Jennifer Baumgartner faces similar issues that most new small-business owners have to deal with, especially the need for financing.
Baumgartner, owner of Las Vegas-based The Cookie Bar, has been slowly building her gourmet food business over the past year while working a full-time job. She funded her startup with savings and with her profits but now needs additional capital to expand.
But instead of a bank loan, Baumgartner is looking to raise $10,000 online through Fundable, a crowdfunding website. Crowdfunding is a collective effort of individuals who network and pool their money, usually online to support efforts initiated by other people or organizations.
“I’m trying to raise money to open a small store on Pecos and Flamingo,” Baumgartner said. “Right now we are a mobile business with a website … producing packages for special events.”
Currently, Baumgartner and her mother, Wendy, run The Cookie Bar out of their Las Vegas home and bake their unique alcohol-infused and nonalcoholic cookies and treats at a local kitchen.
“We share a very small kitchen with other bakers,” Baumgartner said. “We started the business about a year ago and we are still getting our name out at events.”
To raise the money she needs to open her retail location, Baumgartner took a chance using crowdfunding to raise the financing she needs. She also decided to enter The Cookie Bar into Fundable’s money raising contest, giving her an opportunity to take home an extra $10,000.
Out of more than 125 small businesses nationwide that applied, The Cookie Bar is one of nine finalists and the only Las Vegas-based business competing for that cash prize. The contest is supported by The National Association for the Self-Employed, NASE, the Small Business &Entrepreneurship Council (SBE Council), and Fundable.
“We just entered it hoping for the best, now we are a finalist,” she said.
Baumgartner’s deadline to raise $10,000 is Sept. 20. The finalists have been given 30 days to meet their individual fundraising goal through the Fundable platform. The first company to reach their goal receives the cash prize.
So far, Baumgartner has raised $575 from six backers. Her business is the only food-based company in the contest.
Crowdfunding has been successful for other food concepts, including Grapevine Craft Brewery who raised $61,673 from 200 backers to help build a brewery in Grapevine, Texas. The company’s initial goal was $50,000.
How Fundable works is first The Cookie Bar or any business creates an online company profile, which includes a video profile, followed by offering rewards or equity in exchange for funding. Finally each company promotes their fundraiser and gathers commitments.
“If we don’t win, we still have the option of going the business loan route,” Baumgartner said.
Other participants include Local Lux, developers of a smartphone app for hyper-local shopping. The Chicago-based business has raised $1,610 of its $5,000 goal. Global Cancer Diagnostics developed a blood test to diagnose lung cancer at its earliest stage. The Tempe, Ariz. -based firm has raised $350 of its $10,000 goal.
“We are thrilled to offer this opportunity for these businesses to raise capital through crowdfunding, while providing additional cash prize of $10,000 to the business that reaches their fundraising goal. Crowdfunding is not only a creative, but also a practical way for a small business to grow,” Karen Kerrigan, president and CEO of the SBE Council, said in a joint statement with Katie Vlietstra, director of government affairs with NASE, and Eric Corsi, CEO of Fundable.