What's your take on kickstarter or crowd funding projects for a "regular business"

if people are willing to give them money, then good for them

Sure, I guess it just seems pretty silly to me.

But if they can get free money good for them like you said

Agreed

Just think it's a bit odd

I guess it's great that some people can get off to a great start by not owing a ton of money to a lender though

No definitely not

And not everyone has access to those types of individuals

Horror stories like what happened with the Coolster ice chest or Lilly Drone(I almost bought into this one) keep me away for the most part. Though I did help one last year for ActionHat but only because that's something I intended to use and the guy was pretty well known in the fishing community so I wasn't worried.

There's a brewery that's been trying to open up in Lafayette that used Kickstarter and later some other crowd funding site trying to raise $25k towards their brewery. I don't have a problem with Kickstarters because usually you're purchasing a product at a discounted rate that you can get later on, but for the brewery different levels of support got you pint glasses, or T shirts, or other trinkets. For $1000 they'd let you name one of their toilets. In other words, you're not getting $100 worth of shite, or beer, or a bar tab, you're just throwing money at them.

Opening a brewery I'd imagine isn't cheap, but I'm scared of a brewery that's having to turn to crowdfunding to get the doors even open. At last update it looks like they've abandoned their original location for a new location, but now they're having to ask the city to grant them permission to operate there as it looks like they'll fight the same battle Artmosphere did with having an alcohol selling establishment XX amount of feet from a church.

I tried it in college for a business didn’t work. Just got a bunch of spam of companies wanting money to promote my idea

I used Crowdfunding to help start our business almost three years ago. We generated almost $80,000 and it was a huge and unexpected blessing. We are truly grateful to those who helped us.

Reality is, crowdfunding as a whole is dying. The number of utter failures far exceeds the number of successes. Less than 10% actually meet their funding goals. Poor business plans and campaigns to “Help Marjorie get breast implants” killed Crowdfunding so that it’s now basically viewed as internet panhandling.

That all said, if I had to do it all over again I wouldn’t have used Crowdfunding. For a couple of reasons. First, the tax implications are such that as long as anything is given in return it’s considered ordinary income. Even so much as a sticker or t-shirt. Long gone are the days where cash “gifts” were tax exempt. A surprisingly large number of people still believe the money is theirs Scott free.

Secondly, the fees and hidden fees proved to be enormous. The host site be it Indiegogo, GoFundMe or whomever typically takes somewhere around 10% for running the campaign. Most also hit you with a 7-10% transaction and swipe fee. So you are already down 20% before the IRS even shows up.

The last reason is that when you Crowdfund your business you leave yourself open to far more criticism and armchair quarterbacks. It’s kind of your deal with the devil as people view you and your company as a public entity. Given the highly personal nature of Crowdfunding I think this is justifiable. Frankly, the money we generated through Crowdfunding amounted to less than 15% of our total investment. In retrospect I’d of happily paid 7% in loan interest to avoid those headaches.

At the end of the day, I love Crowdfunding as it’s the most organic way to engage customers and grow a biz. At the same time, having experienced it first hand I’d encourage most to stay away.

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First, the tax implications are such that as long as anything is given in return it’s considered ordinary income. Even so much as a sticker or t-shirt. Long gone are the days where cash “gifts” were tax exempt. A surprisingly large number of people still believe the money is theirs Scott free.

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This is incorrect.