JACKSONVILLE -- Day by day, the clock is ticking on Jacksonville residents Casey Ayers and Patrick Duffy.
They are in the midst of a fundraising campaign on Kickstarter.com to collect $15,000 for the launch of Trubador, an invention they designed for holding the iPad so people can have both hands free while using the device. The duo are one-fourth of the way toward the goal. They have three weeks left to make it.
Like others who have turned to “crowdfunding” sites like Kickstarter, the campaign by Ayers and Duffy is based on gathering small contributions -- most fall in the $40 range -- and lots of them.
“Sometimes a few days can go between backers, so it can get nerve-racking,” Ayers said.
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But one way or another, the Kickstarter campaign will show them whether the Trubador has a realistic shot of being marketable.
“It’s kind of the best market research you can do on a shoestring budget,” Ayers said,
Ayers, a 23-year-old University of North Florida graduate, and Duffy, a 21-year-old UNF electrical engineering student, are among the budding entrepreneurs trying to tap crowdfunding for their ventures.
An ever-growing array of sites like Kickstarter.com, Indiegogo.com, and Peerbackers.com offer forums for people to roll out ideas and seek financing. Though most projects involve the arts -- films, music, painting, writing, performing -- entrepreneurs can also pitch ideas through crowdfunding. A bank might not be ready to extend financing, but a batch of small contributions can add up.
The premise at all the sites is people post their ideas, set a fundraising goal and deadline, and then use social media such as Facebook and Twitter to call attention to their proposals. To entice support, the campaigns offer rewards such as samples of the products. The larger the contribution, the more valuable the reward will be. Beyond that, backers can take satisfaction in helping someone, but they don’t get an ownership stake or any financial benefit if the product takes off.
The crowdfunding websites do not charge anything up front for the campaigns. They make their money by taking a cut of the money that is raised.
Kickstarter is an all-or-nothing proposition. It will only release the money if pledges by contributors beat the fundraising goal. If the campaign falls short, the contributors do not pay anything. For campaigns that hit their goals, Kickstarter takes 5 percent of what’s contributed.
Indiegogo.com charges 4 percent if the goal is achieved. Indiegogo will release the money to campaigns that do not achieve their goals, but in that case, Indiegogo takes 9 percent of the amount raised.
Peerbackers charges a 5 percent fee regardless of whether the project hits the fundraising goal.
Another cost is the fees charged by companies that handle the collection and distribution of money raised by campaigns. For instance, Kickstarter uses Amazon, which applies a 3 to 5 percent fee for processing credit card payments.
Outside the box
Growers Alliance Coffee Co. of Jacksonville turned to Kickstarter in hopes of raising $25,000 to help buy its own coffee roasting machine and introduce a new blend of coffee and tea containing extracts from “medicinal reishi mushrooms.”
The Jacksonville-based company makes about 500 bags of coffee a month that is sold at various supermarkets and farmers markets, but the coffee is roasted by a business in Sarasota, an expense that cuts into the bottom line.
The 3-year-old business tried to get financing at six banks but even the Small Business Administration loan program couldn’t help, said company owner Martin Kabaki. He and his wife decided to “start thinking outside the box” and heard about Kickstarter.
“We said ‘Wow, this is the way for people to find out about businesses like ours.’”
He said it caught his eye when a Kickstarter campaign for a product that regulates the heat of coffee in a cup raised almost $307,000 from 4,818 backers.
Growers Alliance Coffee is seeking donations ranging from $1 to more than $10,000. Most of the rewards are the company’s coffee, but the maximum contribution will get a trip to Kenya for a guided tour by Kabaki and his wife.
Girls Gone Green
Northeast Florida artists, musicians, filmmakers and nonprofit groups also have used crowdfunding for their ventures. Last year, local nonprofit Girls Gone Green used Kickstarter to raise $3,505 from 58 backers for the inaugural Northeast Florida Vegetarian Festival.
Julie Watkins, founder of Girls Gone Green, said the 5 percent cut taken by Kickstarter plus the fees for the Amazon payment system caused the group to consider fundraising through its own website and contacts.
“We realized Kickstarter had a longer reach than we did,” she said. “We got a lot of donations from people who would not have donated otherwise. It offset the cost.”
The campaign came down to the wire, topping the goal on the final day. By financing the first festival in 2010, organizers now have a proven track record and can more easily raise money for this year’s festival without crowdfunding.
Ayers and Duffy also thought about creating their own website to solicit support. But they said that would have required upfront costs and Kickstarter already has the technology in place.
“It’s almost a risk-free way to get your idea out there and market a product,” Duffy said.
The inspiration for the Trubador came from various iPad apps for playing musical instruments. The Trubador uses straps to hold an iPad at chest level so someone has both hands free to play the apps. Ayers said the Trubabor also would be useful to anyone who wants both hands free while using other functions of the iPad.
Of the money pledged so far, family and friends account for one-third of the backers. First Coast News and Time.com have featured stories about the Trubador, giving the developers a wider audience.
The money they raise will pay for an initial round of making several hundred Trubadors. If the product catches on, they’d like to manufacture the Trubadors locally.
“It’s always nice to have the Made in USA stamp,” Duffy said. “It would be even better to have that Made in Duval stamp.”