Cider Corner: ​How Crowdfunding Worked​

John Kowchak, ​the president ​and founder​ of ​​​Original 13 Ciderworks​ makes a good point. Why should a local-focused, start-up​ cidery try to use a national crowdfunding platform to generate capital?

​”Why would someone in California invest in a cidery opening in Philadelphia?” he pondered.

​That said, Kowchak does see a benefit to using a platform like Kickstarter, but not as a primary way to get a cidery off the ground.

“We did manage to raise a few thousand dollars, but the real value came from the awareness it generated before our grand opening,” Kowchak said. “I would say after all the rewards were paid out, we broke even, but we gained a lot of buzz.”

Dressler Estates founders Olga and Brian Dressler made a conscious decision to invest their own funds and then seek crowd-sourced funds to finalize the production space renovations.

Using the platform Kiva, they procured a small loan as well.

“This route helped keep our early business decisions solely driven by us without external pressures,” Olga Dressler said. “Plus, as a small business — that was taking some extremely creative routes to get our product in the market — a bank loan wasn’t in the cards for us.”

There were challenges to this format including an automatic refund to lenders if the loan didn’t fully fund.

Dressler said that they needed a captivating story that would speak to the network of almost two million Kiva lenders.

“Kiva is a great source of funding for small businesses since the loan is 0% interest,” she said. “The application process helps push a fund-seeking business to clearly explain their story and request an amount that is truly feasible since the loan needs to fully fund for it to be disbursed.”

Dressler added since crowdsourcing through Kiva is a loan, they report the payments to business credit agencies.

“This way, we are able to build our business credit with each payment setting us up for the ability to seek traditional funding in the future,” Dressler said.

​Original 13 raised $5​,​000 ​through Kiva, ​which Kowchak used to pay for ​the cidery’s initial licensing fees.

​”​The best part is our backers were not looking for a reward, their reward was our success​,” he said, noting that on other platforms many funders like to see product as a reward and that’s not possible because of alcohol laws​.

​”​Once the loan was repaid, they could reinvest in another business​,” Kowchak added​. ​”​I would recommend this to any craft brewer who need a little bit of cash to get going.​”​

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