As crowdfunding takes off, with more entrepreneurs funding their next enterprise or project by asking for money online, a new industry of crowdfunding consultants has emerged.
These are individuals and startups who advise nonprofits, musicians and artists launching a crowdfunding campaign, offering them tech expertise and guidance on promoting their campaign. Recognizing the potential of crowdfunding — which has been used to back everything from 3D printing to rap albums, commercial real estate, smart watches and documentaries — consultants have seized on this blossoming new sector.
Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people via the Internet. Popular crowdfunding platforms include Kickstarter and Indiegogo, although the sector has expanded to include many more. Crowdfunding originated with friends and family giving to a project, but today, hedge funds managers and real estate investors are also getting involved. Crowdfunding even has its own reality TV show.
One startup entering the world of crowdfunding consulting is PitchTop, a fledgling firm that is part of a New York incubator and offers Web tools to help nonprofits and artists launch successful crowdfunding campaigns. PitchTop, which is still in closed beta, uses online data, social networks and historical crowdfunding stats to determine the best ways to attract donations from friends and strangers, and gain exposure in the press and through social media.
“Planning a crowdfunding campaign is excessively difficult, especially for people who need to focus so much of their time on their craft,” said PitchTop co-founder AJ Magnuson.
Bryan Kim, who consults with musicians on their crowdfunding campaigns, said the people who most need to raise money often aren’t the most savvy at crowdfunding.
“There are a lot of artists who are thinking about (crowdfunding) and have no idea how to do it,” Kim said. “At the end of the day, the only thing they should worry about is if the song is good.”
PitchTop is testing its Web tools with the Scholastic Interest Group, or SIG, a nonprofit that helps at-risk young men and boys from San Francisco prepare for college and a career by offering them mentoring and life skills, often taught through athletics. Using PitchTop’s Web tools, SIG is aiming to raise $15,000 to buy a van. Founder Malik Wade, who started SIG to help youths avoid the troubles he endured as a young man, said the organization needs a van to transport students to college campuses in the Bay Area. Wade has only a compact car; not nearly large enough for the 12 students he wants to bring to UC Berkeley, Stanford and other colleges for tours and fairs. The young men are all from disadvantaged families and don’t have access to a car, Wade said.
“When I take them to a college it’s just to plant a seed,” Wade said. “These kids don’t get to go to stimulating environments. They normally don’t leave their neighborhoods; they don’t leave San Francisco. Visiting colleges may stimulate some ambition.”
It looks like he may get that van. With eight days remaining, SIG has raised more than $14,500, or 98 percent of its goal. Wade credits PitchTop’s Web-savvy and marketing know-how for the success.
“With the crowdfunding campaign, there was a lot of tech work that needed to be done behind the scenes,” he said.
SIG will be accepting donations through Dec. 12. Visit the crowdfunding page to make a contribution. There are lots of perks for donors — T-Shirts, gift certificates and concert tickets — that are part of PitchTop’s approach to soliciting donations.
Wade, who started SIG two years ago, runs the organization on a shoestring budget. He’s raised $80,000 through grants and private donations, and the money goes to feeding the boys and running programs and workshops. He also hopes to buy workout clothes for the young men, who play basketball and football with Wade, part of their life-skills training at SIG.
“It’s been a challenge, but I have a vision, so now it’s just a matter of securing additional resources,” Wade said.”
Completing the crowdfunding campaign would not only be a boost for SIG, but also it would help validate the emerging sector of crowdfunding consultants.
“When people come to us, they are already motivated to hit their goal, and they just need guidance or tools to allow them to do that,” Magnuson said. “This past year, we’ve seen many innovations in crowdfunding, and we expect to see more of that going forward.”