Funding your center through Kickstarter – DSP 119

Crowdfunding has made so many projects possible that would otherwise not exist. It seems perfect for niche ideas, concepts that would otherwise never see the light of day, and passion projects that just need to happen. This sounds perfect for float centers, but there are some caveats.

Crowdfunding is time intensive and there’s not guarantee of success. Aside from that, there are some issues with it that complicate things for float centers that other crowdfunded projects likely won’t face. Graham and Ashkahn talk about the successes of float center crowdfunding and the not-so-successes as well.

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Transcription of this episode… (in case you prefer reading)

Graham: And the question is, “How do you feel about funding your float center through crowd funding sites, like Kickstarter?”

Ashkahn: Here’s the problem. How many people can actually come? Like you’re restricted with your float center, geographically. So that’s one thing, right?

Graham: Mm-hmm.

Ashkahn: Most of the time, when you look on Kickstarter, they don’t have that. They’re not restricted geographically, and it’s often products, and they’re usually trying to make enough money to hit like a first batch of manufacturing.

Graham: Yeah.

Ashkahn: But with these crowdfunding platforms one of the reasons I think they’ve been so successful was that you all of a sudden can reach a global audience, and have people contribute, and so you’re kind of hindered right from the get go by that. So, it’s kind of a difficult thing, is the amount of money you need to start a float center versus how much you could feasibly raise, geographically, with a Kickstarter, or some sort of crowd funding, or just … I don’t think you’re ever going to be able to make enough money from Kickstarter-

Graham: It’s difficult.

Ashkahn: -to actually fund your entire construction.

Graham: It’s difficult.

Ashkahn: It is. So, I think it could help. I think you can fund some of your construction like that.

Graham: And that’s what I was going to say, too, is that I’ve seen a lot of attempted Kickstarters, and Indiegogo’s, and crowdfunding campaigns for float centers-

Ashkahn: Yeah.

Graham: … and the most sane of those have relatively low goal amounts.

Ashkahn: Right.

Graham: And it’s only to cover a portion of their ultimate construction, or initial start-up costs.

Ashkahn: So, we’re talking, like, what I usually see things in the low tens of thousands.

Graham: I think the most that I know of anyone raising is in the tens of thousands.

Ashkahn: Uh-huh.

Graham: Like maybe around 40 to 70-

Ashkahn: Something-

Graham: … Might be like the highest.

Ashkahn: That’s the highest.

Graham: Yeah.

Ashkahn: And to build a float center-

Graham: And I only know a couple people who’ve done in that range, too. Way more common, I’ve seen Kickstarter campaigns that have raised three thousand to like-

Ashkahn: Five, ten thousand.

Graham: Yeah, exactly, maybe ten, fifteen thousand on the high end of that lower rung.

Ashkahn: They make their goals, usually, which is nice, but to open a float center, we’re talking hundreds of thousands of dollars.

Graham: Yeah.

Ashkahn: So, really, you’re not even coming close to having like this be the majority, or the real foundation of your funding and, you’re selling floats that you then won’t be making money on when you actually open.

Graham: But every bit helps.

Ashkahn: Yeah.

Graham: I almost view it as kind of similar to Groupon, in a certain way.

Ashkahn: It’s good marketing, too.

Graham: Yeah, you’re on a different platform, you’re going to be reaching customers you might not reach through another advertising venue. You’re able to presale some floats, and get people interested, and feel like they’re helping you start up. And as long as that’s your goal, then I say totally go for it. There’s not really a problem with leaving money on the table somewhere, like with grabbing it from another source.

Ashkahn: It does make people excited, too.

Graham: Yeah.

Ashkahn: Like, “There’s this float center coming, and I signed up for this thing, and I’m going to have a float when they open.” And it’s kind of their part of your story, at that point, which I think is cool for customers.

Graham: So, the downside of trying to raise money that way is that it takes a lot of effort and time to run a crowdfunding campaign.

Ashkahn: Oh, yeah.

Graham: Regardless of the site that you’re doing it through. If you talk to people who are actually trying to fund their products solely through crowdfunding, this becomes their full-time job, from a few weeks before they launch until a couple weeks after, is just managing this campaign.

Everyone I know who’s actually raised a serious amount of money, enough to fund something that’s, you know, again, in that $50,000+ kind of range, of a product they’re launching, or even getting up to hundreds of thousands of dollars, they’re working float tank construction hours on this.

