Kickstarter, Indiegogo and other crowdfunding platforms have been a big hit with product makers and creative types, but a new company called Local Lift wants to bring the power of crowdfunding to those in the local, small business community, too.
With the Local Lift platform, business owners are able to raise funds directly from their customer base and the community at large by running 30-day campaigns for small amounts of funding, usually averaging around $7,000-$8,000, based on early trials.
The idea for the startup comes from a team with financial and business backgrounds, including former Harvard Business School grads, Broderick McClinton, who previously worked at BlackRock and spent time in New Orleans working on economic development issues; and Eric Sonnier, previously of Deloitte and mobile ad startup MdotM. Meanwhile, CTO Matt Christen’s background involves development work on high-frequency trading platforms.
“In all of our careers we had experiences with local business owners,” explains McClinton, “and we knew that there was a huge need for capital. And we’re not talking $50,000, $100,000, $200,000 loans – we’re talking ten to fifteen thousand-dollar loans. Banks after the recession just weren’t giving them,” he says.
“The end result of that is that these five-plus million main street businesses aren’t growing. They’re not creating jobs; they’re not creating economic impact in their community. That’s a huge issue,” McClinton adds.
With Local Lift, these business are able to create a campaign for a project that would benefit their customers or the community at large, as an alternative to taking out a loan for working capital which McClinton says are still just way too expensive for many business owners to consider.
The campaigns run for a month, and the business is able to access all the funds they raise – minus Local Lift’s 7% cut – even if their funding goals are not met.
After a closed pilot in Cambridge, Mass., the company fully opened up its platform in late May in select markets, which today include Austin, New Orleans, and the San Francisco Bay Area – cities chosen because of the founders’ first-hand knowledge and experience there, as well as those that have strong local business ecosystems.
To date, Local Lift has run 27 campaigns, raising $171,000 for small business owners and has another 20 campaigns in the works. Businesses generally raise somewhere around $7,000, though Local Lift has seen raises as low as $3,000 and as high as $25,000, says McClinton.
The platform makes the most sense for those businesses that already have a relationship with their customers, where they can reach out to a base of people who already know, love and frequent the business, whether that’s a fitness studio, retail shop, restaurant, grocery store, or some other type of brick-and-mortar business.
For example, with the funds raised on Local Lift, a Pilates studio was able to expand to a larger location; a sushi place was able to install a new ventilation system, add more seating and offer a delivery service; a gym was able to undergo renovations; and a local market upgraded its POS system and added a bike rack and cooler.
Local Lift helps these businesses not only by offering the platform itself, but also marketing tools to help them reach their customers, including sharing tools and templates for press outreach, emails, and more.
To some extent, the startup will compete with the more general purpose crowdfunding platforms, like Tilt (previously Crowdtilt), as well as a number of newer lending platforms, like Funding Circle, Kabbage, Lending Club, Fundera, CAN Capital, Lendio, and OnDeck, to name just a few.
Local Lift, currently a team of three full-time, is now taking part in the Y Combinator program, where it has also received a small amount of seed funding, in addition to an earlier raise from the Dorm Room Fund and Rough Draft Ventures.