To help harness the power of online funding as a conduit for connecting local projects with local contributors, Coronado Ventures Forum and the city of Santa Fe are teaming up for a first-ever, in-person crowdfunding event July 17. The event will feature 12 New Mexico-based projects that as of July 1 began raising money online through a new, local crowdfunding platform called “MIXstarter.”
Unlike typical platforms, which connect projects based anyplace with potential backers from anywhere in cyberspace, MIXstarter seeks to unite New Mexicans through an online portal that promotes locally based endeavors, said Coronado Ventures board member Matt Culler.
“A lot of projects that seek crowdfunding have community development, or local ties, but currently there are no good mechanisms to connect them with local people looking to fund things in their own communities,” he said. “MIXstarter aims to address that. It’s about taking crowdfunding to the next level to make it relevant in a local context.”
MIXstarter also helps put a human touch to the relation between fundraisers and contributors. That’s something Culler said is often missing in the global crowdfunding industry, where generally people commit money to a project in exchange for a promised reward, such as a new product from a startup once it’s up and running.
“With a lot of projects, donors are not just looking for a reward for their contribution, they’re looking to connect with entrepreneurs to help them do something good, such as creating a new product or service,” he said. “It’s hard to capture that philanthropic element through typical Internet crowdfunding platforms that cut out the human connection.”
MIXstarter’s focus on local projects and donors, combined with the July 17 in-person event, can help reinforce interpersonal ties.
“We have a dozen New Mexico-based projects from around the state – from Los Alamos to Roswell and everything in between – who are running a monthlong, online crowdfunding campaign,” Culler said. “The campaign highlight will come halfway through July with the live event in Santa Fe to connect the projects and the people behind them with people who want to back them.”
The projects include a range of new startups, existing businesses looking to expand, and creative endeavors with local benefits. Duel Brewing, for example, is seeking funds to expand its brewery in Santa Fe, and a newly formed “beer cooperative” wants money to open its first location in Los Alamos.
Others include filmmakers seeking financing for their projects, a tea company looking to expand in Santa Fe, a new cellphone recycling business, and a variety of cultural initiatives, such as a project to match classroom teachers with artists to help engage young people in public schools.
“We expect each project to raise from a few thousand dollars to tens of thousands,” Culler said.
The MIXstarter platform is hosted by an Albuquerque startup, Main Street Crowd, which helps local nonprofits launch community-oriented sites. It’s a new model for crowdfunding, said Main Street co-founder Marshall Neel.
“We provide communities with their own crowdfunding sites to raise capital for economic development,” he said. “It’s a delivery vehicle for crowdfunding at the local level.”
The MIXstarter initiative itself was created by Coronado Ventures and the city program MIX Santa Fe, both of which provide educational and networking opportunities to connect entrepreneurs and investors.
At the live event in Santa Fe, Jonathan Sandlund, founder of TheCrowdCafe news site, will deliver a keynote address on growth of the industry, which generated about $2.8 billion worldwide in 2012.
Sandlund said most of that activity comes from reward-based donations, rather than formal funding commitments by accredited investors who take equity stakes in companies. But that’s changing.
“Private capital markets are shifting from offline to online,” he told the Journal . “That’s making it much easier for entrepreneurs to raise capital, and it’s opening up a lot more opportunities for investors.”
In addition, the U.S. Securities and Exchange Commission is expected to release new rules before year-end to allow anyone to take an equity stake in companies through crowdfunding, not just accredited, high-wealth individuals as is now the case. That could significantly accelerate industry growth.
Culler called it the “democratization” of startups.
“About 90 percent of startups fail, and a higher percentage never even get started, because of lack of access to capital,” he said. “But crowdfunding can help change that.”
After Sandlund’s presentation, event participants will break off to speak individually with project creators to learn more about their endeavors and potentially donate to them.
“The event is free,” Culler said. “We’re telling people to bring their wallets to donate to the crowdfunding project they think is most worthwhile.”