Bullish: Fund Your New Business (Or Get Started Investing in Startups), Part II

Jennifer Dziura writes Bullish, a career column, for The Grindstone on Fridays and Bullish Life, a life coaching column, for our sister site TheGloss on Tuesdays.

Last week’s column, Bullish: Fund Your Business Or Get Started Investing In Startups, Part I, covered angel investing, microinvesting, and the evergreen topic of what being a lady has to do with it.

This week, we’ll discuss more ways to fund your startup or small business, and more ways that you can invest without being a millionaire (or even a tens-of-thousands-aire).

Crowdfunding

I think some people are a little too in love with the idea of crowd-verbing things (crowdsourcing, crowdfunding) because it allows them to abdicate responsibility for doing the hard work of sitting alone in a room and thinking, and then being the lone person with a vision who goes out and does things. I am suspicious of the wisdom of crowds. History of full of crowdlynchings and crowdwitchburnings.

In any case, crowds are pretty good at funding one-off artsy projects in exchange for gifts. If your business fits into this model, crowdfunding might work for you.

On the patron side, Kickstarter is the place to be a budding Medici, using small or large amounts of money to fund mostly creative projects – generally in exchange for “rewards,” not a return on investment. Support the creation of new folk-rock album with $10, you’ll probably get a free download; support it with $5,000, and the band will probably come perform at your house. From the site:

“Kickstarter is a new form of commerce and patronage. In our world, the best way to inspire support is to offer people great rewards. Everyone loves limited editions, one-of-a-kinds, and fun experiences (parties, screenings, balloon rides!). Spend some time brainstorming your rewards and people will respond. No one needs another coffee mug.”

Personally, I have very little interest in financially contributing to other people’s self-expression as expressed through children’s books, documentaries, and hand-knitted socks, but a small portion of the site is dedicated to projects like this – a new iPhone dock that the founders campaigned to raise $75,000 for, and instead raised $715,873 for, as of today.

A quick look at the project page reveals that the founders had already developed a working product (hence all the professional photos of said product) before posting on Kickstarter. Presumably, the cash was to physically produce the product. It’s not entirely clear what the company will do with its excess $640,000 – either make more iPod docks, or invent more cool shit. Either way, not only are the backers happy, most of them are receiving iPod docks in the mail – that is, Kickstarter is a great way to make your first sales for a new product.

In Bullish: Launching Your Empire While Your Youthful Mojo Is Still Sky-High, we heard from reader “Christine de Pizan,” who was hesitant about starting her fashion line, even though she had substantial savings.

A fashion line – something presumably one would have prototypes and attractive photos of – would be especially well-suited to a Kickstarter launch. Here is someone doing just that (gorgeous photos!), and here is a clothing line founded by a paralyzed Iraq War veteran.

My best friend Molly Crabapple raised about $25,000 on Kickstarter for an art project in which she locked herself in a hotel room for the week, covered the walls with paper, covered the paper with drawings, livestreamed the whole thing, held fabulous parties, and ultimately cut the drawings into pieces and mailed them to backers.

“A little less than half” of projects are successfully funded, and the average pledge is $71.

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