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Corner Store Pledge Drive: Small Businesses Look To Crowdfunding

Corner Store Pledge Drive: Small Businesses Look To Crowdfunding

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Published by Crowdsourcing.org

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Published by: Crowdsourcing.org on Jul 27, 2012
Copyright:Attribution Non-commercial

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02/03/2013

 
By:Kim Velsey,7/11
When Aaron Hillis and his
wife bought Cobble Hill’s
Video Free Brooklyn
 — 
a well-loved but somewhat dingyrelic from the age of VHS
 — 
they had rather lofty plans forthe store. They wouldtransform the outmoded spaceinto hub of film culture thatwould redefine the role of thevideo store in the time of Netflix. It would be both aboutique offering personalized service and an event space (thanksto collapsible shelves) with screenings and discussions. But likemany fledgling entrepreneurs, their plans far outpaced theirpocketbooks
 — 
Mr. Hillis figured he would need about $50,000 torevamp the space.They might have tried for a bank loan, or made do until they savedenough for the renovation, but neither option was very appealing,so the Hillises did what everyone with a creative vision and a lack of cash seems to do these days: they launched a crowdfundingcampaign.
 
 
“I don’t
 
think it’s any different or less valid than when PBS or 
NPR ask people to donate for a free tote bag, or the Kickstartercampaign in Detroit to build a life-
size statue of RoboCop,” said
Mr. Hillis, who has thus far raised about $7,000 (with two weeksto
go on a $50,000 campaign) on Indiegogo. “As long as you’retransparent about where the money is going, you’re putting
together something that people want to be a part of.
 Although it might seem counterintuitive
 —aren’t businesses
supposed to get their money by selling things?
 — 
crowdfunding hasbecome increasingly popular among entrepreneurs. Using onlineplatforms like Indiegogo, Smallknot and Lucky Ant, businesseshave raised money to cover everything from startup costs andspecial projects to operating expenses. For the business owner, theappeal is obvious: loans are hard to come by, while onlinefundraising provides access to what is essentially interest-free (andsometimes entirely free) capital, depending on the perks and in-kind services they offer in exchange
 — 
which run the gamut frombeing worth as much as the contribution to a thank you card.In a place like New York, where hyper-gentrification has driven
many popular businesses from neighborhoods, it’s clear that mom
-and-
 pop’s, even popular ones, som
etimes require more thanpatronage to stay afloat. And rather than bemoaning their demise,many people are willing to pay for the luxury of keeping them.
“I think that more and more people are recognizing that small
businesses are integral to community ide
ntity and they’re also anendangered species in many places,” said Jonathan Bowles, thedirector of the Center for an Urban Future. “I do think that many
people are going to be increasingly putting money up to ensure thattheir favorite small businesses st
ay viable.”
 
 
But what does it mean for the future of for-profits? Are smallbusinesses capitalist enterprises whose success ought to bedetermined by the free market, or cultural institutions deserving of our protection and coddling? Can they be both?
“Peop
le want to buy local and be more connected to the businesses
around them,” said Slava Rubin, the co
-founder of Indiegogo, where
small businesses have been crowdfunding since 2008. “It’s emotion andcommerce coming together.”
 Indiegogo is organized around the belief that anyone should be able to
raise money for anything, as long as they’re upfront about where themoney’s going and what they’re offering in exchange for contributions.Its many successful campaigns prove that people will “fund” or “contribute to”— 
both Indiegogo and Smallknot insist on using thelanguage of investment and gently but firmly corrected The Observerwhen we referred to such monies as donations
 — 
every endeavorimaginable.
From opening a vegan donut shop (Brooklyn’s Dun
-Well Doughnuts) to
 paying for a couple’s in
-vitro fertilization (the first crowdfunded babywas born just recently), people can be surprisingly generous. Sure, someare motivated by the perks or in-kind goods and services that mostbusinesses offer in exchange for cash (Video Free is giving awayeverything from free rentals to a private screening with comedian DavidCross), but others seem moved by little more than the spirit of generosity. Dun-Well, for example, offered a coupon for a free doughnutin exchange for a $25 contribution. It was claimed by 58 people.
In Mr. Rubin’s view, crowdfunding allows for a shift from a basic
transaction to a relationship, which is essentially the same thing asbranding.

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