Crowdfunding a new Cowork Space

[Eric Lituchy]

I am new to the Cowork world and find this group to be an amazing resource.  Thanks in advance!

In July, I am opening a coworking space on Long Island.  I am currently working on building the community and already have 6 people onboard.  I thought of raising some capital from friends and family, but started to think that crowdfunding (Indiegogo, Plumfund, etc.) might be a better option. Capital will be used for rent, furniture, technology, etc.

My questions:

1. Does crowdfunding make sense as a way to fund a startup coworking space? My primary goal of the crowdfunding would be to get new members to invest in our community.  
2. I expect to offer membership deals(ex. Contribute $1000 and get 3-months of cowork space), "Hardship" contributions to give out-of-work individuals free coworking space and media/press mentions for larger contributions.  Any thoughts on this?  Other ideas?
3. Any potential pitfalls of going the crowdsourced route?

Any additional advice is sincerely appreciated.

Thank, Eric

Long Island Cowork (Finaly name TBD)

[Karen Ruane]

Hi Eric,

I am opening a space in August and will be launching a Kickstarter campaign on June 1. I've studied quite a few  Kickstarter campaigns for Coworking space, most of which were successful. It's true, the rewards are different because we don't have much of a product to offer. However, there's lots of room for creativity in rewards. We will offer things like short term memberships, art from members who've already signed up, advertising in our space or in our media, Swag with our logo on it... We made sure to create incentives for both local potential clients and everyone else who likes the idea of promoting the coworking industry. 

There aren't many pitfalls to trying to crowd-fund. Of course, you shouldn't abandon other avenues for raising capital, just in case you aren't successfully funded. And then there's the work of it - I've been working on this campaign for over a month and it is still not ready to launch. Doing it right is quite a commitment and takes hours and hours of work. But other than that, I'd say go for it!

Time will tell if I'd repeat that advice!

Best of Luck,

Karen

http://www.thewildsbend.com

[Tony Bacigalupo]

Eric, fellow Long Island native here! Where do you hail from?

We successfully crowdfunded New Work City's expansion in 2010 and ever since I've been largely trying to sway people against doing it until absolutely necessary. 

The reason is this: almost everyone who contributed to our campaign was an existing member of the community we'd built over the course of the previous three years.

I can't speak for everyone and every project, but I can say that if you focus first and foremost on identifying and rallying people who believe what you believe, and want what you want, you will have the support you need to be successful in whatever medium you need it. Do that groundwork and so many hard things become easy, believe me.

If you've already got some momentum behind your effort, then a crowdfunding campaign can be a really great way to galvanize that existing support into action.

I for one hope you succeed as I'd love to see more coworking happening in LI. Keep us posted!

Tony

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[Alex Hillman]

I'll echo Tony a bit here - I'm a bit of a crowd funding hipster, given that we launched Indy Hall largely from membership prepayments but long before Kickstarter and the like existed ;)

And I've seen lots of our members launch crowdfunding campaigns of different scales for their projects. Some have wildly succeeded, bringing in multiples of their goal. Others have fizzled. 

The only consistent difference was that the ones who fizzled did not get the community involved BEFORE the campaign launched. 

The network effects of Kickstarter and the like really only kick (ha!) in after some substantial momentum has been shown. Lots of research on successful campaigns shows that early results often dictate ongoing momentum of the contributions. 

And most time-windowed sales (event ticket sales, product launches, etc) follow a curve where most of the sales happen at the beginning and end of the window - the middle is sort of like a trough of sorrow where very little action takes place. 

But...if a campaign isn't passed 50% before it ventures into that trough, it's VERY hard to hit 100% later when you're trying to pull out of that trough and close the campaign. 

All of this is to say: launching a successful crowdfunding campaign is predicated on knowing who your crowd is and how you're going to reach them. 

And as for pitfalls - technically nobody is going to be physically "hurt" by a failed campaign but morale can definitely be damaged. 

I like to ask these questions: What if you weren't asking for money, but for them to show up to an event? Would you know how to get them to show up? How many would come? Who would show up (specifically)? How many of them would come to a second event?

If you're not sure how to specifically answer these questions for an event, a crowdfunding campaign is likely premature. Instead, like Tony said, focus on getting people together for ANY reason. Show them how valuable and productive and enriching it is to spend time together. 

I also did an analysis about how one of the most successful Kickstarter campaigns ever used some of the community building techniques that I practice and teach to turn it into SO much more than a way to ask for money. I'd say this Kickstarter campaign had more of a sense of community built into it than any I've ever seen. Lots of lessons here worth studying!

http://dangerouslyawesome.com/2015/02/how-tummling-created-one-of-the-biggest-kickstarter-successes-in-history/

-Alex

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[Eric Lituchy]

Karen, thanks for sharing!  Can you tell me why getting the campaign is so time-consuming?  It is wordsmithing, getting together photos, or something else?  Are you producing a video?  It seems straight forward, but I know from experience that things are usually harder than they seem.

Eric

[Eric Lituchy]

Tony - I was speaking to Robert at Bull City Coworking and he said I should be speaking to you.  Thanks for your response.

