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.”
Ramsey is far from alone. Crowdfunding websites—which allow individual donors to contribute to projects and businesses, often in return for simple perks (Ramsey offered benefits ranging from listing donor names on the Lowline website to inviting them to VIP cocktail parties, depending on the amount pledged)—now account for a significant revenue stream for architects and designers. Justin Kazmark, a Kickstarter spokesperson, estimates that more than $70 million has been pledged for design-related projects.
Indiegogo, another popular crowdfunding site that launched in 2008, funnels millions of dollars in pledges every week to a variety of personal projects and businesses. The company says it has seen an uptick in campaigns from designers. After Superstorm Sandy hit last year, Indiegogo partnered with Architecture for Humanity, helping the nonprofit raise over $1 million for its Restore the Shore campaign to rebuild Seaside Heights, N.J.
Crowdfunded design is by now a global phenomenon, allowing projects big and small to obtain financing through donations. In Bogota, Colombia, a developer solicited funds directly from the community to help underwrite the city’s tallest skyscraper. In the Netherlands, the architecture firm ZUS partnered with the International Architecture Biennale Rotterdam to create a website to crowdfund a pedestrian bridge.
Just as important as the cash, though, is something else generated by these campaigns: community engagement. “The secret of crowdfunding is that it’s not about the money,” says Danae Ringelmann, co-founder of Indiegogo. “The true benefit of crowdfunding is being able to both validate an idea as well as engage a community. People are voting with their dollars. That’s why it’s so powerful for architects. It’s an effective way for them to test ideas for a place and, if successful in crowdfunding it, prove that people want it to come to life.”
Kazmark agrees. “Backers have this longing for community, and one of the big things that the Kickstarter experience offers is for backers to be part of the process,” he says. “As a backer, you get an up close look at the creative process. You get the feeling that you are a part of it. So it’s more than funding; it’s also about building a community around the idea.”
Ramsey experienced this after the Lowline campaign went live online. “I would walk down the street and see people wearing Lowline T-shirts. I heard that someone created a video game set in the Lowline,” he says. “Crowdfunding not only underscores and increases an appreciation for design, but it also directly involves people in the process. It’s the ultimate for the democratization of society. I can envision a future where an architect is able to design and build something with no client other than the community.”