CROWDFUNDING is one of those simple ideas that became an online phenomenon, opening a whole new realm of financial possibilities for start-up businesses.
In Australia, creatives and entrepreneurs are using crowdfunding online platforms such as Pozible or Kickstarter to raise capital for projects, from album releases and films to independent magazine launches.
Project creators can encourage supporters to pledge donations with rewards, and if the target isn’t reached, no money will change hands – and with Pozible distributing just under $1 million in pledges to projects each month, it’s clearly an attractive model.
“Projects pitching on Pozible must set a target to deliver the project and the rewards offered – the ‘all-or-nothing’ model, which we felt was more responsible from the perspective of the supporter,” says director and co-founder Alan Crabbe.
“It’s about helping to realise an idea and getting something in return for making it possible, and we’re seeing about 60 per cent of projects succeed, which is higher than other crowd funding platforms.
“The difference with Pozible is we try and prepare people before they launch their campaign, because one of the key things to reaching target is a well planned launch. What we’re seeing now too is that people are very savvy with marketing their project, and that can really build momentum.”
He said although the base concept was to raise capital for a specific project, which would otherwise be sourced from grants or loans, more importantly it was a tool for raising awareness and building an audience or market.
“One of the hardest parts of getting a project or small business off the ground is getting a customer base, and with crowdfunding you’re building an audience and generating word of mouth,’’ Mr Crabbe said.
“Two recent Pozible campaigns which did well were Mr Black (cold drip coffee liqueur) and Four Pillars (rare dry gin), and both launched a campaign with the aim of getting their product out into the market.
“Four Pillars ‘sold out’ of their first batch of product within four days and within four months, the Mr Black team had gone from pitching an idea to selling pallets of product and having distributors to sell it.”
Maintaining a buzz about their business was the winning factor for Dahlia Ishak and Ray Turner. The couple were subletting a building in Fortitude Valley to run the Rabbit Hole, a creative enterprise housing a cafe and co-working studio spaces, but it was scheduled for re-development.
“We were limited at the old building with our space, so this was a good chance for us to salute what we’ve done and appreciate it but then take it to the next step and see what else is possible and open it up,” Ms Ishak said.
The Rabbit Hole is scheduled to reopen in March (the couple are currently hunting for the perfect location) and will include a bar and restaurant, private boardroom, shared and private studios and a pop-up shop.
Ms Ishak said while their target was to reach $55,000 to make an offer and pay for a new building space, the most important part of the campaign was making the Brisbane community aware of their new venture.
“For us, it’s more about telling our story and making people highly aware of what we are doing, and ‘collecting’ those people who are supporting us,’’ she said.
“It’s not the money, it’s the connection and the actual backing, the collection of people standing behind the project. It’s awesome, it gives you that push to keep going.”