I grow up in Commack and have been in Port Washington for the last 10 years. What about yourself?

I completely understand your position on crowdfunding once you have an established cowork space, but since this is a completely new space there are fewer concerns. I have a core group of supporters and have started to put the word out about my plans.  I 100% agree that I need to grow the supports to make this a success.  I know plenty of people, and learn about more all the time, that love the idea.  Many people I know have had successful careers and either consult or run small businesses.  They are lonely working from home, or lonely and overpaying at places like Regus (nice office, but no human stimulation). I would really love to build a place where people love to come to everyday.

I'd love to grab a coffee with you and stop by NWC to see what you've built.

Eric

[Eric Lituchy]

Alex, great advice.  The only reason the space will fail is if I don't to the prep work.  So it's really up to me to do the legwork.  The crowdfunding is purely just another way to market the idea.

Besides talking to as many people as I can in this great cowork community, I am starting to organize some "meetups" to learn about what others in my local area think of the idea and what they would like to see in terms of where we select for the space and how they foresee themselves using it.

Thanks for sharing the Exploding Kittens information!  Something to think about as I plan my crowdfunding strategy.

Thanks again, Eric

http://dangerouslyawesome.com/2015/02/how-tummling-created-one-of-the-biggest-kickstarter-successes-in-history/

-Alex

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[Tony Bacigalupo]

Eric, awesome! I'm glad to hear there's a growing base of support behind what you're aiming for. Keep it rolling!

I grew up in Greenlawn and frequented the old Commack Bowl on Jericho Turnpike back in my teenage days. Small world!

I'd be glad to grab a coffee at some point; let me know next time you're in the city.

Cheers,
Tony

[Karen Ruane]

Hi Eric,

If one wanted, they could probably put together a Kickstarter campaign in an afternoon. However, the campaign, and its response, would reflect that. For us, it's been really important to present a professional and well thought-out campaign which includes professionally designed graphics, images and research to back us up. We are also producing a video with a professional videographer. In addition, we've been working on forging relationships with the community and local businesses in anticipation of being able to hit them up once our campaign begins. As part of the final touches on this campaign, I've also been sending out previews to business professionals I'm acquainted with to get feedback on the writing and tone of the campaign. So much of my time has been spent making small adjustments to language and design. 

Hope that helps! I still totally think it's worth a shot. At the very least, it'll help raise community awareness for our space and maybe bring us a few more members.

Best,

Karen

[Eric Lituchy]

Tony, I spent many Saturday's at Vet's Lanes (I believe it's the same one, as there was another one further West).  Here's a throwback. 

I'll try to get into the city next week and will let you know when.  I'm really looking forward to it.

Eric

[Eric Lituchy]

Karen, it sounds like you have it very well thought out.  Kudos!  I looked at your site and since you are going after the creative crowd I understand having a more polished campaign. I also noticed you went to the U of A.  I am also a Wildcat! Bear Down.

I already liked you on FB and will put you on my Google Alerts and can't wait to see your Kickstarter!  One more questions - I looked at Kickstarter and there isn't really a category for Coworking. Where are you going to post it?

Best of Luck! Eric

[Karen Ruane]

Hey Eric,

I saw that you "liked" us. Thanks! 

Yes, sadly there's no category for coworking or anything like it. Most of the spaces I've seen on Kickstarter have listed under the category; design. I think that's where we might put ourselves as well. 

GO CATS!

Karen

[Raghuveer Kovuru]

Great work Eric! Wish that your campaign succeeds! I had a similar question related to crowdfunding my space here in Hyderabad, India and it goes out to everyone : How important is localization of a campaign? For eg: Can I raise funds on a global platform like Kickstarter or Indiegogo (considering I collect more money in terms of exchange rate) or should I stick to a local platform which helps me connect with the emotional strings of people in India. Again, as far as my community is concerned, I am sure they would support me irrespective of the geography but the remaining crowd also matter a lot. What are you views on this?

Chee

[Eric Lituchy]

Raghuveer - I don't think the platform matters much, but maybe someone with past experience could chime in.  In my opinion, crowdfunding is going to be hyperlocal.  I do not foresee getting funding from anyone outside my local community. The main advantages I see to using crowdfunding platform is that it formalizes the funding and potentially adds word-of-mouth for the space.  I believe I could get 6-10 people commit to the space, but by crowdfunding I can offer a variety of "deals", work to secure longer commitments, and start the business with cash, which would ease some anxiety.  At the end of the day, I am looking to get the community pumped about the space so we can hit the ground running!

Eric 

[Daron Jenkins]

Ok..so..I hear this word community a lot and I ask, what does that mean? As in...having a community can mean a lot of things. It can mean creating an online social network (or forum much like this!) where you gather supporters. It can mean a mailing list where you can continually communicate and share with members. It can mean hosting regular in person meetings/mixers with actual people. Being that I have a little of all of that, wondering...what is a best strategy for building this community? I find that gathering people is easy...evangelizing them (which I think is really the key to successful crowdfunding) is hard.

Any thoughts?