By 10 pm on August 20th, 2012, $697,937 has been raised out of an $850,000 goal. With 41 days to go.
A day later, 8/21/2012, the money continues to roll in. ...
6 am: $704,972
10 am: $710,854
2:30 pm: $728,167
5:15 pm: $743,892
8:00 pm: $750,249
11:15 pm: $767,509
8/22/2012, more of the same. ...
12:30 am: $770,478
10 am: $789,479
12:30 pm: $800,187
5:15 pm: $835,903
8:30 pm: $891,708 (funding goal surpassed)
8/23/2012, the goal has been reached yet support continues to pour in. ...
5 am: $964,592.
This is an example of
crowdfunding, and, as a result, the eccentric inventor and undisputed genius, Nikola Tesla, is one step closer to finally having
a museum constructed in his honor on the very grounds of his final laboratory setting in Shoreham, NY, to boot.
The idea of many people contributing a small amount of money to support a specific cause is not novel. However, as with many commonplace activities, a connected, web-enabled populace has a funny way of amplifying those human activities to another level of sophistication and reach. As a result, the digital era has ushered in a series of increasingly ambitious crowd-funding ventures. The latest, a Tampa-based platform for local government projects called Citizinvestor; get it? (citizen + investor).
Founder Jordan Raynor describes the current civic project queue as being flush with opportunities that have been ''scored'' and government approved, and all of them have one thing in common: no cash. "With these types of projects, all the boxes have been checked, and the state and local governments just don’t have the money to make them happen.''
Cynics may wonder why a person would want to just "give'' the government more of their hard-earned money, however, Raynor reminds that this is the first time in history that a person can earmark his/her own dollars. Think of the opportunities to support things you'd like to see in the Tampa Bay region or in your own hometown.
Wait, why wouldn't people just use Kickstarter for this?
Kickstarter already has an active user base, plenty of web cred, and hoards of successful campaigns under its belt.
Raynor's response: "Kickstarter is laser focused on 'creative' projects, and they are pure in their purpose. They actually decline a ton of projects in order to ensure that the projects that go live fit into their guidelines. Parks, bike lanes, community pools, etc., don't really work there.''
While Kickstarter -- the web darling of the crowdfunding space -- has indeed gained significant popularity with users, industry-specific versions of the same model have popped up around more exotic topics such as:
scientific discovery,
healthcare innovation,
startup companies, and even
treatment development options for children with rare genetic conditions.
How Does It Work?
Citizens interested in funding change in their neighborhood simply create an account with
Citizinvestor, and then they can invest in projects that they'd like to see get funded. If you work for/with a municipality, then you can actually upload a project in an attempt to gain financial support from citizinvestors. It's worth mentioning that only a municipality and its official partners (manually authenticated by Citizinvestor) can post a project, however, regular account holders can create a petition around a specific project that would rock, and then work with Citizinvestor to turn the idea into an investable project on the site.
There are no guarantees, however, though it's reasonable to think that if there are enough citizens who want to see something happen, and they are willing to pay for it, the idea will get a chance on the site. The alternative might not be a healthy outcome for local politicians during election season.
Too Big To Fail?
A post on the "Save the Friendship Trail Bridge of Tampa Bay''
Facebook page is indicative of local interest in using Citizinvestor as a way to crowdfund support, however, the price tag might be a little high for Raynor's startup. The bridge is expected to cost into the millions in order to salvage, design, develop and maintain over the course of the next 20 or 30 years, and, at the moment, Citizinvestor is focusing on projects that governments have already pre-approved -- meaning the environmental impact assessments have been completed and deferment has occurred purely due to lack of cash. That said, there are plenty of projects out there in limbo just waiting for a solution to come along, and Raynor believes that he's got just the ticket for citizens who want to see action now.
This strategy hasn't been plucked out of a hat. Raynor and his team have embraced the entrepreneurial mantra of learning from failure, direct failure -- direct failure in the form of a San Francisco competitor, Civic Sponsor, which started up about a year ago and folded.
"Their CEO has become a good friend, and has supported us in an informal advisory capacity,'' says Raynor. Their big mistake? "The projects they posted were too big and too far from home. We see ourselves helping communities focus on 3-5 projects per city for now.''
That doesn't mean that larger scale projects can't be crowdfunded, however. For instance, Bogota, Colombia, recently made waves with a
citizen-funded skyscraper(!). Not just any skyscraper, mind you, but the tallest in the entire country.
