CrowdIt launch results disappoint

Only six of the 156 would-be startups and existing businesses seeking funds through CrowdIt.com achieved their goals during the Springfield-based crowdfunding site’s first round of projects ending Aug. 18.

The disappointing results are chalked up to a lack of marketing.

“We continue to battle this myth that when you put a project online, the angels come down and give you money,” CrowdIt co-owner Jason Graf said. “We are pleased with those who raised and were successful, but we are not pleased with the overall numbers.”

Under CrowdIt’s business model, similar to crowdfunding veterans IndieGoGo.com and KickStarter.com, donors pledge financial support for projects they would like to see come to fruition, usually in exchange for exclusive perks.

Among the successful campaigns were a Springfield startup to distribute Ethiopian coffee to the United States and an expanding Nixa cell phone retailer.

Graf said six companies reached their fundraising goals and 11 generated money for their projects. Unlike competitors such as Kickstarter, companies promoting projects on CrowdIt can keep funds raised even if they fail to reach their goals as long as they hit a 10 percent funding threshold or custom terms esablished.

Wireless 4 Less in Nixa raised $27,870 through its campaign, nearly $3,000 above its CrowdIt goal, but owner Doug Davis said the bulk of those donations were monthly bill pre-payments from customers.

Davis estimated the store, which plans to expand its Nixa location and is currently seeking a 4,000- to 6,000-square-foot site in Springfield, might net a couple thousand dollars in contributions. The prepayment strategy was designed to secure CrowdIt’s $10,000 prize for the most money raised above the goal set during the site’s initial 75-day fundraising period.

“People paying their monthly bills were given the opportunity to pay them in advance through that website,” Davis said. “It was less about raising money for us – at least during this initial (fundraiser) – because of the contest. I would say we raised $2,000 to $3,000, but the majority of the money was money we were going to get anyway.”

Davis said he would have used the contest winnings to offset donations to Nixa youth sports as the company looks to grow its footprint and product offerings.

“Obviously, that was a one-time deal,” Davis said, adding he would consider utilizing the site in the future for specific needs. “There is never going to be another $10,000 prize.”

The top-grossing project was designed to fund a CrossFit gym in Cave Creek, Ariz. The project raised $30,400, more than double its original goal, according to its project page, plus the contest prize money.

After exceeding its $10,000 goal, Springfield-based Axumite Trading Co. secured the exclusive U.S. distribution rights of To.Mo.Ca. Coffee in Addis Ababa, Ethiopia. Axumite Trading collected $10,962, making it the first local startup to claim a successful campaign.

Co-owner Roger Wasson confirmed Axumite intends to move forward with its plans, but he declined to be interviewed for the story. In a letter emailed to donors slated to receive signed bags of coffee, T-shirts or decals for their contributions, the company wrote: “Your support is helping to create jobs in Ethiopia, Africa, and bring the world’s best coffee to the United States, which must feel pretty darn good. Seriously, we could not have done this without you and are humbled by your interest and involvement in what we are doing in Springfield, Missouri, and trying to do in Ethiopia.”

Davis said funds raised for Wireless 4 Less would help jump-start a gaming-tournament side of the business, as well as expand its Nixa operation and bring in more game and movie releases. Largely a seller of cell phone plans, the store also sells gaming and movie products.

“We have two suites on either side of us we are hoping to absorb,” Davis said, noting the additions would bring his Nixa store to 6,500 square feet from its current 4,000 square feet.

He said the company recently closed a 750-square-foot store in Springfield next to Ocean Zen on East Battlefield Road in anticipation of finding a new location in the Queen City.

Davis also said he knows Wasson, and plans to sell Axumite’s coffee when a Wireless 4 Less coffee shop is in place.

Acknowledging he’ll net little more than marketing from his efforts, Davis said he believes the only way to be successful on crowdfunding platforms is to get a customer base involved.

“People think you can put a project on a crowdfunding website and millions of people are going to be drawn to it. You have to bring your own audience,” Davis said. “A lot of people never even moved off the ground, but had they started with their own audience and gotten themselves in the running, maybe more people would have found it.”

Examples of failed projects include water-repellant garment manufacturer Infernotek, travel bottle Biggyboo and a website and app called WishGyft.

Up next for CrowdIt, Graf expects by mid-September to unveil plans to enlist the support of advisers, aka “suits,” on the website. He said suits were originally supposed to be involved in the June fundraising launch, but that part of the business has been slow to develop.

He said suits should comprise companies and individuals who would like to work with startups once they’ve raised seed capital. For example, he said a manufacturer could advise a would-be business owner with a dream of launching new manufactured goods.

Still, Graf stressed the key is in marketing the campaigns.

“The power of crowdfunding lies within your network,” he said.[[In-content Ad]]