Tuesday, March 17, 2015

Crowdfunding Kickstarter for Craft Kombucha

Raising money is on top of the list of the greatest barriers of starting a business, as most polls and studies show.

The US Small Business Administration (SBA) reports that at any given time, about 27 million US businesses are in need of capital and that lack of capital is the main reason why 50% of new businesses fail within their first five-years of operation. According to Peter Diamandis and Steve Kotler in their book, BOLD, “despite the clear need, 23 percent of the companies are so daunted by the prospect of raising money that they don’t even try, while another 51 percent get turned down for their effort.”

This is now changing. Available and accessible are new sources of funding that creative and aggressive entrepreneurs can tap. The tool in tapping is Crowdfunding. It allows you “to mine the world with like-minded individuals and fast track passion project like never before.”

Diamandis and Kotler also report that in less than seven years, crowdfunding has become a significant economic engine. They say that there are now more than 700 crowdfunding sites online today. It is expected to double in a few years. “Globally, the total funds raised have followed an exponential curve from $530 million in 2009 to $1.5 billion in 2011 to $2.7 billion in 2012. By 2015, experts predict a $15 billion crowdfunding market, which with the passing of the JOBS Act and the addition of equity crowdfunding to the scene could become an incredible $300 billion marketplace over the coming years.”

The four known types of crowdfunding are Debt, Equity, Donation, and Reward or incentive. We all know about Debt – asking the crowd for a loan to be paid back with interest. We also know about Equity where investors are asked to provide cash in exchange for stocks. Donation is the digital version for charity where donors get little beyond gratitude and a receipt to claim on their taxes.

The type that interests me most is the Reward or incentive system. A model for this type of Crowdfunding is the Kickstarter method.

My first exposure to Kickstarter was from consumer electronic firms who were launching their new technology products. Some were physically displayed and demoed in the International CES held annually in Las Vegas, Nevada. Those who needed funding launched a Kickstarter campaign as they issued press releases to columnists, bloggers, and members of the media like me.

I was not surprised when I found out that my eldest daughter, Tanya decided to do a Kickstarter campaign for her kombucha business. Feeling a greater demand for her popular Craft Kombucha products, she needed funding to expand and accelerate production to meet the growing market. Of course, she is also lucky that her brother-in-law Jason Myles Goss (baby sister Traci’s husband) works for Kickstarter at the headquarters in Brooklyn, New York.

The Craft Kombucha Kickstarter campaign is still to be launched on Thursday, March 19, 2015. Although I got a copy of their video, which I uploaded on Facebook, I have not been able to get the details of the launch. The rewards or incentives for donating should be of great interest to most of the people – in the community, the loyal customers, friends, relatives and even to those who love dogs.

 Handmade wool felt tote bag with faux leather
(One of the rewards)
I know that some of the rewards are quite rare, unique, exclusive, limited, and authentic to the Craft Kombucha campaign.

The financial target is not that high. But achieving or even surpassing it would be good.  But its success would inspire other members of the community – either physical or online, to come forward with their innovative ideas knowing that there is always the Kickstarter as a tool for sourcing and mining a passionate and supportive crowd for funding.

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