Kickstarter/Crowdfunding to help finance a new business, What say ye?

[Anonymous]

I am looking to start a brick and mortar apparel business in DC (H Street corridor.) There will, of course be an internet presence as well. I've been crunching the financials and need between 330K-400K more beyond what I and my parents will personally invest. I'm not sure I want to be beholdin' to a bank for the whole amount...to be honest I'd like to leave those money sucking leeches out of the picture. My friends are tapped out pretty much, but maybe another 15K from them. When I become profitable, I want to invest a portion of my proceeds in the local schools, maybe support a reduced cost clinic as well.

Of course, in a perfect world I'd have two million on hand and could get cash discounts from my vendors. Life.....

I've been toying with going the crowdfunding route? What sites do y'all think would work? And why? Should I shoot for the whole amount or go lower?

Please feel free to chime in.....

[Anonymous]

You might look at past campaigns. I would be very surprised if you could raise $300k for a clothing store.

Most of the really successful/high dollar kickstarter projects I've seen offer rewards that people are essentially buying, but I wonder what you could offer that would pull people in.

[Anonymous]

well there's always kickstarter? And Donald Trump started fundanything.com. I'd say ask for a smaller amount, maybe 50-75,000 and indicate in the "hy I am doing this" part how much you would truly need to get the business of the ground. Many kickstarter campaigns go over the amount requested

[Anonymous]

you could try indiegogo too. Have you considered angel investors? does DC offer any grant money? Why not write to Oprah or Ellen etc; it surely wouldn't hurt, especially if you plan on supporting good causes

[Anonymous]

Apparel? Are you hoping to be homeless?

[Anonymous]

I owned a boutique and as any store owner will tell you ....it is a labor of love not something that will help strike it rich.

[Anonymous]

These sort of campaigns make me want to shun its business.

[Anonymous]

to poster who wants to shun my business, perhaps you have $400K to loan me at a low interest rate?

[Anonymous]

I advise entrepreneurs. Crowdfunding for this type of business would only work if you offer a specific item in exchange for contribution, like a "free" dress for a $50 donation, etc. The complication is you can't use Kickstarter as e-commerce, so you have to be careful how you word it.

In other words, when you give an item for a donation, usually it's an item which can't be offered without the crowdfunding. Think like a titanium iPhone case where they need 30,000 orders/$3 million in order for the manufacturer to make them. Then, you're helping to get them to that goal, and in return you get the iPhone case.

But the cost to produce apparely isnt't really like that.

Also, you said you want to shun bank funding -- well guess waht, they'll be shunning you, unless you will give a personal guarantee on the loan and/or back it with assets (home equity line).

Sorry, but you're entering a business which is highly competitive, driven by price pressures, has a huge economy of scale, and with a customer that is extremely fickle.

Think of it this way - why should anyone fund you?

Here's why I would:
- You have X years in the apparel retail industry, including building a brand
- You have worked with suppliers and know cost structures
- You have a plan for your new brand, know your numbers down pat (margins, etc)

Are you all those 3? If not, it's going to be very tough.

Let's see the last few that came across my desk.. One was making handbags out of some recycled material, another was making stylish control pantyhose, and the third was some other type of bag or womens' accessories. I didn't fund them, nor did anyone I know. It's a WAY difficult industry.

[Anonymous]

Yes I have all three. Medium to higher end brands. Only business like it in the neighborhood and was asked to come there. Will work with the school system and medical community for my products. 15 years in retail management and buying. 5 years in wholesale and importing. 7.5 years in commercial banking and 4 years in foreign exchange. Margins are tight, but less so in higher end.

[Anonymous]

comfort and fashion branding combined

[Anonymous]

Anonymous wrote:Yes I have all three. Medium to higher end brands. Only business like it in the neighborhood and was asked to come there. Will work with the school system and medical community for my products. 15 years in retail management and buying. 5 years in wholesale and importing. 7.5 years in commercial banking and 4 years in foreign exchange. Margins are tight, but less so in higher end.

Great. I'd say your best funding options are:
1. Go to those potential customers and pitch a partnership deal
2. Bootstrap (so skip the store part to begin with) and self-fund based on all those customers you've got lined up
3. Shake your tree of contacts and get funding that way. People in the industry will understand the potential and business idea better than people outside, so their funding (or not funding) will be good feedback and a good way to get some money.

Actually with all that experience, are you sure you can't self-fund, maybe with a lower up-front plan? Sounds like you're mid-career so you'd have built up some assets.

[Anonymous]

If OP has mostly worked retail than he/she probably doesn't have that much money. Not exactly a lucrative career field unless you own or perhaps are a regional manager