Dreaming of your own business? Raise cash quick online
Photo: Video by kgun9.com
CREATED Feb. 17, 2013 - UPDATED: Feb. 18, 2013
TUCSON (KGUN9-TV) - Are you one of those people who has a dream business project and just needs some money to get it started? Forget bank loans. Forget investors. Forget stock sales. In the 21st century, there's a modern way to raise cash and it works. But is it too good to be true?
Take the story of Mike Gura and Beau Hintz. They have a dream for downtown Tucson: turning a quiet, historic building on Broadway between Church and Stone into a specialty cafe and brewery.
9 On Your Side reporter Kevin Keen asked Gura inside the space, “What do you hope it sounds like?”
“Chatter, conversation, glasses clinking -- hopefully not breaking,” the professional data analyst answered. “People having a good time.”
“This is the patio that we're able to use,” Hintz said, showing off the space. “It's beautiful, open and a lot of space.”
To make the dream come true, Gura and Hintz needed cash but cringed at the idea of enlisting investors.
“There's not much credit in today's economy,” Gura said. “Trying to convince a bank to give you a loan for $50,000 or a $100,000 would be really hard.”
They chose another option: convincing people to donate to the cause. They turned to the website Kickstarter, made a video and asked believers in the dream to give any amount out of the goodness of their hearts.
They posted a plan online, set a fundraising goal and the site gave them a month to meet that goal. It worked. They raised $37,700, which came from 277 people. Most gave $25 to $50, according to Kickstarter.
That’s money from family, friends and strangers they won't have to pay back, which they say puts them on track for their dream to come true.
But what if -- for whatever reason -- it doesn't?
Kickstarter didn't want to be part of a recorded interview with 9 On Your Side. A spokesman explained people need to know there are risks and no guarantees when using the online service. If a proposed project doesn't even start, a refund is possible but not guaranteed.
The company says it screens the thousands of proposals but states: "Kickstarter does not investigate a creator's ability to complete their project. Backers ultimately decide the validity and worthiness of a project by whether they decide to fund it."
Keen asked Tucson BBB spokesman Nick LaFleur,”How do I determine if a project is sound?”
“The first thing you want to do is make sure you can verify who the person is behind it,” he answered. “Make sure they're a real person. What sort of track record do they have? Do they have experience in the area they're raising money for?”
Ask questions, do your homework and read the fine print, LaFleur added.
Kickstarter admits many donors complain project coordinators miss their deadlines but eventually come through.
9 On Your Side asked how many projects never become reality. The company says it does not keep track.
Read more about what Kickstarter has to say about accountability.
Hintz and Gura said they're on track for what they've named “Public Brew House and Coffee.” How fitting.
“When will you open?” Keen asked Gura.
“That's a great question. We're working on that,” he answered, adding he expected it to be a matter of months.
Kickstarter takes five percent of the money a project raises to pay for its service.
There a number of other "crowd funding" sites. Each has its own rules and standards. If you want to give, be sure to ask questions -- both of the web site and of the people proposing a project.