News Column

Kickstarter Jump-starts Entrepreneurs' Dreams

Aug. 20, 2012

Walter Pacheco, Orlando Sentinel

Two Orlando businessmen are working on creating a unique way to teach beginners how to build apps -- the hottest skill in the tech industry -- but it's a pricey venture.

So Gregg Pollack and Eric Allam turned, a site that lets people with creative ideas solicit cash from ordinary people, known as "crowdfunding," to finance their course. So far they've collected more than $110,000 in pledges in fewer than 30 days, more than double their goal.

Orlando leads the state with more than 173 Kickstarter projects, including a Marvel comic artist looking to publish a book; a crew wanting to film a zombie commercial; and dozens of singers and bands eager to record an album.

Kickstarter and similar websites, including RocketHub and Indiegogo, offer budding entrepreneurs and others interested in launching a creative product a chance to drum up funding without a venture capitalist or taking out a bank loan.

"It offers a unique way to bring projects to life," said Kickstarter spokesman Justin Kazmark. "Funding oftentimes is the most difficult part of getting a project off the ground. You can experiment without risk. If no one decides to back your project, you lose nothing."

Kazmark didn't know why Orlando has so many projects, saying only that perhaps because "many of the projects previously launched in Orlando were successful," it raised awareness.

In the case of Pollack and Allam, they needed $50,000 to start development of Try iOS, a Web-based class that teaches app development using an iPhone simulator, how-to video tutorials and rewards similar to those found on mobile games.

"We felt confident that we could use Kickstarter to fund this project because we have a lot of traction and people that respect our work," said 35-year-old Pollack, founder of Envy Labs, an Orlando-based Web-app-development company.

Since it launched in 2009, Kickstarter has raised more than $274 million for more than 28,000 projects. Its biggest crowdfunding success story is gaming startup Ouya Inc., which sought $950,000 for developing a new gaming console but instead raised $8.6 million by Aug. 8.

The website charges nothing to launch a campaign, but it does take a 5 percent cut from the funds raised by successful projects. Thus it collected $425,000 from Ouya. Amazon, which processes the payments, takes a 3 percent to 5 percent scoop, too.

If the project doesn't meet its goal in the specified time, the investors and creators are not charged.

The project creators produce a video to promote their product and offer incentives, free products or services to their lay investors as a way to generate more pledges. As for Try iOS, they paid a crew from Full Sail University $500 to help them film the video.

In the near future, a new law will allow those who invest to have a stake in the company itself.

Those who pledged $25 will get permanent access to the course once it launches. Higher monetary pledges receive special patches, T-shirts or a one-on-one session with a developer, among other bonuses.

Because these are considered sales, some project creators might owe taxes on the funds raised on Kickstarter.

But not all Kickstarter projects are expensive to finance, and many also never meet their goal.

Jannette Matos of Orlando's Baldwin Park, is asking for $5,000 to build 20 to 25 wooden boxes around Orlando as part of the Little Free Library movement. Matos said people can drop books that made a difference in their lives into the box and exchange them for free. Donors are encouraged to include a note in the book explaining why it's special to them.

Though she has raised just more than $1,100 from 21 backers and has 14 days to meet her deadline, she's not sour about the experience with crowdfunding.

"Even if I don't get the funding, this has been successful in many ways," said the 47-year-old Spanish-language interpreter. "I've met so many amazing people through this Kickstarter project, and it's opened a lot of doors for me."

Source: (c)2012 The Orlando Sentinel (Orlando, Fla.) Distributed by MCT Information Services

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