Business

KC Business Owners Turn to Crowdfunding

The people behind Columbus Park Ramen Shop, Crane Brewing Company and Ocean & Sea explain why they turned to crowdfunding and what they learned during the process.

Story by Riley Mortensen & Leah Wankum

Starting a business isn’t easy by anyone’s standards, but these days businesses have options besides traditional loans or investors: In swoops crowdfunding to save the day. With websites like GoFundMe, Indiegogo, Kickstarter and more becoming a bigger part of area business plans, we take a look at KC companies giving this next generation funding a try.

Columbus Park Ramen Shop

Meet Josh and Abbey-Jo Eans, owners of Happy Gillis Café & Hangout. After working in the restaurant business for a few years, the Eanses became friends with the previous owners of Happy Gillis, who eventually sold the café to them in December 2013.

Happy Gillis serves breakfast and lunch, keeping it simple with its menu.

“We focus on doing a small amount of things really well instead of a lot of things,” she said. “We work really hard with local businesses and local farmers, and we do everything ourselves. It’s important for us to support local.”

Taking that commitment to the next level, Josh and Abbey-Jo decided to start a ramen restaurant, calling it the Columbus Park Ramen Shop, and using Kickstarter to help them with funding.

Abbey-Jo and Josh Eans

“Our goal was $37,000 and we set a time limit of 30 days to reach the goal,” she said. “If you don’t make your goal within the time limit, you lose the money.”

They hit their goal, then surpassed it, receiving $41,000 a day or two before the funding shut down.

“The first day was crazy,” she said. “We raised over $12,000 the first day. I think the support that we got from the Kickstarter showed the real community-feel that Kansas City has, and to us, that was one of the biggest victories about our Kickstarter. We had a whole city that was rallying around us. It’s kind of an amazing feeling.”

The ramen shop opened next door to Happy Gillis in October and Josh says since opening, they’ve had a great response.

Just recently the couple hosted one of their first private dinner parties at the restaurant. The guests invited? Backers who donated $1,500 or more. As part of its advice, Kickstarter urges aspiring businesses to offer rewards for backers of every level. These rewards can be just about anything, from a social media shoutout to supporters to all you can eat ramen forever.

The dinner party consisted of 12 backers from Children’s Mercy who donated to the campaign as a group.

“They had an awesome time,” Josh says, adding it was great to see them experience the restaurant and their investment.

Crane Brewing Company

CrowdBrewed, which calls itself the craft beer financing marketplace, was the crowdfunding website of choice for Crane Brewing Company, a brewery in Raytown, Missouri, founded by six entrepreneurs from across the country, including Michael Crane, for which the brewery is named.

“We wanted to make sure that we have a significant amount of construction done,” Crane said during the campaign. “The plan is not (to use) the money to open the brewery, but to do extra things like focus on our barrel-aged beers. These beers take years to age in barrels, some of them, and that ties up capital for anywhere from six months to four years, depending on the style of beer, and we don’t have the funding to tie up capital that long.”

Another reason for using CrowdBrewed was to purchase testing equipment, which Crane says can cost thousands of dollars.

The Crane Brewing team chose CrowdBrewed as their crowdfunding site because it lets businesses keep their funds even if they don’t make their goal. If they do meet their goal, CrowdBrewed only keeps 5 percent of what they raised. For those who don’t meet their goal, CrowdBrewed claims 7 percent of funds raised in addition to a 2.9 percent fee and $.30 per transaction. (By comparison, Kickstarter keeps 5 percent of funds raised through successful campaigns, plus payment processing fees of 3 percent and $.20 per pledge; the company doesn’t charge fees for unfunded campaigns.)

While CrowdBrewed isn’t as well known as other platforms, Crane co-owner Christopher Meyers says their focus on the beer industry has helped promote their brewery through social media. He says the most significant part of the experience using CrowdBrewed to help with finances is how humbling it has been.

“We couldn’t really do anything to promote our beer,” Meyers says. “We raised $25,000 just on people wanting to support us, so that’s one of the biggest benefits about it. We had so much of the city behind us who are willing to help support us and get us started.”

In total, the group raised $45,705. The brewery is now in full production with beer already packaged and ready to hit the market after it settles a few details with distributors.

The owners have also planned for a semi-private grand opening on Dec. 5. Tickets to the event were made available on the CrowdBrewed website, but they’ve got something planned for the public too. Luckily their backers are not only excited, they’re patient and understand good beer comes to those who wait.

Ocean & Sea

So crowdfunding works for food and drinks, but what about other types of businesses—let’s say a clothing brand called Ocean & Sea that’s looking for money to help build a landlocked sailboat-shaped pop-up shop?

“It came about because we had a real problem to solve,” says owner J. Brendan O’Shaughnessy, who started Ocean & Sea in 2013 with his wife, Amanda, and launched a Kickstarter campaign to help them raise money for the sailboat shop.

O’Shaughnessy says although they love the boutiques that support them and currently sell their products, (like their popular LA, KC, NY heart T-shirt) making money off a wholesale model as a small business is next to impossible, and in turn hindered the way they wanted the company to grow longterm.

“The sailboat is a really practical way that we can go anywhere and bring our experience to the customer,” the designer points out. “Whether it’s through a concert, a festival, or if it’s just on the side of the street maybe in a downtown area, it allows us to really quickly and cheaply get that direct sale, but not only that, but to bring the experience of what it is that Ocean & Sea wants to bring to that customer, which ultimately is be comfortable being childlike again.”

What better way to feel childlike and inspired than by interacting with a life-sized sailboat pop-up shop? With the help of Kickstarter, the duo raised $23,146 to make their dream a reality. The sailboat will be built off a trailer and attached to a van for mobility. When finished by the end of 2015, the vessel, which is being made by Second Life Studios, will stand around 10 feet tall, 10 feet wide and 8 feet long.

While many turn to Kickstarter strictly for the no-strings-attached money aspect, O’Shaughnessy says for Ocean & Sea, the funding choice had a lot to do with marketing. From day one, the company has used social media to grow the company organically, and Kickstarter helped to take them to the next level.

A graphic designer, he used his skills to make sure they ran a highly visual campaign. From photos to renderings and high-quality video, the O’Shaughnessy says engaging your audience is one of many ingredients necessary for a successful campaign.

Another key element? Time.

O’Shaughnessy notes crowdfunding campaigns take up more time than you think; between his full-time design job and running Ocean & Sea, he says he barely made it through the 30-day campaign.

“You are putting yourself out there in such a forceful way that as much as a possibility it is for you to succeed, you can proportionally fail, and not just fail as in you didn’t fund the project, but now thousands of people now have an opinion of how you engaged them through the campaign,” he explains.

However, if you can push your idea through and run a successful campaign, you can also learn a lot. O’Shaughnessy says when looking through the list of donations, he was surprised to find he knew nearly 75 percent of his backers whether they were friends, family or acquaintances.

And now, with the completion of the sailboat, the Ocean & Sea team will be able to build even more meaningful relationships and pursue their goal of becoming a nationally recognized brand.

“The true goal of Ocean & Sea is to be able to show people that you can live your dream,” O’Shaughnessy says. “Look at how ridiculous mine is. I’m calling myself a captain, selling T-shirts out of a sailboat that I made through crowdsourcing and it’s kind of a ridiculous story, but I want to use that story, which is an extreme one, to be able to encourage others that maybe your little small business concept that you’ve always been thinking about running out of your garage really isn’t that big of a stretch.”