What is crowdfunding? Learn more about this new funding mechanism and why it is so popular. Are there hidden pitfalls? Will it work for everyone? Then hear a firsthand report on the “CinemaSalem Miracle,” a crowd funding campaign that raised more than $68,000 to enable the local theatre to convert to a new digital cinema system. What were the positives, the negatives, and the lessons learned?
2. Last year at this time,
CinemaSalem faced a life and death crisis.
We needed to raise around $60,000 in a few months
to convert our 35mm movie theater
to digital projection.
3. !
Hollywood is phasing out movie distribution on film
in favor of digital distribution,
threatening hundreds of small indie theaters.
!
Because conversion to digital is very expensive,
in the next year, 3,000-4,000 movie theaters will close.
4. We had a plan.
Leveraging our strong support among local merchants,
we hoped to set up individual meetings with 120 businesspeople,
asking them to contribute $500 each.
!
All that would be required was:
-about 240 hours of our time (six weeks at 40 hours per week)
-the ability to sell, utilizing a somewhat weak value proposition
-figuring out how to collect the money
!
and a 100% success rate.
5. Then someone suggested Kickstarter.
Kickstarter = Crowdfunding
-instead of one person giving $1 million, one million people give $1
-allows many people to participate in something important
-encourages affiliation with your project/venture -- a sense of ownership
-encourages funders to come to you
-the fundraising mechanism and technology is pre-built and fully customizable
-the platform is trustworthy - we had to apply and be approved
-the process of actually making a money contribution is simple and familiar
-encourages donations by offering rewards
-wildly popular
-crowdfunding as a concept is relatively new
6. Two types of successful Kickstarter projects,
and their two very different motivations.
1) The opportunity to purchase a product, usually an innovative one,
while making its creation and manufacture possible:
motivation is rational --
affiliation with inventors combined with acquisitiveness.
2) The opportunity to make a difference in the world, creating or preserving
something important to you:
motivation is emotional --
affiliation with a cause or a community asset combined with
the opportunity to enjoy that asset.
7. Tapping an Emotional Response:
CinemaSalem Kickstarter Comments
Someone who lives and works in Harvard Square wrote, “Everyone who works
here feels like the closing of the Harvard Square AMC theater this fall was a
huge loss. We have great restaurants and shops still, and each time we’ve lost a
bookstore, it’s felt devastating, but there was always a bookstore left. Losing that
movie theater feels like we’ve lost the heart of Harvard Square.”
From Jennie Cudmore’s Facebook page, referencing her son: “OMG Tommie makes
me so proud, he watched the Save CinemaSalem video and said, ‘I'll give them my
$10.00!’ and he also said, ‘I don't mind not getting Christmas presents this year and
we can give money to CinemaSalem.’”
8. The Good News:
!
Thanks to more than 1000 Kickstarter backers,
over a 40-day period, CinemaSalem’s Kickstarter campaign raised $68,895
and Salem’s downtown movie theater successfully converted to digital projection
in March, 2013.
!
We reached our goal of $60,000 in 12 days.
9. Takeaways:
!
-gratitude and humility at being part of something amazing
-several things we learned through the process
!
Things we did right
Things we did right accidentally
Things we did wrong
Things no one tells you about crowdfunding
10. The CinemaSalem Miracle: Things We Did Right - Intentionally
-research Kickstarter (or your platform) to see what works and what doesn't
-be honest and dependable
-use humor
-state the challenge simply and dramatically
-make a video that shows your face
-connect with your conventional networks before the launch - like Salem Chamber!
-use traditional media to publicize the campaign
-make sure all your staff is intimately familiar with the campaign
-be available
-provide updates
-deliver your rewards on time (or if something comes up, explain why you can't)
-keep the rewards affordable (in value and in time)
-promise mostly flat rewards (which can be mailed in an envelope)
-pay attention to every backer
11. The CinemaSalem Miracle: Things We Did Right - Unintentionally
-share the Kickstarter draft site with some people before launch (including fundraisers)
-become viral on Facebook -- initiated by the Salem News article
-have already built equity in the community by how you conduct business
-strike a nerve with people all over the world
-keep a permanent relationship with every backer
-a successful Kickstarter campaign will improve your overall business
(our business is up about 11% this year)
12. The CinemaSalem Miracle: Things We Did Wrong
(largely inconsequential)
!
-underestimated some of the costs of digital conversion
-we may have set our target too low (target reached in 12 days)
-we could have run the campaign for 30 days instead of 40
-underestimated the amount of time fulfilling rewards
13. The CinemaSalem Miracle: Things No One Tells You about Crowdfunding
-in Kickstarter, if you contribute to your own campaign, you lose all the money committed
-be prepared for a very public referendum on you and your business
-the overhead costs are about 8-10%
-give yourself at least 2-3 weeks to build the site, get approved, and arrange the finances
-consider the tax implications
-about 15% of your backers won't end up paying
-running a Kickstarter campaign is a full-time job for awhile
!
-your business will permanently deepen its relationship with your customers and community
-you will want to stay connected with your backers
-the “ownership” of your business will be shared forever - which is a good thing
-you will feel incredible gratitude
!
