Money Matters: Crowdfunding casts a wider net through the Internet
From expanding a business to raising money for a medical procedure, the Internet is making it easier for "crowdfunding," when people ask friends, family and sometimes complete strangers to pitch in some bucks. YNN's Tara Lynn Wagner filed the following report.
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When Michelle Cruz needed money to expand the East Harlem Cafe, getting a loan wasn't easy or inexpensive.
"I wanted to be creative about raising funds without packing on more debt," says Cruz.
Rather than seek outside sources, she looked to her loyal customers. One told her about Indiegogo.com, a crowdfunding website that allows anyone to set up a campaign for any reason. Cruz set a goal of $10,000 and raised it in just 30 days.
"We put the word out that this is our initiative, this is what we're doing and the community took a hold of it and just ran with it," says Cruz. "I'm still overwhelmed."
There is a fee involved for those looking to fundraise. Indiegogo collects anywhere for 4 to 9 percent, depending on the payment plan you choose and whether or not your reach your goal.
Indiegogo co-founder and CEO Slava Rubin says there are a number of factors that go into running a successful campaign.
"You need to have a good pitch, you need to be proactive and you need to find an audience that cares," says Rubin.
Even if you are not a coffee shop, it doesn't hurt to offer a few perks.
"Campaigns that hit their target, over 93 percent of them will offer perks in return. That can be an actual cupcake, maybe your name on a wall," says Rubin.
Crowdfunding is getting to be a crowded field, with dozens of websites like Kickstarter and Rockethub offering similar fundraising opportunities. But the idea dates back long before the Internet, to Joseph Pulitzer, who used newspaper editorials to call on Americans to help finance Lady Liberty's pedestal, and millions chipped in.
"And the cool thing is that it was 83 cents on average," says Rubin.
The average Indiegogo contribution is about $70 and that adds up quickly. A campaign to turn noted inventor Nicola Tesla's final lab into a museum recently crossed the million-dollar mark.
Then there's bus monitor Karen Klein, who was filmed being bullied by middle school students in upstate New York. After seeing the clip, a good samaritan decided to raise $5,000 to send her on vacation.
"And before you know it, it went viral and they raised over $700,000," says Rubin.