The most successful crowdfunding campaigns to-date include an e-paper watch, the Coolest Cooler, a travel jacket with 15 features, and the Flow Hive, which collects honey directly from your beehive.
Cool products, to be sure. We think coworking is also cool, but can crowdfunding be used for a coworking space?
The short answer is yes. Ironfire, a coworking community and planned coworking space in Long Beach, California, is currently running a crowdfunding campaign on Kickstarter.
The longer answer is that you have to do it right.
Success in New York City
In 2010, Tony Bacigalupo, founder of New Work Cities, surpassed his Kickstarter crowdfunding goal of $15,000 to create a coworking space in New York City—a space he described at the time as a “self-sustaining local community center…that will be open to startups, hackers, freelancers, students, artists and those who can work anywhere to collaborate, socialize, teach, learn, play and work.”
Bacigalupo had signed a lease on a space and launched the campaign to help pay for construction and outfitting costs. At the close of the campaign, Bacigalupo and his team had raised $17,911.
“If you do the homework and build a strong following, crowdfunding can be an amazing opportunity to capitalize, literally, on your organizing efforts,” Bacigalupo says. “If you just throw a campaign up there without getting people excited and onboard first, you’re likely to end up wasting a lot of time.”
Closing the Gap
Jerome Chang, founder of Blankspaces in Los Angeles, had a different experience in 2013 when he ran a crowdfunding campaign to open his third location. He had some of the funding for the new space, but needed to “close the gap.”
Chang chose a new crowdfunding platform because he knew the owners. He had what he describes as a decent video and decent incentives, but the campaign “went nowhere.”
“People aren’t used to crowdfunding coworking spaces,” he says.
In Chang’s case, however, there was a silver lining. A member of Blankspaces saw the campaign and invested in the company with significantly more than Chang was asking for in his crowdfunding campaign.
He compares the experience to what happens on the television show Shark Tank. Companies use the show as a way to market their product to millions of viewers—not simply to secure an investment from one of the sharks. Chang points out that Ring, the company that provides home security products, turned his Shark Tank “failure” into a $28 million investment from Richard Branson. The same logic proved to be true for Chang’s crowdfunding campaign.
Chang’s failed crowdfunding experience became a valuable resource for Jenny Poon, founder of CO+HOOTS, an award-winning coworking space in Phoenix, Arizona. When the rent at her original CO+HOOTS location was going to double, Poon and her team decided to move. They found a building they liked, but the owner wanted to sell the building, not lease it.
“Never in [their] wildest dreams” had they considered purchasing a building Poon explains, but they did some research and found that it was a great revenue model for them. They talked to a banker who helped them navigate the process of purchasing the building.
At the time, CO+HOOTS had already been around for seven years and had a proven business model. However, the bank loan they were offered had a higher interest rate than what they had projected and they needed $50,000 to make up the difference. They turned to crowdfunding and spoke with Chang about what he did with his campaign, what went wrong, and what he would have done differently.
CO+HOOTS ran a successful campaign, coming in several thousand dollars over the crowdfunding goal. With a background in design, marketing and communications and a husband who is a marketer, Poon already had a head start that Chang admits he lacked. She was able to create a professional marketing campaign around the CO+HOOTS crowdfunder.
“The marketing part could take people months to figure out,” Poon says, “but we’d already done it for hundreds of clients.”
Other factors contributing to the success of the CO+HOOTS campaign include:
- One of the CO+HOOTS members is a crowdfunding expert who gave them advice and helped oversee the project for a percentage of what they made
- They had a built-in team working on the campaign, including a social media professional on staff and a social media-savvy community manager
- They had strong community relations they had built from years of supporting other businesses, city officials, nonprofits and community organizations. “We are committed to our community,” Poon says, explaining that their commitment extends to the entire Phoenix community, not just her coworking community.
Poon offers the following tips for people considering crowdfunding a coworking space:
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- Frame the campaign as something that extends into the larger community
- Partner with local artists, designers and photographers on the incentives. This way, campaign backers get a cool piece of art from a local talent, and the creatives get their work promoted to a larger circle
- Create incentives that people want: t-shirts, water bottles, bags, art, posters
- Purchase incentives you can use for future promotion if you don’t use them all during the crowdfunding campaign
- Don’t underprice valuable incentives. Poon and her team promised to make thank you videos for everyone who donated at the $250 level. They did “a ton” of videos and eventually called it quits. No one who donated at that price was upset—the incentive wasn’t why they gave at that incentive tier—they just wanted to donate. (Note: Their crowdfunding expert had warned them not to do the videos.)
- Crowdfund outside of your member community. Find people who are interested in supporting the space as a community resource. Target organizations interested in being innovative and in supporting new businesses. Poon and her team asked a lot of corporations and people who had attended events at CO+HOOTS.
- Have a plan for the first week, the second week, the third week, etc. Assign tasks for the different aspects of the campaign. This should all be laid out before the campaign launches.
- Do a pre-launch. Before you publicly announce the campaign, launch it to friends and family and have them donate to it. Email people who you know will give to the campaign. This way, by the time you launch to the public, the campaign already has momentum and people are more likely to contribute.
“If it’s really early on and the campaign is already halfway there,” says Poon, “people want to be part of it.”
Don’t Start From Scratch
Bacigalupo offers the following tips from his experience funding New Work City, which was the first dedicated coworking space in New York City.
0. Don’t start from scratch.
The biggest reason for our success was the years of community building we did before launching the project. In many ways, the success of the Kickstarter was validation for the work we had done to that point, more than a successful campaign unto itself. As such, I have little experience mounting a successful Kickstarter project without the aid of a dedicated community.
1. Be extra cautious offering any prizes that don’t scale well.
Especially at the low levels, you don’t want to commit to giving away things that increase your labor as more people pledge. It’s a scary thing. Ideally, you should try to offer things that cost little or nothing and can easily be reproduced and distributed in unlimited quantities. Digital things and soft services are obviously great.
2. Only offer things that cost a tiny fraction of what people pledge, if anything.
It doesn’t make sense to offer stickers, for example, to everyone who pledges $1. It might make sense at $10.
3. Be ready to wait forever for payment…and not get as much as you thought.
Receiving payment once the campaign is over takes weeks. Kickstarter takes its cut, but you will also get some declined payments from people who pledged but then either rescinded or something went wrong with their credit card. Set expectations accordingly.
4. Your best times will be the beginning and end.
Prepare to make big pushes accordingly, and brainstorm creative ways to maintain some momentum during the middle phases.
5. Send regular updates to your pledgers.
At least once per week, let them know how things are going. These people can be your evangelists and, if properly motivated, are often in a position to easily increase their pledge amounts. People love getting updates.
6. Line up some ringers.
If you have a close personal friend who wants to pledge a large dollar amount to you (say, $500 or $1000), have them hold off until you know whether they really need to boost the Kickstarter campaign. Ideally, they could circumvent Kickstarter and give you the money directly—but if you need them to get the campaign funded, they can be at the ready.
7. Look at other successful campaigns.
I learned a ton by finding other campaigns that were similar to mine, though I couldn’t count on any of them for a comprehensive strategy.
Have you crowdfunded a coworking space or project? What was your experience?