2,888 crowdsourcing and crowdfunding sites
One crowdfunding benefit that’s cited often is crowd validation. A successful campaign that generates buzz and builds an audience not only proves the concept to the entrepreneur behind the campaign, it also makes investors’ jobs easier.
After all, a company or project that has already experienced success, however small, and managed to generate income in the form of pre-sales is a safer investment than one whose concept is untested. Mark Cuban, in fact, has said that crowdfunding should be a requirement for every startup.
One recent crowdfunding campaign showed, however, that even a not-so-successful campaign can still gain enough traction to convince an investor to support a company.
That’s what happened to Oogave, a soft drinks company based in Denver. Oogave first came to be in 2005, when Esteban Anson decided to offer a quality, organic soft drink in his restaurant that didn't contain processed sugar or high fructose corn syrup. The soda, which is sweetened with agave nectar, proved popular with his patrons, and Anson decided to expand operations in 2009.
Oogave has been well-received, appearing in stores and restaurants nation-wide. This is especially impressive considering its competition – the company claims that Pepsi and Coca Cola each sell as much pop in 20 seconds as Oogave sells in a year. But, nearly four years on, the company ran into financial difficulties and decided to crowdfund in order to keep operations running.
The soda company’s co-founders launched a flexible funding campaign on Indiegogo with an ambitious goal of $500,000 (to date, only seven projects have raised over half million dollars on the crowdfunding platform).
The campaign raised only $10,000, which Oogave will receive because its founders chose the ‘keep it all’ option. But that probably won’t keep the company afloat for too long.
What could help Oogave survive, however, is a bridge loan that the company was able to secure thanks to the publicity generated by the crowdfunding campaign.
“Part of the crowdfunding campaign is just to get the word out about Oogave, and we do have some other options that are coming through as a result of the campaign,” the company’s co-founder Gannon Merrell said in an interview with a local news station.
The short-term loan, Merrell predicts, should help the company get to positive cash flow by the end of the year. In the campaign video, Merrell and Anson predict the company to become profitable in around 18-24 months.
Despite not meeting the campaign goal, Merrell is bullish on crowdfunding.
“[Crowdfunding] is definitely a laborious, time-intensive process,” Merrell said. “However, I think it’s a great opportunity to raise funds for your company and help yourself grow.”