Dan Gigante is looking to raise $25,000 to help his You and Who socially conscious T-shirt venture take the first steps toward making its wares at home.
And to do it, he’s not turning to banks. He’s not knocking on the doors of rich investors.
He’s reaching out to the masses online, through the fast-growing technique known as crowdfunding.
“We realized that we needed our shirts to be made here and to create jobs here,” Gigante said.
But to do that, You and Who needed about $25,000 – a tidy sum for a venture with a strong charitable twist. For every T-shirt that You and Who sells, it promises to donate a second shirt to someone in need through homeless shelters and other community organizations across the country. And the shirts are designed by hometown artists in each of the 40 cities where You and Who operates.
It’s an unconventional business, and Gigante realized that made it tough to get conventional funding.
But crowdfunding is a whole different world. Ventures like You and Who tap into the social networks of their friends and fans to try to raise money for their projects. You and Who isn’t seeking investors. It’s a donation, although a change in federal law last month made it legal for small startups to solicit investments from wealth investors publicly, through the Internet.
Gigante’s 33-day crowdfunding venture got under way with a blast – a beer blast to be precise – at the Pearl Street Brewing Co. on Wednesday.
But make no mistake, the power of crowdfunding comes from the power of social media. The more connected you are on social media sites, from Facebook to Twitter, the better your chances of turning your crowdfunding venture into a success.
So Gigante and his colleagues worked the social media sites in the days leading up to the launch trying to put together a Thunderclap, a crowd-speaking platform using social media. They asked everyone they could reach through social media and the Internet to sign up for their Thunderclap through their Facebook, Twitter and Tumblr accounts.
Gigante hoped to have 600 people sign up for You and Who’s Thunderclap. He got 319.
At precisely 6 p.m. on Wednesday, just as You and Who’s fundraising effort was going live on the IndieGoGo.com crowdfunding website, the Thunderclap struck. A message announcing You and Who’s money-raising push went out to all of the contacts linked to the social media accounts that were part of the Thunderclap.
In all, a little less than 303,000 people got the message. “That’s tremendous,” Gigante said.
By the end of Wednesday, You and Who had raised more than $6,400 from more than 110 donors. And the donations kept trickling in on Thursday. By noon, just 18 hours after the launch, the tally topped $7,500. You and Who already had reached 30 percent of its goal.
That’s important, because speed and momentum mean a lot in crowdfunding. Successful projects tend to get off to a fast start and reach their goals quickly. Only about 44 percent of the percent of the projects launched on Kickstarter, one of the biggest crowdfunding sites, reach their goal. Nearly one of every 10 Kickstarter projects never gets a single pledge.
“It’s been really encouraging and inspiring,” Gigante said.
But Gigante’s work isn’t done. He was in New York City on Thursday to host a happy hour. He’s headed to Chicago this week for another.
“It takes a lot of work,” he said. “You can’t just put it out there. You have to push it.”
Charlie Riley, a local marketing executive, tried to do his part. He chipped in $40 on Thursday morning – a donation that entitled him to receive a newly designed You and Who T-shirt.
Almost as important, Riley was part of the Thunderclap and then sent out a separate Twitter message to his nearly 3,400 followers letting them know that he had just contributed.
“It’s brilliant when you think about it,” Riley said. “With people who have larger social media followings, it spider webs the information and it really spreads it out.”
Ethan Mollick, a management professor at the University of Pennsylvania’s Wharton School of Business who studied 48,500 crowdfunding projects that raised more than $237 million, found that successful ventures had common characteristics. They were well thought out and put together, featuring a quality video explaining the project. They were able to tap into a wide network of social media followers, and they took advantage of local geographic ties.
Meeting the fundraising goal is essential, because many projects – but not You and Who’s – are set up so that if it falls short of the target, donors never have their credit cards or PayPal accounts charged and the venture gets nothing. Projects tend to either fail badly or succeed by a narrow margin. Projects, like You and Who’s, that reach 30 percent of their fundraising goal, have a 90 percent success rate, the study found.
While Buffalo isn’t a hot spot for crowdfunding, there have been success stories. East Buffalo Organics used Kickstarter to raise more than $10,000 this summer for its project to turn an East Side factory into a facility for growing organic microgreens. The Lockhouse Distillery raised more than $14,000 this summer for its efforts to become the first licensed distillery in Buffalo since Prohibition.
You and Who plans to use the money it raises to shift production of its T-shirts to a family-owned business in Allentown, Pa., and to use a North Carolina firm as the source of its cotton.
“When you make a shift like this, you can’t just do it for 10 shirts. You have to do enough of them for it to make sense,” he said. That’s where the T-shirt reward comes in. Donors who contribute at the $40, $50 or $75 levels get one or two T-shirts as a reward.
“Ours is really kind of a presale,” he said. “You donate, but it’s really the cost of the T-shirt.”