to reach people and get their support.

"You have to have all of that level of engagement (with crowdfunding)," she said. "I don't think people understand the full degree of work."

MadePossibleBy.Us started with engagement on Twitter, with a conversation using the hashtag #WhatIfOKC, where people could reply with possibilities for citywide changes.

It launched its first project in September, asking people to contribute to launching a food truck, operated by A Good Egg Dining Group. All proceeds from the truck's event outings will be given to the Regional Food Bank of Oklahoma. When the truck isn't at an event, it will be at an after-school program passing out snacks created with items from Whole Foods Market. The truck staff will educate the students about healthy eating.

The project used its own website for the crowdfunding. It had an initial backing of $18,000 from partner businesses, and needed to raise $53,000 total. It needed $13,000 more when the Nov. 8 deadline hit.

But MadePossible co-founder Mike Zserdin said there have been some offline donations that are expected to make up the difference.

"We'll have plenty of money to get the truck going and on the streets," he said.

He said the organization didn't want to use an existing site like Kickstarter because it wanted to display support from businesses and organizations.

"We felt like none of them addressed the use of multiple stakeholders in the way we wanted to do it," he said.

He said the group received a lot of volunteer support off-line as well, which it wasn't expecting. Financial backers did not receive a reward, which many crowdfunding projects offer.

Outlaw said a reward does help draw people that don't have a connection to the brand or business, but if it's for a cause like disaster relief, people are not as likely to expect a return.

Published: Wed, Nov 18, 2015

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