Ashkahn: Yeah, yeah.

Graham: They’re working at least 12 hours a day, just like killing it, for the entire month that they’re running their campaign, in order to drive the traffic necessary, and get interest. It’s something you don’t realize if you’ve never done this before, is those sites, I mean, you could luck out and be on one of those things they love-

Ashkahn: Uh-huh.

Graham: … lists that they email out, but the chances of that are so low. So, you’re doing most of your marketing out to your audience, and you’re the one who’s garnishing all the attention and getting everyone excited, and contributing. It’s not like you launch on Kickstarter and all of a sudden they’re just sending this huge horde of people over your way. It’s like, “No, that’s still on you.” And that’s what ends up taking such a long time, is just getting people to go to the page in the first place.

Ashkahn: The other difficult thing is that you, from the time you get the money, to the time your float center is probably actually ready to float people, is also probably a decent amount of time. Construction is just always rife with delays.

Graham: Mm-hmm.

Ashkahn: So, just be super realistic, if you’re doing this, because it might be six months. If you have a location set, and everything, by the time your crowdfunding’s done, if you need this money for construction, by the time you’re actually ready to float these people, like at minimum it’s probably three or four months, and more likely could be longer than that. So, make sure people’s expectations are set correctly.

Graham: Yup, and I would say, okay, so here’s kind of like the conclusion of all of that, for some of my just concrete advice to people, which is launch this expecting to not make that much money. So, have a relatively low goal. Go into it knowing that you’re going to have to hustle in order to get the people there, contributing. So, budget aside enough time, that you’re not going to be in the midst of construction when this thing is going on, because then you’ll put some medium amount of energy into launching it, and it’ll do okay, and it’ll totally not be worth it, unless you actually invest that extra bit to push it over the edge.

Probably, with your content, double-down on stuff you’re already planning on putting on your website. So, doing sketch-ups of your space, a little interview with you as the founder, about what you want, or what your float center is all about, and don’t just design this for Indiegogo, or Kickstarter, your crowdfunding platform, but have content where it’s going to see the light of day in other areas. Social media, your website, little walk-throughs, things like that, because it’s going to take a lot of effort, and sometimes money, to even get a really good video up there, to help raise money, and they’re all about the videos, too.

Ashkahn: Uh-huh.

Graham: If you look into how to do a crowdfunding site, you definitely want a video there. So, replicate some of the content, don’t just make it one-off use, and what else?

Ashkahn: Well, so you might want to … I don’t know too much about this, but there are other platforms that are more geared towards geographic specific things, like I know Portland has its own Portland crowdfunding platform, that people look at, for specifically, like things in town. So, it might be worth looking into something that’s a little more suited for what you’re doing, than Kickstarter and Indiegogo.

The other thing that’s maybe worth considering is if things are kind of set up for you, and you know you can do this even … You’re know you’re just using this as a small part of your funding, and you’ve got your location and all that stuff, you could also just pre-sell floats yourself, to your float center, and not give a cut to any of these platforms, and just have your hustle lead there. Just lead to your website and just start pre-selling floats straight through whatever your software is to sell that. Then you don’t have to really give a cut to anybody.

The nice thing about Kickstarter is you don’t get any of the money, unless it’s fully funded, which gives people confidence to put in money, but for you, again, you’re not trying to hit some sort of like amount of money to do your first batch of fundraising.

Graham: Your goal would have to be, yeah, three hundred thousand dollars, or something, which its not going to be. So, that’ll-

Ashkahn: That logic’s not really there, in your setup, so you don’t really need that benefit of it. You might just be able to run your own pre-sale and cut out the middleman.

Graham: All right, so-

Ashkahn: Yeah. Good luck. Sorry if that wasn’t exactly what you wanted to hear.

Graham: Yeah, and yeah, again, definitely there’s no reason not to give it a whirl, and try to pull in some extra money from it, but its not going to fund your whole center.

Ashkahn: Uh-huh.

Graham: And if you do, you’ll actually be the first person I know of who did it that way.

Ashkahn: Let us know. You would be awesome.

Graham: And you’re awesome anyway.

Ashkahn: Yeah, you’re already awesome. Don’t listen to what anybody tells you.

Graham: You know, unconditionally awesome, don’t let Ashkahn sell you short. Yeah.

Ashkahn: All right. If you guys have other questions for us, hop over to floattanksolutions.com/podcast, and we will talk to all of you later.

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