News Column

Kickstarter Proves Useful for Entrepreneurs

Sept. 30, 2012

Bethany Clough, The Fresno Bee

entrepreneurs,  businesses, kickstarter

Sept. 30--A website originally designed to get concerts, films and other artsy projects off the ground had an unintended side effect: it's helping launch local businesses.

Several local startups have turned to Kickstarter.com, a "crowdfunding" website where the public pledges money. At a time when money for new businesses is hard to find, entrepreneurs find Kickstarter an attractive option.

Food trucks and a soon-to-open craft and sewing studio in Fresno have raised thousands of dollars using the 3-year-old site.

The projects must be approved by Kickstarter staff and fit into one of 13 art-related categories, from dance to food. The projects are listed on the site for up to 30 days, with the public pledging money toward the overall dollar amount goal.

It's an all or nothing proposition: If the user doesn't meet his or her goal, no one's credit card gets charged.

Craftopia is the newest Fresno business using Kickstarter to help fund its start. Founder Kirsten Gould is hoping to raise $6,800 by today. The money will pay for six sewing machines, spinning wheels and contribute to first and last month's rent at the studio, at 2225 W. Shaw Ave. in the Piccadilly Square shopping center.

Gould, who was hammering together bookcases in a skirt on a recent morning, is prepping the studio for its Oct. 6 opening. Inspired by a stint teaching knitting and sewing to Russian youths, Gould decided to open Craftopia. The Madera native left her career in the fashion design industry in Southern California to open the studio.

A tongue-in-cheek video on the Kickstarter site features Russian nesting dolls explaining that Craftopia will teach classes in knitting, crocheting, making jewelry and other crafts. It will provide a place for crafters to work and socialize, and will also sell handmade items and craft supplies that big-box craft stores don't carry.

Gould chose Kickstarter because she hoped to avoid loans, which are nearly impossible for new businesses to get.

So far, 31 people have pledged nearly $2,000. She's got a ways to go, but she said Kickstarter campaigns typically pick up speed on the last day.

Unlike investors, people who pledge through Kickstarter don't get a stake in the company. But Kickstarter encourages rewards. Craftopia will give rewards ranging from gum ball necklaces to a free class.

"You get something in return for your pledge," she said. "It's almost like a PBS telethon."

As a backup, Gould's parents took out a personal loan through their credit union. She plans to pay the loan back.

Kickstarter doesn't track how many businesses it has helped launch.

The site's founders didn't plan on helping people start companies, said Kickstarter spokesman Justin Kazmark. Its guidelines even specifically say "starting a business" is not an appropriate goal for a project.

But a specific project -- like buying a food truck or sewing machines -- is acceptable.

Kazmark says he's not surprised that many of those projects help launch companies.

"Most creative people are entrepreneurs," he said. "A filmmaker, that is their business ... I think it's a blurry line there between artists and entrepreneurs."

About 44% of Kickstarter projects are successful, according to the New York-based company. Pledges range from $1 into the thousands, but the most common pledge is $25. The average amount entrepreneurs ask for is $6,000.

Kickstarter's growing popularity comes at a time when other sources of money for new businesses are difficult to get, said Tim Stearns, director of the Lyles Center for Innovation and Entrepreneurship at Fresno State.

Banks rarely give money to businesses that have no track record and venture capitalists are looking for a higher rate of return, he said. Kickstarter has been a "wonderful boon," for startups, though it took some people by surprise.

"I didn't quite understand why people would be putting money into something they read about on a website ... but there's all these remarkable stories coming out of Kickstarter."

Typically, entrepreneurs use "the three Fs: friends, families and fools" to fund their companies, along with credit cards, Stearns said.

Friends and family still made up the majority of people who pledged money to James Caples, who ran a Kickstarter campaign last summer to raise $20,000 to buy a food truck.

Caples' business, Benaddiction, will soon be serving its eggs Benedict sandwiches and breakfast corndogs -- sausage dipped in a pancake batter and fried -- on Fresno streets.

About 80% of the people who pledged money had a connection to Caples' family. His backstory became part of his fundraising campaign.

After working 12-hour days managing restaurants, Caples decided to launch the truck after his 3-month-old daughter didn't wake up from a nap at day care. Caylie Caples' death from sudden infant death syndrome gave him the motivation to pursue a dream and find a job that would give him more time with his family.

But Kickstarter is not easy money, Caples said.

"Kickstarter is probably the most stressful thing I've ever done," he said. It was a massive marketing effort that involved the entire family, he said. Knowing he wouldn't get any money if he didn't meet his goal was a huge stressor.

Benaddiction was short $2,000 on the last day of its campaign but one person donated enough money to put them over the top.

Kazmark, the Kickstarter spokesman, agreed that the site is not an easy way to fund a business or an arts-related project.

"It's a lot of work for creators," he said. "It takes a lot of courage to get a project out into the world."

The reporter can be reached at (559) 441-6431, bclough@fresnobee.com or @BethanyClough on Twitter.

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(c)2012 The Fresno Bee (Fresno, Calif.)

Visit The Fresno Bee (Fresno, Calif.) at www.fresnobee.com

Distributed by MCT Information Services



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