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How we raised thousands via crowdfunding

By Oliver Milman
Monday, 01 October 2012

feature-crowdfund-thumbLike increasing numbers of budding Australian entrepreneurs, Kylie Gusset has turned to crowdfunding in order to get her enterprise off the ground.

 

Gusset’s mission was simple – to purchase and process a tonne of quality Tasmanian wool that could then be turned into a variety of products.

 

Faced with a price tag of around $55,000 to turn a tonne of wool into yarn, Gusset turned to crowdfunding platform Pozible with the aim of raising $33,000.

 

She ended up receiving pledges worth more than $38,000 – the largest single amount raised on Pozible in 2011.

 

Gusset was successful in crowdfunding – which asks the public for money to back a certain project or start-up in return for products or offers – by pitching her idea as a great way to support small businesses in Australia.

 

Rewards for different levels of monetary support ranged from a regular email newsletter on the wool industry to bundles of wool sent out domestically and overseas.

 

“There were plenty of learnings in the whole process, such as estimating when the rewards will be available,” Gusset explains.

 

“The expectation is three months, but in reality, the average is eight months on Kickstarter (giant US crowdfunding platform).”

 

“People are prepared for this kind of thing. There are so many hurdles you face, such as creating your own mailing list.”

 

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Crowdfunding looks to burst out of comparative obscurity in Australia, with corporate regulator ASIC taking a closer look at how the industry is regulated.

 

It’s hoped by some in the industry that ASIC will loosen the regulations to allow start-ups to use crowdfunding in a more formalised setting, in order to raise money for their business in return for equity.

 

Until then, new market entrants, in a variety of niches, are offering options to innovators to have projects backed. But how can you best deploy crowdfunding?

 

To help others grapple with the challenges of the rapidly evolving crowdfunding scene in Australia, Gusset has organised an event called Crowdfund Your Startup Thousands, to be held in the Melbourne suburb of Richmond on October 11.

 

The speakers at the event, who have collectively raised $135,000 using Kickstarter, Pozible and indiegogo, will be sharing their top fundraising tips at the talk.

 

StartupSmart managed to get an initial snapshot from two of the speakers – Rob Ward and Tom Dawkins.

 

Tom Dawkins

 

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Dawkins founded crowdfunding platform StartSomeGood.com, which has raised close to $500,000 for social impact projects.

 

He founded Vibewire in 2000 and opened Sydney's first co-working space, now the Vibewire Hub, in 2006.

 

Dawkins prefers to call his style of crowdfunding ‘peerfunding’ and has spoken previously on the topic, providing some valuable practical advice, such as explaining the importance of written thank you notes to supporters rather than emails or Facebook mentions.

 

Here is a longer-form version of Dawkins’ crowdfunding tips:

 

 

He also kindly answered some of StartupSmart’s questions:

 

What first convinced you of the potential of crowdfunding?

 

Seeing the impact it was having in the arts and the opportunity that was being given to creative entrepreneurs I wanted to create the same opportunity for social entrepreneurs.

 

The very first time I was invited by a friend to support their fundraiser on Kickstarter in 2009 I knew it was significant.

 

What are some of the best examples of crowdfunding you’ve seen and been involved in?

 

Some of the projects which raised money on StartSomeGood which I'm really proud of are the Do Good Bus, who raised $101,000 for a national tour; Kinyei, a social enterprise cafe in Cambodia, who raised $18,000 to expand their operations; GalliGalli, who are doing really interesting things with mapping technologies in Nepal; and Vibewire, who raised funds to offer scholarships to social entrepreneurs to use their co-working space in Sydney.

 

What was the thinking behind StartSomeGood.com? How has the venture fared so far?

 

The thinking was to provide social and ethically-motivated entrepreneurs with a fundraising platform built specifically for their needs.

 

Our site has a unique spin on crowdfunding designed for social enterprises and causes and people are responding really well to it. We're happy with our progress so far and excited to work with many more ventures over the coming months and years.

 

Do you think there are plenty of other niches in the crowdfunding sector for different types of specialist sites?

 

It'll be interesting to see how it shakes out in terms of niches.

 

Right now you have three levels – the completely generalist sites, like IndieGoGo, the broad-niche sites, like Pozible (creative), Kickstarter (creative) and us (social good) and then the tight-niche sites, like unbound for book publishing and Greenhelper for environmental projects.

 

I think when people create a unique spin and focus on a community with specific needs and interests – such as unbound with books – there's a lot of potential in niche crowdfunding sites.

 

We like where we sit: we have a clear mission to support social impact initiatives but we're very open in terms of how that impact is achieved.

 

How do you think crowdfunding is developing in Australia?

 

Crowdfunding is very strong in Australia.

 

Pozible are a leading site for creative projects and we are aiming to be the world's leading crowdfunding site for social ventures and we're very proud to be half-Australian (half our team and my co-founder are in the US).

 

Both of us are growing strongly and I think that will continue. There's a huge amount of creativity to unleash in Australia.

 

What tips would you pass onto a start-up keen to fund a project through crowdfunding?

 

Focus on cultivating your initial community of champions, who will chip in early and spread the word about your projects.

 

Early momentum is critical for success, so be ready to create this the moment you go live.

 

And be realistic – successful crowdfunding is hard work! Only do it if you are able to commit to the effort.

 

Rob Ward

 

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Using Kickstarter, Ward and a co-founder raised over $60,000 to fund production of iPhone accessories via their company Annex Products.

 

Why crowdfund?

 

We saw crowdfunding as a great way to validate our idea, raise capital without relinquishing any equity and promote our products at an early stage.

 

What tactics did you use to ensure you hit your funding target?

 

We had started spreading the word on Facebook and Twitter before we even launched our campaign.

 

This catapulted us into the popular pages straight away and made it easier for others to find our project.

 

Were you surprised by the success of the Kickstarter campaign?

 

I always believed the product would fund but the greatest success of the Kickstarter campaign has been the ongoing media attention and publicity.

 

This was a huge surprise to me.

 

What are the pros and cons of using Kickstarter as an Aussie start-up?

 

It can be hard for Aussie start-ups to get approved to use the platform but the benefits of Kickstarter's massive reach and popularity far outweigh the negatives.

 

Do you think crowdfunding suits a certain type of start-up better than others?

 

I think crowdfunding suits any start-up that allows you to give something back to your backers, be it a product, piece of art, experience or software.

 

As long as you have rewards with real value then I'd say you have a good opportunity to try crowdfunding.

 

What tips would you pass onto a start-up keen to fund a project through crowdfunding?

 

Don't hurry your project, take the time to get it right as you only have one shot at it.

 

Try to get as far down the development path as possible before launching your campaign and be willing to spend your own money upfront for prototyping and design if needed.

 

This helps tremendously once your project is successful and leads to faster delivery times.

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bryanvadas
The last week has seen the issues raised in your article really and truly underscored, with two projects being listed, aiming each to seek $1mil plus (see http://ipledg.com/l/bme-international on http://ipledg.com/). The most amitious campaigns ever undertaken in Australia should make for interesting spectator sport in the coming weeks to see if we can rival the USA in the serious funds that can be raised for small business through the pledge model of crowd funding. Having recently been invited to Canberra to engage with federal policy makers, we hope to see more startups and entrepreneurs raise funding in this wat so that we can put the pressure on the regulators to quickly follow the lead of the US and allow crowd funding to be used for investment
bryanvadas , October 01, 2012
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