Crowdfunding may have reached its high-water mark.

Tommy Up and Sarah Brown turned to Kickstarter to fund a Fishtown tiki bar, an idea "a lot more out of left field than your traditional business concept."
Tommy Up and Sarah Brown turned to Kickstarter to fund a Fishtown tiki bar, an idea "a lot more out of left field than your traditional business concept." (CHARLES FOX / Staff Photographer)
Posted: May 15, 2014

In late April, business partners Tommy Up and Sarah Brown put out an offer: Pitch in to help them open a tiki bar called the Yachtsman in Fishtown, and reap rewards ranging from a private party to your name engraved on a bar stool (plus the right to evict other patrons from said stool).

Brown and Up - who is also the owner of PYT, a Northern Liberties eatery that is in the process of franchising its format of wacky burgers and boozy milkshakes - said construction overruns had cleaned them out. So, rather than seek a loan or bring in a partner, they decided to cash in their social capital via Kickstarter, an online crowdfunding platform through which anyone can donate, and funds are collected only if the target goal is reached.

By Tuesday, the campaign had raised $17,873 toward its $36,700 goal - but it also had raised the hackles of critics.

"There has been pretty tremendous blowback," Up acknowledged. "The consensus is: 'Who the hell do these people think they are, asking us for charity donations?' There may be a perception that, owning a restaurant, you must be rich."

It raises the question: After five years of crowdfunding's explosive growth, are we encountering its limits? As established business owners - and even Hollywood celebrities - join artists, inventors, and first-time entrepreneurs in courting the masses for cash, some say Kickstarter overload is bound to set in.

"If you open a place where people can get free money, it's going to get crowded pretty quickly," said Don Steinberg, the Philadelphia-based author of The Kickstarter Handbook. "There's still a huge amount of opportunity, but there is a lot of fatigue and saturation."

The Yachtsman is hardly the first project to weather backlash. Filmmakers Spike Lee and Zach Braff both drew criticism last year for going to Kickstarter in the name of retaining creative control of movies that might, in different times, have been backed by production companies.

Kickstarter itself takes the position that celebrity participation will only grow the crowdfunding ecosystem. This year, the five-year-old site surpassed $1 billion raised, including $8.8 million in Philadelphia. It also has inspired a slew of competitor sites serving niche markets, like Crowdrise for nonprofits, or offering flexible funding models, like Indiegogo.

In Philadelphia, crowdfunding has helped bring us Little Baby's Ice Cream, the acclaimed street-art documentary Resurrect Dead, and the How Philly Moves project, best known for the mural at the airport. (There also are many, many local projects that did not meet their funding goals, including a Philly-set zombie comedy; a documentary about The Preston and Steve Show; a fixed-gear-bicycle ride across the country; "the most amazing independent puppet sitcom ever"; and a possibly illegal prank TV show called Messin' With Cops.)

Food-related start-ups, in particular, are catching on to the model's potential. This year, the Superior Motors Community Restaurant & Farm, outside Pittsburgh, broke the restaurant Kickstarter record, raising $310,225.

Up thought it made sense for his project, too. After all, a Fishtown corner bar marrying craft cocktails and faux Polynesian kitsch "is a lot more out of left field than your traditional business concept," he said. "This was a way to open with some of the weirdness still intact."

Ethan Mollick, a Wharton School management professor who has studied the dynamics of crowdfunding, said several factors predict a project's success, excluding weirdness but including the quality of the campaign, the size of a founder's social media network, and even the campaign's duration (shorter ones tend to fare better).

But the point of crowdfunding is not just to raise money. Mollick surveyed fund-seekers and found that "because they couldn't have done the project without the money" was only the fourth-most-common motivation.

"People wanted to build community, judge demand, find out whether their idea was a good idea," he said. "But you have to be honest. The crowd is pretty smart, and they don't like to be taken advantage of."

Tim Patton, who's starting brewing this month at his Saint Benjamin Brewing Co. in Kensington, weighed those factors last year when he ran a successful campaign via Lucky Ant (since absorbed into another site, MoolaHoop) for $20,000 to restore the building's facade. Patton had planned to postpone that restoration a few years, but a Lucky Ant representative persuaded him to go to the crowd.

The campaign helped him get the word out, Patton said. But the cost of making good on rewards is looming. Meanwhile, since his opening is months behind schedule, he's worried about keeping funders waiting to redeem them. "That's made me nervous," he said. "That's not the kind of bad vibe I want going out about my brewery."

West Philadelphia-based photographer JJ Tiziou, who has run three Kickstarter campaigns including the one for How Philly Moves, sees crowdfunding as the most logical way to support his work: public art projects and providing free photography for nonprofits, arts organizations, and activists. But he added, "There's this question of how much do you pester people."

Some day, he'd like to move from project funding to sustainable funding. If 800 or 1,000 people pledged monthly contributions through a site he's now working with called Fractured Atlas, he could work full time making art that benefits the community and giving images away for free.

Until then, he remains active on Kickstarter. Last year, he tried a stretch goal: $100,000 for "Everyone Is Photogenic," to make and distribute portraits of thousands of Philadelphians. He raised $38,000, and so collected nothing.

Tiziou said that at least with Kickstarter's all-or-nothing format, donors won't feel cheated.

In contrast, he recalled chipping in $25 toward a $3,000 Indiegogo flexible-funding campaign. "At the end, they had only raised $75. I had to pay my $25, and they had to send me my T-shirt, and the project never happened. That was really frustrating."

Still, Tiziou said, it's worth trying. "What I love about Kickstarter is it is letting people who might not have had access put their ideas out there."



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