SalemNews.com, Salem, MA

Business

October 30, 2013

Getting a kick out of crowdfunding Small businesses like CinemaSalem increasingly turn to sites like Kickstarter for financial backing

Small businesses turn to sites for financial backing

SALEM — If it weren’t for crowdfunding — the use of an online platform to raise small amounts of money from lots of people — Salem’s only movie theater would have gone dark this year or next, CinemaSalem owner Paul Van Ness says.

Van Ness needed to raise $60,000 this year to convert his movie theater from a film to a digital projection system, as studios move to distribute films solely using hard drives. It’s a dilemma faced by independent movie theaters across the nation.

Van Ness’ original plan was to approach 120 businesses and ask each one for $500. He estimated the time to do this would have been equivalent to a full-time job for four months, and it would be successful only if everyone kicked in.

Instead, he took up a suggestion to use the popular crowdfunding website Kickstarter, which helps raise money for everything from artists’ work to new technology. The idea behind the site is simple. Instead of one person giving $1 million to fund a project, you can accomplish the same thing if a million people give $1 each.

Van Ness spent a month researching Kickstarter before launching his Save CinemaSalem campaign last December.

In just 12 days, he raised the $60,000 he needed; after a 40-day campaign, he’d raised $68,965 from 1,023 backers.

Most of his backers were small donors; his largest donation was $1,100. All donors got some sort of reward; even a $5 donation got a backer an online and on-the-big-screen mention.

There is, however, a major catch to Kickstarter, Van Ness said told an audience of 40 businesspeople last week during a workshop at the Enterprise Center at Salem State College.

If you don’t raise the money before your campaign ends, you get zilch. It’s also forbidden to contribute directly to your campaign.

The crowdfunding workshop at the Enterprise Center was held, coincidentally, on the same day the U.S. Securities and Exchange Commission issued new rules to permit companies to offer and sell securities through crowdfunding.

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