Citizinvestor is currently running with a team of six equity-staked employees, each personally investing their time, energy and money into the venture. In addition to Raynor, the startup is co-founded by Tony DeSisto (managing director), and Erik Rapprich (technology director). The team is rounded out by Mathias Hansen (lead developer) and Nick Walters (front-end design).
With a beta site in development and some initial interest from several major U.S. cities, Raynor and Co. see themselves heading to California to raise money -- an oft lamented strategy amongst entrepreneurial types.
"We'd love to raise it here [in Tampa Bay], we just haven't found the angels; seed funding is tough in Tampa.''
The Business Model
In line with most crowdfunding platforms, Citizinvestor takes 5 percent of successfully funded projects. Add on another 3 percent for Amazon flex payment service and you're looking at an 8 percent total hike in project cost in order to play. That model is proven. The market has validated its willingness to pony up the somewhat stealthy administrative fee, and it doesn't cost the cities or the citizen users anything to register, so projects just have to aim a bit higher with funding goals.
Soon it will be time for the venture to staff up and begin raising awareness about local projects. More next steps for the business include partnership development with U.S. cities, and online community managers to drive traffic via social media; and also to stay in constant contact with civic associations, HOAs, neighborhood groups, PTAs, and other civic-minded groups.
This is important, because first-mover advantage is at stake. Competition is on the horizon in the form of a Kansas City, MO, startup, called
Neighbor.ly, which aims to help people invest in places and projects they care about, and boasts an almost identical, neighborhood and civic-appeal. There's also a European version of the concept based in Finland,
"Brickstarer'', that is gaining momentum. All the more reason to hustle!
A Problem Worth Solving?
Why is this important? Raynor, a sixth-generation Tampanian, believes this is important because: "If we are successful this will completely disrupt the way that the government budgeting process works, and it will -- for the first time -- give citizens the ability to earmark dollars around where their money is spent.''
Citizinvestor faces a two-sided challenge: It needs a user base willing to pony up dollars as well as a list of government-validated projects worthy of citizen investment. Raynor isn't worried, though, and replies, "Who's got the most incentive to see a project get funded? The locals.'' Furthermore, he explains, "We are providing community leaders a cheerleading platform and the tools to raise money for projects in their district. It's a very exciting form of participatory budgeting.''
Asked about local projects in the pipeline, Raynor says: "You know what I'd love to see? How about something to make downtown [Tampa] more friendly for technologists? I'm not sure what that looks like, exactly, but it would be awesome, wouldn't it? He backs that up with another: "How about a micro-scale project? Something that affects me personally: More parking at the Jimmie B. Keel library! I can never find parking there, and the county [Hillsborough] has already scored exactly how much it will cost for new parking spaces. I would gladly citizinvest in that.''
What got him involved in this stuff in the first place? There's not exactly a long line of folks chomping at the bit to help citizens better participate in their communities and plan for the future.
"I went to school at Cambridge Christian School on Habana Avenue in Tampa, and before he was a [Hillsborough] County Commissioner,
Mark Sharpe was my 8th grade American government teacher; he's the reason I pursued a career in politics and government.''
The idea for creating Citizinvestor grew out of investor DeSisto's service on the City of Tampa's Citizen Budget Advisory Committee. DeSisto and then Raynor became aware projects that citizens wanted to see built and that the city wanted to take on, but couldn’t do due to lack of financing options.
Example: The renovation of the historic Davis Island Pool. Renovations were scored to cost $100,000 and the city just didn't have the money to make it happen. Mayor Bob Buckhorn told the neighborhood association that if they could raise $80,000, the city could find the other $20,000. So, the neighborhood association rallied together putting on a neighborhood BBQ and going door-to-door physically holding cash from other neighbors with no guarantee that they would reach 100 percent of their funding goal. DeSisto saw how inefficient and non-scalable this funding method was and saw the opportunity to build a crowdfunding platform solely dedicated to solving these types of problems.
Citizinvestor now makes it a whole lot easier to put your money where your mouth is, and somewhere, throngs of armchair city planners have officially been put on notice.
Nathan Schwagler is a freelance journalist, creativity researcher and visiting instructor of entrepreneurship at USF St. Petersburg who will buy you a cup of coffee or a delicious pint if you promise to tell him something interesting and on the record. Comments? Contact 83 Degrees.