Most small businesses need capital at some point, money to pay for a new machine or product or service. That, Diane Wolverton already knew.
She’d spent 17 years as the director of the Wyoming Small Business Development Center and was familiar with the struggles and battles faced by Wyoming’s rural business owners.
She also knew there had to be a way to connect those small businesses with their communities -- with the people who wanted to see them succeed.
Crowdfunding, she realized, would be a way to allow someone in a community to directly help a business or nonprofit. It would be a way for towns to galvanize, keeping businesses and services in their communities.
That’s why Wolverton and co-founder Kim Vincent started The Local Crowd, a company designed around social networking and crowdfunding. Projects go online and are pitched to anyone familiar with the business, who then pitches it to their friends, who pitches it even further. Because it’s all online, it works like a fundraiser on steroids. And donations come with perks.
With a U.S. Department of Agriculture Small Business Innovation Research grant, Laramie-based The Local Crowd teamed with Powell and Evanston to see if this crowdfunding exercise would work. Powell launched the first of its three projects Sept. 25. Evanston begins Monday.
“You have an immediate local response group that is made aware that it is important for me to help you, because in a few months maybe I will have a project,” she said. “That’s why the barn-raising metaphor is used, because we’re all helping each other be successful.”
Crowdfunding itself is not a new idea. The Statue of Liberty’s base was paid for in 1885 using crowdfunding. The publisher of a newspaper asked everyone to donate to the cause, inspiring about 125,000 people to raise $100,000, said Christine Bekes, director of Powell Economic Development Partnership.
It’s also not new online. Websites such as Kickstarter and GoFundMe have been raising money – or not raising money – for artists, musicians and charities for years. Someone sets up an account online, attaches relevant information and how much money is needed and hopes for the best.
All projects also have timelines, adding to the urgency of the fundraiser.
The Local Crowd’s proposition is a similar idea: Businesses and nonprofits will post videos, stories and pictures explaining their needs and give usually between 20 and 40 days to raise the money.
But the biggest place they differ is with incentives and the hyperlocal focus, Wolverton said.
A gas station, for example, can give $25 gift certificates to another business trying to expand. If someone donates, say, $100, he or she would receive the gift certificate and know all of the donated money is going to the specific project.
“It’s local shopping,” Wolverton said. “Someone can go on and say, ‘I wonder what’s being offered; I want that and will also support the project.’ The business offering the reward also gets the exposure to the community.”
Businesses themselves can also give perks. A brewery, for example, could offer a special growler to anyone who donates a certain amount.
“This platform offers the opportunity for people to really be community-minded and put projects together conglomerated by community,” said Leah Bruscino, director of field operations for the Wyoming Business Council. “It’s the wave of the future, using technology to reach more people. I’m pretty optimistic about it.”
The Local Crowd received its grant from the USDA in June and sent requests for proposals to communities shortly thereafter.
Wolverton initially planned to work with only one community but decided Powell and Evanston were different enough to launch their program with both.
If this phase is successful, The Local Crowd can apply for the second stage of the USDA grant in 2015.
The Powell businesses are working through the Powell Economic Development Partnership, and Evanston’s are through the town’s Main Street program.
Both will feature three businesses, each with its own needs and services.
Powell launched recently with Positive Progressions, a mental health center hoping to raise $2,000 for video equipment. The equipment will be used to record children’s play therapy, improving the center’s services, said Bekes.
A local bowling alley offered a night of bowling for four for anyone who donates $50. Another company will give stand-up paddleboard lessons for two if someone donates $100.
“If you look at the Powell project, you don’t have to claim a reward,” Bekes said. “What they do is so impactful. Their message -- it breaks your heart, and you feel fortunate to have them in your community.”
In about a week, the campaign has raised $683 from 23 donors.
Bekes will also help launch a campaign from WYOld West Brewing Company and Plaza Diane, a community center for the arts.
Projects have to be selected carefully, Bekes said.
“I always tell people, you’re not going to crowdfund a vacuum cleaner,” she said.
Evanston’s businesses will launch on Monday, featuring Moonflower Yoga, Ana's on Main Street and Serendipity Books & Antiques, said Amy Grenfell, director of administrative services for the city of Evanston.
“All of these are investing in existing businesses,” she said. “This will help them expand, grow and flourish. We’re hoping that these campaigns will be successful and that we will see these three businesses when this is over mentor and champion that next set of businesses or nonprofits or organizations do the same thing,” Grenfell said. “I hope this is contagious and creates a culture of supporting our own and championing our business owners.”
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