Crowdfunding, the use of a funding portal to raise money for a cause or a business, is now a form of investment recognized by the US government in the form of the 2012 JOBS Act and is supported through a number of funding portals including Kickstarter, AngelList, IndieGoGo and the one with my favorite name, Kapipal (it even has a Kapipalist Manifesto). The systems are simple to use: register with the site; decide the amount to be raised, describe the cause or goal for the challenge; explain what people who donate will receive in return (a thank you note, a t-shirt, their name on a wall in the shop, etc). Once the challenge is up and running, it must be promoted by the fund-raiser or it will fail. There are no guarantees with crowdfunding (a brief look at the challenges shows how few achieve success), but there are things the fund-raiser can do to improve the chances. There is plenty of advice available now, from from bloggers like Rich Brooks or consultancy firms. Potentially one could even use crowdfunding to pay for a consultant for the crowdsourcing?
Gina Holmes and Christopher Jones did it right when they sought to raise capital for a new book store in New Haven, Conn: Monte Cristo Books (though they don’t say whether they used a consultant or their own marketing savvy). In retrospect, a book store is the perfect opportunity for crowdfunding because they depend on customer loyalty, they add value to a community, and they are social enterprises by nature. Holmes and Jones started their IndieGoGo challenge then actively promoted it by twitter, facebook and email. They raised additional funds by ebay book sales. They managed to wrangle interviews in the local news and get support from local and national politicians. They kept their supporters informed of what was happening and the progress they were making. The idea of offering books in return for higher donations seems ideal, as in effect they are early book sales as much as they are donations.
In three months they raised the $10,000 they needed to fund the loan for their book site. They also managed to build a customer-base without yet having opened a shop! They have continued to keep their facebook page up and running, and are using it to continue to build the community of customers, going so far as to ask advice from them:
Policies to be squared away before we open – Following the model of other independent bookstores for author signings, event attendees must purchase the book from Monte Cristo either that day or have a sales receipt from a prior purchase. If one cannot make the event, they can purchase the book in advance and (if the author allows) we will have the author sign it on their behalf. No outside books. Does this seem fair to you?
It seems to me that this sort of policy, of extending the life of a store on-line, is a potentially powerful way to sustain a bookstore in the 21st century. As the borders between our on-line and off-line communities continues to blur and fade, our book stores will need to act positively in both. Congratulations to Monte Cristo for managing the trick as they start out, including both communities in the life of their store. The store opens in October.