I was asked by someone yesterday to explain Kickstarter a little more thoroughly–and I thought it would be a good thing to address for everyone here on Tiny Twig.
Kickstarter is a crowd-funding platform (other options are IndieGoGo and GoFundMe are two other choices) where people can fundraise for a project (or cause in some cases) of their choice. Just as some people raise funds through venture capitalists or angel investors, we see crowd-funding as a way to fund through tiny angel investors…mostly people you already have a relationship with who desire to see you and/or your idea succeed.
The idea with crowd-funding is that many people give a little rather than one person giving a whole lot. And, with Kickstarter in particular, instead of giving up equity in your company–you trade a good/service for a pledge. So, it’s a win/win with little to no risk for the investor/pledger. You simply get on the Kickstarter website, pledge the amount that is in accordance with your budget and desired reward, and then wait until the estimated delivery date for your reward.
Now, the hard part is…with Kickstarter a project must be FULLY funded in order for the organizer to receive any of those pledges. This is to protect the pledgers and make sure that the Kickstarter organizer has enough funds to complete the project in order to deliver the rewards. See, we couldn’t go into production at ALL if we raise a penny less than $20,000. The order minimums are prohibitive to do otherwise. So, that’s a hard thing when you have a big goal–but it’s ultimately the best protection for the person pledging and the business-owner.
Traditionally, in the “olden days”, you had just a couple options when it came to raising capital to start a business. You could:
- Use cash you had in savings. (Better be Ritchie Rich and not have other plans for that money…like, use in an emergency, retirement, etc.)
- Take out a loan. (Welp, that’s a risky move mortgaging your future.)
- Take on investors in exchange for equity. (Better know people.)
But, today, like the democratization of information and access to key players, you can crowdfund your business. There are NO gatekeepers. The people who love you and already love what you’re doing can play a part in getting your business off the ground. They don’t have to put out a billion dollars to get it started, but $10 or $25 given by a ton of people can make a BIG impact. They also don’t have to do it out of the goodness of their hearts. They get a fantastic product in exchange.
Plus, do you ever feel like you “know” someone huge because you follow them on social media? Like, I feel closer to the White House because I get their social media feeds. I feel like I “know” my favorite authors because I see what they are up to on a day to day basis. It gives me insight into their writing, it helps me see the story unfold between books, it makes me feel…involved.
And that’s what people can do with something like Kickstarter. You can literally be involved in getting a tiny baby company sitting up on it’s own. You can feel a strong sense of connection and you’ll be called on to weigh in on important decisions (like…snaps or buttons? this label or that?) in the beginning days of the company.
So, we’re using Kickstarter because it is the wisest choice for our family and our company. It spreads the risk out over hundreds of people rather than remaining centralized. It also spreads out the fun to everyone involved as opposed to keeping it all to ourselves. We promise to be transparent with the story of Wildly Co. and let you in on the excitement as we go. Plus, we’ll be trading you some AWESOME kids clothes in exchange for your pledge. It’s a good deal, and we’re GRATEFUL for your support.
I am also using Kickstarter because, to me, it feels like the way of the future. I want to be part of this story. I want to encourage others that their ideas can come to fruition, that their plans can succeed, and that they aren’t alone in making it happen. There will always be people who use traditional investors when they can leverage their investors business acumen and relationships (think about the deals on Shark Tank…the business-owners most often go to the Shark with the most experience in their field). But, not everyone has access to these kinds of people with big money to put into a business that demands more than it produces at this point in time. Businesses are a lot like babies…they are incredibly demanding in the beginning and they don’t give much of anything back.
But, it’s worth it. Because some of those baby businesses grow up to be the kinds of organizations that really change things. They become the ones with strong voices for good. And, that’s what I hope Wildly Co. will be. I can’t wait to get started. Will you join us?
