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Crowd funding websites help people tell the world about their business or personal projects that need funding. If someone likes the project, they can pledge money through the website to help the idea become a reality. An Ozarks-based crowd funding website, CrowdIt, is planned to launch in just under two months—and it promises to offer more than just a means of funding. KSMU’s Rebekah Clark has more.
CrowdIt is one of the new start-up companies housed in Missouri State University’s IDEA Commons eFactory building that officially opened its doors a few weeks ago. The small business incubator helps provide resources for entrepreneurs to launch their own companies, like the CEO and founder of CrowdIt, Jason Graf.
“We took a tour of Jordan Valley Innovation Center, and while we were there, Allen Kunkel told us about the eFactory as a part of IDEA Commons. Being a start-up ourselves, and the eFactory being a small business incubator, which is really what our site is trying to accomplish in a virtual manner—being a virtual incubator for small business—it was a perfect fit.”
Just a little over a year before, Graf stumbled upon the use of crowd funding for the first time, after watching a program on TV.
“I stumbled upon crowd funding after watching a Rock City segment on a gentlemen that had produced a watch band that you pop an IPod Nano into and it turns your IPod Nano into a watch. He needed $50,000 to manufacture this band and get it to the public, or get it to market. He had a prototype, he took it to Apple Inc., and they kind of laughed him out of the room. So he posted that project on Kickstarter…”
…Which is one of the top crowd funding websites in the world. Instead of just making his goal of $50,000, this gentleman made $973,000 by the end of his designated timeline on the site--around 75 days. Graf says the new concept amazed him. He and a few other business partners started researching the industry and the Entrepreneur’s Right to Capital Act, which has already been passed by the House and is still awaiting approval from the Senate.
Right now, federal and state security laws prohibit startup operations, like the ones that would be promoted on CrowdIt, from offering equity to their investors, or in this case, donors on the site. If the legislation passes, some of those restrictions would lessen. Graf says he hopes to offer not only funding and networking opportunities through his site, but also the chance for people to gain equity through stock or ownership in exchange for donations.
Graf says CrowdIt is different from other larger crowd funding hubs.
“All you can really do on the other sites is go in and contribute dollars. We believe, and really I think we know, that the crowd wants to offer more than just dollars. We also know that the number one reason a business fails isn’t capital. Capital is actually number two. The number one reason is experience. Our users can interact with each other and network and mentor and collaborate.”
He compared it to LinkedIn, a social media outlet that allows members to offer professional advice and collaboration with each other. Graf says he would like to recreate that interactive environment on CrowdIt to help improve the chances of project success.
Graf says he hopes to focus on technology and create jobs for users.
“There’s some very good companies in town—Jack Henry, Health MEDX—that have set up that technology foundation. We’re hoping to bring more of that to Springfield and to Missouri. And of course, the creation of jobs; every one of these projects that are on our site has the potential to create jobs if they’re successful. Small business makes up ninety percent of the job market.”
If the user hits his or her financial goal in a specific amount of time, they get to keep the funds they’ve raised. A small percentage of the proceeds then go to the CrowdIt Company. However, operations and user membership to the site are free.
The site is scheduled to launch June 4. Already, Graff says he has over 200 projects committed to launch on the site when it’s up and running.
For KSMU News, I’m Rebekah Clark.