Companies seeking to expand or launch new projects have a tough time of it, particularly green-based companies. Sierra Club Green Home explores why more green entrepreneurs are turning to crowdfunding as a viable financial option to help them grow.
Crowdfunding is a financial vehicle that helps entrepreneurs, start-ups, small businesses, and even musicians and artists to raise much needed funds by pitching their ideas directly to the general public via the internet and asking for pledges. It lets them bypass the lengthy, often grueling process of seeking venture capitalists or “angels.” However, a crowdfunding campaign offers no guarantees. Success or failure rests on the efforts of the entrepreneur and the response from the public.
Many crowdfunding websites have gained prominence over the past few years. Perhaps the best known are Kickstarter and Indiegogo. Launched in 2009, Kickstarter has seen over $250 million pledged to more than 24,000 creative projects backed by two million people. Projects encompass a panorama of topics and industries, covering innovative products, books, movies, technology, and much more.
Kickstarter has helped to successfully fund green business campaigns including theWindowFarms Project—a vertical hydroponic “farm” that allows urban folks to grow fresh veggies year round in almost any window—and ANI (As Nature Intended) shoes—stylish, vegan, eco-friendly “Barefoot” shoes made with 100% organic canvas and recycled packaging. Examples of active green Kickstarter campaigns include the following projects:
- Lean, Mean & Green—an exciting documentary focused on what residents of urban areas are doing to turn urban blight into something extraordinary and useful to their communities. This campaign closes December 9th, 2012.
- Urban Air—a project to convert conventional advertising billboards in Los Angeles into above-ground living bamboo gardens. The campaign ends December 11th, 2012.
Project organizers run everything on Kickstarter campaigns. They build their web page; shoot and upload pictures and video clips; set their minimum funding goal timelines (the “by when” the project must be funded or end); and come up with tiered incentives to entice donor participation. From there, it’s all about promotion—casting as wide a net as possible to publicize their campaigns, create excitement, and elicit oodles of donations to turn the dream campaign into reality.
An added benefit is Kickstarter’s focus on building a community around its projects/campaigns. Running a campaign is a way to connect with potential customers, build word-of-mouth, and generate enthusiasm about a forthcoming project.
Yanna Sharifi, founder of ANI, was surprised at the number of people contacting ANI to sell the shoes in their stores after learning about ANI on Kickstarter. “I think being eco-friendly is a plus [with crowdfunding] and definitely helps,” said Sharifi.
Like Kickstarter, Indiegogo provides a platform where passionate people with creative projects can tell their story to the public and inspire others to get involved. While Kickstarter campaign fundraising is “all or nothing,” Indiegogo takes a different approach. It offers two funding options: Flexible Funding and Fixed Funding.