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Crowdfunding to Support Local Small Business

Crowdfunding to Support Local Small Business

By | 07.11.12
Crowdfunding to Support Local Small Business

According to a June 2012 poll by the American Planning Association (APA), 79% of the general public supports community planning. The survey defined city planning as “a process that seeks to engage all members of a community to create more prosperous, convenient, equitable, healthy and attractive places for present and future generations.”

The survey also found that:

  • Fewer than one-third of Americans believe their communities are doing enough to address the country’s economic situation
  • Many Americans believe that key features of an “ideal community” include locally-owned businesses
  • 66% of respondents say that both community planning and market forces are necessary for economic improvement and job creation

Smallknot is riding this wave of community interest by providing residents with opportunities to invest in their local businesses in practical ways, like buying chairs and tables or updating air-conditioning systems. By enabling businesses to raise funds for various projects through direct appeals to customers, Smallknot hopes to “change the way people think about their local retail economy.”

This is not a new concept. But where most crowdfunding ventures, like successful Kickstarter, facilitate fundraising for artistic and creative projects, Smallknot’s focus is exclusively on small businesses.

“It’s a platform for funding, but it’s also a tool for engagement,” says Ben Rossen, one of Smallknot’s three cofounders.

In most crowdfunding ventures, “investors” get nothing tangible in return for their donation. But Smallknot encourages businesses owners to give little perks in return, like 20% off discounts, personalized t-shirts, and private cooking lessons.

“One of the things that’s really important to us is that this does not feel like a donation,” says Rossen. “There’s a reason we use the word ‘investment’ all over the site, even though it’s not perhaps the most traditional use of the word. The idea is, as a user, you get more back than you put in.”

Smallknot started in New York but plans to expand soon on the national level.

Sources:

American Planning Association. “Planning in America: Perceptions and Priorities.” June 2012. http://www.planning.org/policy/economicrecovery/pdf/planninginamerica.pdf  June 2012, American Planning Association.

Kim, Erin. “Smallknot: Pledge cash, get perks at local businesses.” http://money.cnn.com/2012/06/29/smallbusiness/smallknot/index.htm?iid=SF_SB_River  June 29, 2012.

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