When B.C. small businesses turn to Kickstarter, who wins?

Crowdfunding: Why small-town entrepreneurs may have an advantage raising Kickstarter cash

Got any dough?
Purebread bakery came up short on Kickstarter

Small-town entrepreneurs may have an advantage raising Kickstarter cash

In June 2014, Colin Pickell, a coffee shop manager in Ladysmith, set out to raise $7,000 on crowdfunding platform Kickstarter Canada. He wanted to publish his children’s book, called Who Will Tuck Me Into Bed?, and he needed money to hire an illustrator. After a 30-day campaign, Pickell had exceeded his goal by $221.

A month later, Vancouver-based entrepreneurs Mark and Paula Lamming launched a Kickstarter campaign to gather $50,000 so they could reopen their popular Whistler bakery, Purebread, which had been destroyed by fire. They fell far short, achieving only 8.55 per cent of their goal. (The Lammings found other means of raising cash; they’ve since opened a location in Gastown and two in Whistler.)

How does an aspiring small-town children’s book author cash in when an established business with a loyal fan base can’t? People from smaller communities seem to fare better on the platform, according to Jordyn Hrenyk, who just published an academic paper examining who wins on Kickstarter. “We found it was partially because the Vancouver-based creators had a harder time building offline excitement and getting their projects out beyond their personal and professional networks,” she says.

Hrenyk, a producer at web services firm Animikii Indigenous Technology, took an in-depth look at four B.C.-based Kickstarter campaigns as a directed study in her final year of a bachelor of commerce degree at UVic’s Peter B. Gustavson School of Business. Her paper, completed in 2015 and supervised by professor Rebecca Grant, recently appeared in the Journal of Strategic Innovation and Sustainability.

Although Pickell’s campaign had a smaller financial goal than Purebread’s, his community backed him more enthusiastically. The author received pledges from the patrons of his café; advertising from his son’s school district, which invited him to do readings; and coverage from the Ladysmith Chronicle and his Ontario hometown newspaper, the Goderich Signal Star.

In contrast, the Purebread owners hesitated to bug people about helping their cause. The Lammings also found that as potential contributors, their customers didn’t seem to understand why a successful bakery would need to crowdfund, a confusion that wasn’t helped by their video and other information about the campaign.

Hrenyk notes that projects that get lots of cash are few and far between. In May 2016, Kickstarter reported that slightly fewer than 36 per cent of all projects had been successfully funded since the platform’s 2009 inception, and 14 per cent never received a single pledge. The entrepreneurs who thrive on Kickstarter aren’t afraid to sell, Hrenyk contends.

“You have to bring the crowd to your project; the crowd is not going to find it,” she says. “There’s information overload on these platforms. You have to guide people to it, just like any other business.”