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What is crowdfunding? Learn more about this new funding mechanism and why it is so popular. Are there hidden pitfalls? Will it work for everyone? Then hear a firsthand report on the “CinemaSalem Miracle,” a crowd funding campaign that raised more than $68,000 to enable the local theatre to convert to a new digital cinema system. What were the positives, the negatives, and the lessons learned?

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  1. 1. Last year at this time, CinemaSalem faced a life and death crisis. We needed to raise around $60,000 in a few months to convert our 35mm movie theater to digital projection.
  2. 2. ! Hollywood is phasing out movie distribution on film in favor of digital distribution, threatening hundreds of small indie theaters. ! Because conversion to digital is very expensive, in the next year, 3,000-4,000 movie theaters will close.
  3. 3. We had a plan. Leveraging our strong support among local merchants, we hoped to set up individual meetings with 120 businesspeople, asking them to contribute $500 each. ! All that would be required was: -about 240 hours of our time (six weeks at 40 hours per week) -the ability to sell, utilizing a somewhat weak value proposition -figuring out how to collect the money ! and a 100% success rate.
  4. 4. Then someone suggested Kickstarter. Kickstarter = Crowdfunding -instead of one person giving $1 million, one million people give $1 -allows many people to participate in something important -encourages affiliation with your project/venture -- a sense of ownership -encourages funders to come to you -the fundraising mechanism and technology is pre-built and fully customizable -the platform is trustworthy - we had to apply and be approved -the process of actually making a money contribution is simple and familiar -encourages donations by offering rewards -wildly popular -crowdfunding as a concept is relatively new
  5. 5. Two types of successful Kickstarter projects, and their two very different motivations. 1) The opportunity to purchase a product, usually an innovative one, while making its creation and manufacture possible: motivation is rational -- affiliation with inventors combined with acquisitiveness. 2) The opportunity to make a difference in the world, creating or preserving something important to you: motivation is emotional -- affiliation with a cause or a community asset combined with the opportunity to enjoy that asset.
  6. 6. Tapping an Emotional Response: CinemaSalem Kickstarter Comments Someone who lives and works in Harvard Square wrote, “Everyone who works here feels like the closing of the Harvard Square AMC theater this fall was a huge loss. We have great restaurants and shops still, and each time we’ve lost a bookstore, it’s felt devastating, but there was always a bookstore left. Losing that movie theater feels like we’ve lost the heart of Harvard Square.” From Jennie Cudmore’s Facebook page, referencing her son: “OMG Tommie makes me so proud, he watched the Save CinemaSalem video and said, ‘I'll give them my $10.00!’ and he also said, ‘I don't mind not getting Christmas presents this year and we can give money to CinemaSalem.’”
  7. 7. The Good News: ! Thanks to more than 1000 Kickstarter backers, over a 40-day period, CinemaSalem’s Kickstarter campaign raised $68,895 and Salem’s downtown movie theater successfully converted to digital projection in March, 2013. ! We reached our goal of $60,000 in 12 days.
  8. 8. Takeaways: ! -gratitude and humility at being part of something amazing -several things we learned through the process ! Things we did right Things we did right accidentally Things we did wrong Things no one tells you about crowdfunding
  9. 9. The CinemaSalem Miracle: Things We Did Right - Intentionally -research Kickstarter (or your platform) to see what works and what doesn't -be honest and dependable -use humor -state the challenge simply and dramatically -make a video that shows your face -connect with your conventional networks before the launch - like Salem Chamber! -use traditional media to publicize the campaign -make sure all your staff is intimately familiar with the campaign -be available -provide updates -deliver your rewards on time (or if something comes up, explain why you can't) -keep the rewards affordable (in value and in time) -promise mostly flat rewards (which can be mailed in an envelope) -pay attention to every backer
  10. 10. The CinemaSalem Miracle: Things We Did Right - Unintentionally -share the Kickstarter draft site with some people before launch (including fundraisers) -become viral on Facebook -- initiated by the Salem News article -have already built equity in the community by how you conduct business -strike a nerve with people all over the world -keep a permanent relationship with every backer -a successful Kickstarter campaign will improve your overall business (our business is up about 11% this year)
  11. 11. The CinemaSalem Miracle: Things We Did Wrong (largely inconsequential) ! -underestimated some of the costs of digital conversion -we may have set our target too low (target reached in 12 days) -we could have run the campaign for 30 days instead of 40 -underestimated the amount of time fulfilling rewards
  12. 12. The CinemaSalem Miracle: Things No One Tells You about Crowdfunding -in Kickstarter, if you contribute to your own campaign, you lose all the money committed -be prepared for a very public referendum on you and your business -the overhead costs are about 8-10% -give yourself at least 2-3 weeks to build the site, get approved, and arrange the finances -consider the tax implications -about 15% of your backers won't end up paying -running a Kickstarter campaign is a full-time job for awhile ! -your business will permanently deepen its relationship with your customers and community -you will want to stay connected with your backers -the “ownership” of your business will be shared forever - which is a good thing -you will feel incredible gratitude !
  13. 13. Thank you.