For several years, independent artists, writers, and musicians have used crowdfunding platforms such as Kickstarter and IndieGoGo to raise capital for upcoming projects. Now, Jonathan Moyal’s startup, Lucky Ant, is helping small businesses get in on the act, too.
Lucky Ant, which launched in early January, features one New York City-based small-business project each week. Site visitors are encouraged to help the company meet a predetermined fundraising goal for a business-improvement project (such as a remodel or new piece of equipment), often in exchange for discounted or free services. As with other crowdfunding platforms, if the business doesn’t raise the minimum amount of capital, the deal’s off — and supporters who pledged money never spend a dime. If the business reaches or surpasses its goal, Lucky Ant takes a commission fee.
The Intuit Small Business Blog recently spoke with Moyal about how Lucky Ant aims to help small businesses raise money.
ISSB: What inspired you to start a crowdfunding platform for small businesses?
Moyal: I had always been intrigued by crowdfunding. After launching my first startup, One-Song, I started brainstorming ways to crowdfund startups. I met with a few people and found that legislation made it almost impossible to crowdfund for equity (at the time).
I learned about the importance of cash flow and how a lack of cash can stifle innovation and improvement. Small retailers that were doing really well still had cash flow issues and had to shelve projects that would help them grow.
I thought that crowdfunding as it existed made perfect sense for bands, artists, filmmakers, and innovators to host projects on sites like IndieGoGo and Kickstarter. Some businesses were already using these services to crowdfund, but it didn’t work as well: It was very difficult to “invest” in a business that was 500 miles away, because you couldn’t see the immediate benefit as a user and as a consumer.
At the same time, businesses are uniquely positioned to crowdfund because they already have products that they can use for rewards. But it only makes sense for a consumer if the business is local and the crowdfunding is also done locally. I can’t get a box of muffins from a coffee shop in Seattle if I live in New York. So, bringing the crowdfunding model to the local level and applying it strictly to small businesses was a no-brainer.
I’ve always believed in creating a business model that not only is profitable, but also actually has a good mission. I think Lucky Ant achieves that and is positioned to benefit both parties involved. Users can get the fuzzy feeling from helping out and also can get special access and perks from the businesses they love.
Tell us about the most successful project you’ve run to date and why you think it worked so well.
Our first project raised $5,020 in six days to help Bari Studio trademark the Bari brand and identity. Supporters received perks such as a special workout DVD, a free class, and even a detox meal plan, depending on their pledge levels. More than 50 people participated, and it was an absolute success.
The reason Bari was so successful is that they were able to mobilize their customer base. More than 80 percent of users were already Bari customers, and they already had an attachment to the studio and to the people who worked there. Of the other 20 percent, a lot of people cited that, aside from helping out, it was a great deal. Businesses that are crowdfunding have to be able to provide value to their funders.
What’s your growth model for the company? Do you plan to work only with businesses in New York, or will you grow to include other regions as well?
The plan is to first crash-test the model here in New York City. We are learning so much with every successful (and not-so-successful) project. We want to make sure we have this really figured out and know how to do it best before going for a rapid expansion. The hope is that in a few months we can expand nationally to many other cities and neighborhoods. The great thing about this model is that it’s about neighborhoods, so hopefully we can go farther than some hyperlocal sites that are focused on big cities and bring it to small communities as well.
Will you continue offering just one crowdfunding opportunity each week?
There was a little bit of skepticism early on about whether we could raise significant amounts in one week. Bari Studio proved that at the very least it is possible. I strongly believe that curating projects and bringing users one quality project per week will drive more user engagement than having hundreds of projects up at the same time. It also gives the businesses we feature the chance to be exposed to all our users in their neighborhood, rather than having to rely strictly on their mailing lists.
What should small-business owners do to help ensure that their crowdfunding efforts will be successful?
If you are in New York, definitely give Lucky Ant a call! In all seriousness, though, it is important to realize that good will is only half the equation. As a business owner, you know what it is that your customers want and what it is that you can offer them. If you can offer your customers a chance to help out and at the same time get a great deal, then it becomes a no-brainer for them. A great way to do that is to use your nontraditional resources. If you have a kitchen and a chef, then cooking classes are an option. If your restaurant is closed on Sundays, private parties might be an option.
Invest yourself in your crowdfunding effort through producing a high-quality video and offering unique perks. If you put the time in, your customers and potential customers will understand that you care about this project and will be more likely to want to get involved.
Finally, the internet is great, but nothing beats the personal touch. You know who your “power customers” are. Talk to them one-on-one and explain what it is that you are doing. They are the most likely to get in the game early on. Crowdfunding is also about momentum, and if you can get your favorite customers to get the ball rolling, it will be a lot easier for others to join in.