On Dec. 21, I was offered $12,000. On Dec. 28, I turned it down.
The risk of crowd-funding and why I still believe in it.
Yes, you read it right: on Dec. 28, I turned down almost $12,000. I raised approximately $11,800 on this platform and would have been able to spend the money on whatever I wanted without any accountability. The only catch is, I would have had to pay roughly 4% of my income back in the next 10-15 years of my life. I said no.
Who am I?
I’m a writer. I write novels, short stories, screenplays, essays, and articles. I’ve been writing as a hobby since I was ten, as a semi-serious professional since I was thirteen (I published my first book at fourteen), and I recently released my debut novel six months after graduating from college. It hit Amazon Kindle’s Bestsellers list this year.
I was going to use the money from that platform to establish my independent multimedia company, MNO Media. It would have covered the costs of designing the website, producing more books, providing bookstores with inventory, and marketing my work. I would have paid off one of my student loans, saved some of the funds in a CD account, and used the rest for emergencies. None of it would have gone to waste.
I won’t name the platform I’m referring to. You’ll likely discover it on your own and I encourage folks to make educated decisions without the bias of my experience but I ultimately chose to turn the deal down for a couple big reasons.
1.) Debt sucks a**.
Had I remained on that platform, I would have paid a maximum of $59,000 — 5x the amount of money I received. That’s more than all of my student loans combined and apparently that rate is more than what most mortgages require in payback (they cap at around 3x the original amount). And while I hate the fact that I have student loans to begin with, when I took them out, I was up against the ropes and they gave me the chance to get my degree in conjunction with my scholarships and jobs. At the end of the day, I am grateful for the opportunity it afforded me and while I wish I didn’t have to take out those loans, I don’t regret doing it. I couldn’t say that for this particular deal.
2.) This wasn’t my only option.
Ultimately, I asked myself - is there any other way I can do this without getting ensnared in more debt? How much do I really need to go for my goals - and can I raise that amount without that platform? Without the $12K loan they are offering me? The answer was yes. Debt and emergency savings aside, I really only need about $2,500 for my business. I will start it online and use the revenue to grow it. So why take out a $12,000 loan to do it?
Though more challenging, and certainly risky in and of itself, I've decided to put the funds together through a combination of my tax returns, Christmas gifts, and a crowd-funding campaign I'm holding on www.booster.com/mnomedia. I designed a shirt that’s a conversation starter and all the proceeds from it will go towards my new business. If I sell a minimum of 150 shirts, I'll be able to fund my business without owing any money back. If I sell even more than that, I'll be able to pay off some loans - again without owing anyone any money.
It’s still risky.
For every crowd-funding, Kickstarter-like success story, there are probably 50-100 failures. Crowd-funding, though a very smart way to raise capital for a cause, is a very draining, downright emotional road trip for those who run it.
Let’s face it. In today’s economy, people are close-fisted. Not only do they hold onto their funds with grips of steel, they often have good reason to. Americans get sold to on an almost 24 hour basis and it can be exhausting. As a result, it is easier to say “no” to every Tom, Dick, and Harry that asks for money — even if it’s their own friend.
It’s hard to ask for help when it means financial assistance because no one wants to come off as that person. The one who is always asking for a “handout.” The perpetual missionary, girl’s scout, or other entity that siphons money out of pockets. That person.
My experience so far.
The beginning of a fundraiser is always the hardest. You go into it with a ton of enthusiasm and faith that people really will believe in your cause and want to support your dream. You recall all of the conversations you’ve had where you really felt they were on your side. You think, “Man, if I’m this excited about this project, surely it will catch on like wildfire.”
And then you tell people. And then they respond.
And wait…to hear anything back from them.
When they do finally respond, sometimes you’ll get questions about exactly what you’re doing even though it’s pretty straightforward. Other times, you’ll get the patented “Oh, that’s interesting. I’ll check it out.” Sometimes, you’ll get a simple “No, the economy sucks and my wallet is empty.”
For every glorious moment when one of your family or friends chooses to invest in you and says, “Yes, I’ll support you, I believe in you!” — you’ll have 10 of the aforementioned responses — if you get a response at all.
I’ve learned that it really comes down to persistence — not pestering. Being continually excited about your campaign even when you’re faced with the reality that only 3 people have purchased your shirts and one of them happened to be your mother. (Mom, you rock!)
I’m grateful for every person who does take a chance on me because even though they are a small part of the greater puzzle, every piece is needed to make it a success.
With great risk, comes great reward.
Why do I still believe in crowd-funding? Why am I doing it even though it’s exhausting and I hate asking people for money?
I’m doing it because I have a dream.
I’m doing it because my dream of being a successful writer and publisher far exceeds my fear of failure. My fear of rejection.
I’m doing this because I still believe in the good of humanity and in the desire of people to rally together around causes they believe are worthy.
I’m doing it because the reward of starting my business without getting in deeper debt far outweighs the risk of giving up a $12,000 loan.
There are certainly moments when I stop and ask myself, "Did I really just pass on twelve grand?" but then I realize, "Yes…I passed on twelve grand and almost sixty grand worth of debt for 15 years."
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