Remember the days when all it took was a handshake and signature to get a loan for your small business? You’d simply walk into the bank and ask to talk to the loan officer. After a couple cups of coffee and a few Marlboro cigarettes, you’d walk out with a check in your hand and a song in your heart, ready to make your American Dream come true. Then you’d head over to Al’s Diner for a burger with your pals Richie, Ralph and Fonzie. Play the Juke Box and laugh, and laugh, and laugh.
There’s a reason they called the 1950s happy days! But that was a half-century ago … way before the economy crashed, the government shut down, and the pools of available money dried up. Before we funded two wars, the mega banks collapsed and American home values plunged us into a recession.
Today’s entrepreneur must think “outside the bank” to raise capital for their business ventures. And for a lot of people, the buck stops there. No government grants. No small business loans. No rich uncle. No American Dream.
Then there are the dreamers who won’t let conventional ways of getting funding keep them shackled to the death-rolling U.S. economy. These men and women truly believe in their ideas and are willing to go “all in” to make their ventures work.
Enter Kickstarter. Or more precisely, http://www.kck.st/1765Kbu
It works like this: you, your neighbor, your dad, a co-worker – anyone really – can submit their original concept for consideration. If approved, it is officially launched on Kickstarter (there are guidelines that must be met) and a dollar benchmark is assigned. If the donations reach that amount (or more), the project is considered funded. If the donations fall short of the goal (in the time period allowed), no money changes hands … and the project is ended.
No Money Changes Hands Unless and Until the Project Is Completely Funded
If donations reach the benchmark (or more), the project is considered funded. The money is collected from the donors (via an Amazon payment matrix). At that time, both Kickstarter and Amazon take a small percentage of the money as payment for their services. It’s important to note that it costs NOTHING to submit a project. You only pay if you are fully funded.
Lots of Success Stories Online – But Could This Concept Truly Work?
According to the website, 44% of the projects featured on Kickstarter become fully funded. A little bit of math and deductive reasoning shows me that 56% – more than half – of the projects are not successful.But do numbers really tell the whole story? In order to dig deeper, I reached out to an entrepreneur featured on the “staff favorites” listing. Zac and his wife are working with a Midwestern chocolatier to create gourmet, vegan sipping chocolates to serve during the cold, snowy winter months in Minneapolis. Since brick and mortar stores were unrealistic and out of Zac’s budget, he chose to launch a food truck instead. The Warming House was born. His friends and family were really excited about the idea and wanted him to move forward. But, as with most families these days, they didn’t have a lot of extra money to donate to his venture. He considered conventional ways of funding, but didn’t want to mortgage everything to follow his dream. That’s when he turned to Kickstarter.
Will he be successful? After two weeks live on the site, The Warming House has 93 backers and $5,808 in pledges, leaving him $8,500 shy of his benchmark. But as anyone who’s ever gambled in Vegas or bought a lottery ticket knows: having a 44% chance of success in this economy is just too good to pass up!