Crowdfunding tries to grow up

Ben Franklin $100 BillSarah Dvorak was desperate. The former retail executive had depleted her savings accounts, borrowed from family members, and secured a microloan from a local development group to launch Mission Cheese, a San Francisco café that would specialize in domestic products like Minnesota-made Camembert and a silky sheep’s-milk cheese from Northern California. But three weeks before opening day last spring, she still didn’t have refrigerated cases to store and display her fare. Despite having cobbled together $225,000 to start her business, she had come up $12,000 short. So she turned to Indiegogo, a San Francipsco-based site that allowed her to appeal directly to the public for money. “Within one month, I had the funding I needed,” Dvorak says. “I was in tears.”

Welcome to the new world of fundraising, in which so-called crowdfunding websites like Indiegogo and Kickstarter let just about anyone with an idea try his or her hand at bankrolling a dream. Proponents of crowdfunding believe it has the potential to upend traditional financing models, such as loans and venture capital, and unleash a tidal wave of capital for entrepreneurs, creative types, and, yes, cheesemongers. Reliable estimates of the industry’s size are hard to come by, but one research outlet, Massolution, predicts some $5 billion will be raised through crowdfunding this year, up from $2.7 billion in 2012.

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