Cremades and his co-founder, Tanya Prive, learned this lesson the hard way.
In November of last year, the two set out to launch a crowdfunding site allowing start-ups to solicit small contributions from large groups of people in exchange for non-financial rewards like products or recognition. (The Securities and Exchange Commission is working on regulations for equity-based crowdfunding, which would allow large groups of small investors to buy stakes in a start-up.)
Crowdfunding has been gaining visibility, and though no clear number exists for the number of online platforms being set up to raise money, estimates range from 500 to 700. Most, including Rock The Post’s main competitors, Kickstarter and Indiegogo, offer a similar rewards-based system for financial donations.
To distinguish the platform from its competition, Cremades and Prive initially tried offering their customers something new — the ability to solicit and offer time, material and resources, in addition to financial contributions. “Crowdsourcing meets crowdfunding,” Cremades said.
Entrepreneurs could post their need for, say, Web development services on Rock The Post’s listing and interested developers could respond.
But the company quickly found that non-financial contributions were difficult to track. Entrepreneurs and interested helpers would sometimes take their communication off-line, and Rock The Post couldn’t always ascertain the value of the offering. “We were doing too much,” said Prive, whose service makes money by taking a cut of each deal.
They noticed, however, that Rock the Post’s platform for financial contributions was more popular.
In June of this year, the two launched a simplified platform. This time, Rock the Post sought to distinguish itself simply in terms of its focus — allowing entrepreneurs, non-profits and small businesses to advertise, solicit contributions, and offer non-financial rewards to contributors.
“We’re bringing Wall Street to Main Street,” Cremades said. Unlike Kickstarter, which draws the “creative young hipster techy person [who] is familiar with crowdfunding” most often to fund art and design projects, Rock the Post is for “entrepreneurs who are spread thin and need money,” Prive said.
“The people who call us, [often] don’t have a clue what crowdfunding is,” she said.
Noting the criticism other crowdfunding platforms have received for funded projects which never came to fruition, Rock The Post’s team vets the businesses first to select the ones that seem likely to succeed, looking specifically for a“well-thought out and developed idea,” a “sustainable structure” and a “concrete plan,” Prive said.
This curated model differs from that of competitor Indiegogo, which touts itself as a completely open platform — any project can be featured on its site. But on a normal basis, Rock The Post only features 20 to 30 projects, five of which already met their funding goals so far. Prive estimates that for every project the team approves, 10 are rejected.
Rock the Post also assigns an account manager to each project to educate entrepreneurs about the crowdfunding process and help them tailor their pitch, Cremades said.
One of Rock The Post’s most successful projects is Villy Custom, a Dallas-based custom bicycle brand recently featured on the ABC show Shark Tank, in which entrepreneurs pitch their businesses to a room full of investors. After securing $500,000 from the show’s investors, Villy Custom turned to Rock The Post to raise an additional $10,000 for a new line of bicycles, a goal it met within two weeks.
Having initially bootstrapped Rock The Post themselves while working full-time corporate jobs — Cremades at a law firm, and Prive at Fox News — the two feel they understand the plight of entrepreneurs searching for capital today.
“Entrepreneurs are the most innovative, passionate, and forward thinking — but most can’t get access to capital,” Prive said.
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