Missouri firm hopes to change crowdfunding industry

Saturday, April 6, 2013 | 6:00 a.m. CDT; updated 4:03 p.m. CDT, Saturday, April 6, 2013

SPRINGFIELD — It's hard to talk about Jason Graf's new Springfield-based crowdfunding company without mentioning Kickstarter and Indiegogo.

They're the "800-pound gorillas" of the industry, as he puts it. But they're also, he believes, "first-generation crowdfunding platforms."

"We feel that the crowd can lend more value, or additional value, to that of just capital — in mentoring, in guidance, peer review," said Graf, the company's CEO.

Graf believes that CrowdIt, which launches June 4, will help usher in the industry's "second generation," thanks to a focus that will extend beyond funding. Graf and Chief Financial Officer Paul Freeman have varied entrepreneurial backgrounds; Chief Technology Officer Markus Pope came to the company from Springfield-based Paperwise Inc.

The three face a lot of competition.

The crowdfunding concept allows individuals to contribute money online to reach a funding goal set by a project creator or business owner. Funders on these sites typically receive some reward based on the amount of their contribution.

Recent years have prompted the creation of dozens of new sites. Some, like Kickstarter, allow for a broad range of projects, while others are extremely specialized — ArtistShare is just for musicians, for example, while Microryza funds scientific research.

It wouldn't be a new website without a comparison to other, already-successful websites.

"Think of it as a LinkedIn and Facebook with crowdfunding at its backbone," Graf said.

Graf believes that more businesses fail because of a lack of experience than a lack of capital. He thinks that "suits" — lawyers, marketing specialists and other experts — will want to contribute advice to projects on the site as part of an effort to brand themselves as experts.

"It's done every day on LinkedIn," he said. "Here's a way you can do it where the money's already flowing."

The core of the projects will still be the pitch, where project creators use text, photos and videos in an attempt to attract funding, Graf said. Projects designated full-funded will have to reach their goal to receive the money pledged; those designated flexible-funded will only have to hit 30 percent.

CrowdIt will sweeten the pot by offering an additional $10,000 bonus to the project that goes live on June 4 and raises the most money during the 75-day period, Graf said. Eventually, project creators will be able to set their funding period at a series of intervals ranging from 15 to 75 days.

As of Monday, more than 100 people had confirmed accounts on the site, Graf said, with some of them having already established projects that will go live on June 4. Graf hopes to have 250 projects at launch.

"By this time next year, we'd like to see a robust community," Graf said.

Jeremy Bates, CEO of Nixa-based software company QRPro, said he's launching a project on CrowdIt on June 4 because he wants to support a local tech company, and because he was attracted by what CrowdIt hopes to do beyond just funding.

"Their vision of how they help the entrepreneur — they just get it," Bates said.

The company hopes to raise $100,000 to develop an app for their One Card, which Bates described as a "Rolodex of digital business cards." The four-employee company considered using crowdfunding about six months ago, Bates said, but didn't find a platform that suited them until Graf contacted them.

Drury University freshman J. Harmon said he's hoping to raise $10,000 for EDJy Skate Apparel, a company he founded last summer that sells skateboarding equipment and apparel.

"We are currently growing at such a fast rate that we cannot keep up with the growth and expansion of products financially," Harmon said.

Harmon said he considered using Kickstarter to raise money, but that Graf and the CrowdIt team convinced him to launch the project there.

"The passion (Graf) had, and the faith he had in us to be not only a successful project but to help take us to another level and kind of be a 'headlining' project of CrowdIt made us want to use him," Harmon said.

Bates said he's resisted venture capital so far, preferring to retain full control of the company. And he believes that crowdfunding offers benefits beyond just funding.

"People want to be a part of something ... it creates lasting customers."

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