The Cranston Chamber of Commerce is taking a new approach to supporting small business. Using the Cranston-based Tom Lanigan Band as a test subject, the Chamber is exploring “crowdfunding” options for local businesses.
“A crowd comes together and funds projects. It can go for anything from creating watches down to what we’re doing,” said Chamber President Stephen Boyle. “People click on ‘back this project’ and you make a pledge. It’s sort of like the PBS concept.”
Boyle first heard about crowdfunding from his son, who wrote a blog on the subject. The idea piqued Boyle’s interest, and he wondered how it could help get businesses off the ground or breaking ground on new projects.
“They’re hoping it will create a lot of small business development going forward,” he said.
Crowdfunding is a way to raise capital by providing an outlet for individuals to make donations to causes and organizations, or sometimes even just ideas, they believe in. Tom Lanigan and Jenn Wettergren of the Tom Lanigan Band are putting crowdfunding to work for them, setting up a page on the crowdfunding portal Kickstarter.
They set a goal to raise $6,500, which would be used to cut an all-original album, the first for a band that is locally known for their Irish sound. Lanigan and his partner Wettergren promise that “Asta Coya” will include roughly 12 songs that fuse folk, rock and “everything in between,” according to their Kickstarter page. The album is being recorded and produced with the help of Joe Moody and Danger Multitrack Studios in Providence.
The challenge to crowdfunding is that if a start-up does not hit their goal, they get none of the money. Groups are given a finite period of time to raise the capital. The deadline to support Tom Lanigan Band is Tuesday, Jan. 8.
“The downside to Kickstarter is if you don’t hit the $6,500 – you don’t hit the goal – you don’t get the money,” Boyle said. “Tom’s checking it every two minutes because it is an all or nothing proposition.”
Or, at least he was in the beginning. The Tom Lanigan Band doesn’t have to worry about that anymore. Earlier this week, they surpassed the $6,500 mark and were at $6,633 and counting on Thursday. Sixty-four backers have donated to the project (band members are not eligible to donate to their own project), making the average donation roughly $103.
Boyle attributes some of that success to promotions. He helped the Tom Lanigan Band put together a video about their Kickstarter page and album project, and then pushed that out to friends on Facebook. Boyle also informed Chamber members of the project through their online newsletter.
“What we wanted to do was jump in with both feet and actually do a project,” he said.
As crowdfunding becomes a more popular means of raising capital, it is actually being used to fund some municipal projects. In Kansas City, residents can contribute to build new playgrounds or improve the city’s bike path (for an example, visit neighbor.ly). In the next year, crowdfunding donors will be able to not only contribute, but also take an equity position on projects thanks to a law modification in Congress.
The Tom Lanigan Band has already been successful in their pursuit of capital, and Boyle is confident that the approach could work for other Chamber members. He is looking forward to promoting the concept and working with businesses to understand how they can benefit from crowdfunding.
“If a project walks into the Chamber now, I’ll know exactly what to do,” he said. “We’re having some fun with it. It’s a different approach.”