Crowdfund 101
Kickstarter, Indiegogo, Fundrise, Fundable—more and more online crowdfunding platforms are emerging. But achieving a funding goal for a project is no easy task. Here are a few tips:
Pick the Right Platform: Kickstarter funds projects, not businesses, whereas Indiegogo funds anything, including startup capital for a business. Do your research to understand which crowdfunding platform best suits your needs.
Keep it Simple: James Ramsey and Dan Barasch didn’t try to fund the actual Lowline with their Kickstarter campaign; that would have been too complex. Instead, they funded an exhibit that allowed them to develop a prototype of the technology and test the feasibility of their plan.
Make a Video: It doesn’t have to be a Hollywood production, but it needs to be succinct. The Lowline video runs less than two minutes and emphasizes the critical components of the project.
Use Your Network: Word of mouth is critical. Consider the best strategies to reach constituents who may have a connection to your project. Go offline and host cocktail parties where investors can meet one another and ask questions.
Be Transparent: Fundrise attracts investors by building trust and making decisions public. “That’s not how commercial real estate usually works,” co-founder Benjamin Miller says. “Most people aren’t privy to how the architecture happens or how the decisions are made. But we post every document online.”
The video opens with a question: “Where do you build new green space in a crowded city like New York?” After the camera zooms down from a digital image of the Manhattan skyline to the congested street level, an answer appears on the screen: “Why not underground?”
Cue a sales pitch for the Lowline, a proposal by architect James Ramsey to turn the decommissioned Williamsburg Trolley Terminal into New York’s first underground park. Ramsey, 35, the owner of Manhattan-based firm RAAD Studio, produced the video last year with several colleagues for a Kickstarter campaign. He had seen other architects bankroll personal ventures through online crowdfunding sites—a growing phenomenon that The New York Times has called a new patronage model “for a DIY generation.” Still, Ramsey was skeptical that he could raise enough money for his concept, a kind of subterranean version of the High Line. “What we were doing was much larger in scale than the other projects we saw getting funding,” he says—namely, revitalizing 1.5 acres under Delancey Street on the Lower East Side.
Ramsey discovered the space in 2008. Since then, he has spent years tinkering with a remote skylight design capable of delivering light underground through the use of fiber optics powerful enough to support plant photosynthesis. He partnered with Dan Barasch, a community outreach expert, to form the Lowline nonprofit organization in 2011, and they turned to Kickstarter to raise funds for an “Imagining the Lowline” exhibit that would help sell the idea and showcase a skylight prototype.
Founded in 2009, Kickstarter is one of the preeminent online platforms for raising money from individuals. In March, the company crested the half-billion dollar mark in funds pledged, with more than 3.4 million people giving money. Most campaigns on the site ask for less than $10,000 to support a project, but Ramsey and Barasch took a big risk and asked for $100,000. Their Kickstarter campaign went live on Feb. 22, 2012, and they hit their goal.
In eight days.
And people kept giving. By the close of the campaign in April, 300 backers had pledged $155,186. “It was a startling result,” Ramsey says.