Molly Cupcakes is the first small business to use the Seedlauncher crowdfunding platform.
If crowdfunding sites weren’t already on the rise, the passage of the JOBS Act earlier this year propelled more to jump into the sphere dominated by platforms like Kickstarter and Indiegogo. Seedlauncher, which went live from its Iowa City offices July 8, hopes to bring a homegrown crowdfunding choice to Iowa’s small businesses.
“We’re hyperlocal. Kind of the whole idea is investing back into your own community,” said co-founder Jeromy Sonne, who is finishing up his senior year at the University of Iowa and currently interning for Dwolla.
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Their first “seed,” or micro-campaign, launched Monday. It’s by Molly’s Cupcakes, a shop that has been featured on Cupcake Wars and is opening a locally-owned branch in Iowa City soon.
The Seedlauncher idea was sparked when Sonne (left) wanted to start a food cart in Iowa City about a year and a half ago. However, he became frustrated with the financing options available.
“A lot of people fall through the cracks in financing, even though they have perfectly viable business plans,” Sonne said. He and his team of two developers are bootstrapping Seedlauncher.
Sonne described Seedlauncher as a formalized version of the “friends and family” round, where people who care about the business pitch in what they can.
Instead of focusing on other startups or creative projects, Sonne wants Seedlauncher to help local small businesses. He said their main competition is Smallknot, a member of TechStars in New York.
Seedlauncher requires that seeds be started by for-profit businesses and provide investors with tangible rewards. Sonne expects most campaigns to be between $5,000 and $20,000. Like Kickstarter, businesses can offer different rewards for different levels of investment, and no money is exchanged unless the campaign meets its goal. Seedlauncher collects a 5 percent fee from campaigns that meet their goal within 60 days.
Going forward, Seedlauncher campaigns might be able to offer equity in the business in exchange for the initial investment. The JOBS Act contains provisions that allow funding by non-accredited investors, but the Securities and Exchange Commission has until early 2013 to define crowdfunding regulations.
In the meantime, Sonne hopes to spread Seedlauncher across the state and eventually nationwide. The developers are working on fine-tuning the user experience to create a competitive product.
“There’s a huge, huge market that exists for this type of thing,” Sonne said.
Credits: Screenshots from Seedlauncher. Photo courtesy Sonne.
