18 Jan 2013

Local Businesses Turn to YOU for Funding

Photo uploaded to Flickr by johnnytakespictures

Photo uploaded to Flickr by johnnytakespictures

I think we’ve all heard stories about a startup video and online fundraising campaign that launches a small business or creative artist’s latest project.  They’re just the type of populist, bootstrapping stories we all love.  A personal favorite is one my husband ran across a year ago:  Dollar Shave Club.  (Yeah, its Friday, so go ahead and watch all the videos in this link.)  He’s been a member ever since.  Not every business is ultimately looking for $1 million in seed capital from a venture firm, though.  Often, businesses are simply looking for a bit of crowdfunding to help them reach a more immediate milestone.

Sites like Kickstarter and Indiegogo are helping businesses raise the money they need by appealing to the masses, which sometimes means their current and potential customers.  One active campaign is for local business DC Access.  The wireless Internet provider (and provider of Hill Ads, the online advertising network for many local blogs, including The Hill is Home), is raising money on Indiegogo to help offset expenses related to moving their business from their home to a recently purchased office building at 1504 Pennsylvania Ave, SE.  After 10 years of working out of their house, the company is making the leap in their expansion and using Indiegogo to help them “take back [their] home” by covering costs related to moving and outfitting their new space, which includes meeting space available to rent for other small businesses, as well as to improve service for existing customers and expand their coverage area.  Special perks for contributors reflect the roots and commitment DC Access has to Capitol Hill, such as special guided tours of Congressional Cemetery, a wine tasting with Schneider’s of Capitol Hill and VIP events with Councilmember Tommy Wells and historian Robert Pohl (also THIH’s own Lost Capitol Hill blogger).  That campaign ends this Tuesday.

Last November, Rose’s Luxury, a restaurant coming soon to Barrack’s Row, went to Kickstarter to raise $20,000 to help with some of their design and renovation costs.  Their campaign closed with $25,000 in the bank.  They did it by offering special perks ranging from a fist bump to a multi-course tasting dinner for you and eight friends cooked in your home.   The Million Puppet March, in Lincoln Park last November, raised more than $6,000 to help with their costs, too.

As a small business owner myself, and as a consultant to other small businesses, plenty of business owners and potential “investors” have asked me if this is legit.  It is.  Not everything you see is likely to seem worth your hard earned cash, but I would happily jump at the chance to help fund a project that’s meaningful to me.  Especially one in my own neighborhood.  But keep your expectations in line with the current reality of crowdfunding.  There are all kinds of creative perks to be had for participating in a campaign, such as the VIP-style experiences offered by DC Access and Rose’s Luxury.  So think of it as investing in a unique experience that happens to help out a local business.  For projects asking to fund manufactured products, you can often be one of the first to own the latest and greatest gadget — like this LED iPhone armband created in DC.

What you cannot do is actually own part of the company.  Yet.  The Securities and Exchange Commission is, however, in the process of writing rules for how small businesses can offer securities direct to the public without jumping through the myriad of expensive hoops and paperwork burdens required of public companies and for IPOs.  Funding platforms like Indiegogo and Kickstarter want to be a conduit for those investments, so in the future you may be able to own your own unique piece of Capitol Hill.



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