The rush of interest around crowdfunding is spawning many variations on the theme, and one of the more original of them — Crowdtilt, part of the most recent crop of Y Combinator startups — is today announcing a funding round of $2.1 million for its platform that lets groups of friends come together to fund an event or project, like a house party or group vacation.
The company tells us that the seed round is coming from SV Angel, Crunch Fund, Y Combinator partners Paul Buchheit, Alexis Ohanian, Harj Taggar and Garry Tan, and DCM and Felicis Ventures, and it follows on from a very impressive three months of growth. James Beshara, the CEO and co-founder, tells us that it has now seen nearly $1 million of events funded since launching in February 2012.
Apparently, we’ve heard that Crowdtilt had some of the biggest inbound interest of all the startups after the YC Demo Day, and the company caught our eye too: we put it on a list of 10 YC startups to watch — along with Pair, a social network and app for couples (or other groups of two) that announced a seed round of $4.2 million from an equally impressive list of backers.
What makes Crowdtilt interesting is that it is filling a distinct gap in the market: while sites like Kickstarter are good for funding the development of a product or projects on a wide scale
where some kind of equity is offered to the backers (some crowdfunding sites offer equity; some like Kickstarter do not), they don’t cater as well to small, defined groups based around specific events. At the same time, there aren’t any well-used services out there to help people collaborate on paying for something together: I’ve found that when I plan something like a vacation rental with friends, it’s often done by email with a lot of chasing for payments in the aftermath (that could just be my own flaky friends, of course).
“The main differentiation is that rather these big projects for the whole web you can create funding projects for small groups,” explains Beshara. “Instead of raising money from the crowd you raise money from your crowd.”
He also admits, though, that “It’s just a better way of collecting money, rather than sending out emails, engage interest and all that coordination you can do it in one fell swoop.” And that, he says, could lead to having a more active and social life: “We believe friends can do this more often if they could.”
So far, that seems to be the case, at least as far as Crowdtilt’s own business is concerned. He says that in addition to $1 million being processed through the site since launch (the number was $400k at the end of March, so picking up $600k since then is a sign of momentum picking up); Crowdtilt has been seeing that 34.6 percent of users return to use the service again, suggesting that people are planning more activities, given the tools to do it. In all, the site has picked up 10,000 users in the last 11 weeks, purely through word-of-mouth.
So what happens with the $2.1 million? The funding, Beshara says, will be used to grow out its business with more enhanced services — without the need of worrying about raising money, which he says “can be a drain” when you are a small outfit. Crowdtilt has recently added code that ensures payments within 24 hours of a project closing — Crowdtilt takes a 2.5 percent fee of the transaction only if the deal gets completely funded; otherwise there is no fee.
Other future services include expansion to international markets (currently the project originator has to be in the U.S., although the rest of the group can be based anywhere); building a mobile app; and possibly doing more with more public campaigns open to more than just a select, strictly private group of people. Beshara notes that there are more of these appearing already on the site, and “there was a reason we didn’t call the company ‘Grouptilt’” — another domain they registered, thinking ahead to one day serving more than just small, select groups.
Beshara himself studied development economics in college and comes from the non-profit realm, and his last crowdfunding project was a platform he helped set up while volunteering in Cape Town, South Africa. “I thought about this a lot, the social dynamics of crowdfunding and why it is so effective online, and how it could be applied to campaigns among friends.” So perhaps in future, there may even be some charitable elements to the site.