Going with the Crowd

For as long as he could remember, Synady T. Laurent ’08, ’17 M.B.A., dreamed of owning his own business. So, as he worked his way through his creative marketing and management classes at NJCU, he spent a lot of time brainstorming with his friend and serial entrepreneur Michael Amegashie, an alumnus of the New Jersey Institute of Technology. What they came up with was an idea for a technical application to allow customers to make low-cost local and international calls.

Eventually, the talk gave way to action. Laurent became the chief marketing strategist for the startup firm and he immediately began to develop marketing strategies for a crowdfunding initiative on Fundable.

“We were young, with very little money, and ready to try new ideas,” said Laurent. “I was interested in crowdfunding and anxious to see if we could leverage this out-of-the-box funding source.”

They could and they did. Laurent’s and Amegashie’s company, GASHIE, reached their campaign goals. Some of the funds were used to launch an active social impact startup based in Newark. To date, the company, renamed LANORA, has a valuation of nearly a million dollars.

Crowdfunding or crowdsourcing is a broad term used by individuals or organizations for obtaining contributions from internet users, primarily through social media, to acquire needed services or ideas. In recent years, crowdfunding has become a rapidly growing resource to build modest capital for new business ventures. Laurent is one of a number of NJCU alumni who have started businesses this way. These businesses run the gamut from small manufacturing start-ups and motivational consultants, to marketing and service providers. Each has embraced digital branding, promotion, and marketing tools to build successful platforms. And each business got off the ground with only a few thousand dollars.

Laurent is also a millennial, the generation that is said to be the most entrepreneurial. Defined as those aged 18-34 in 2015 and now numbering 75.4 million, millennials have a reputation for resilience, grit, passion, confidence, and optimism. Almost two-thirds of them say they want to start a business. In reality, however, they are starting businesses at a much lower rate than any previous generation. Experts say it is too much student loan debt and a lack of access to capital that is confounding their dreams of entrepreneurship.

It is almost impossible to grow a successful business without some type of outside funding. The most common source is bank loans, another debt instrument. If millennials already have debt and little equity or collateral, however, banks are reluctant to give them money. The risk of default is just too great.

More than two-thirds of entrepreneurs use personal savings to get projects off the ground. Daniel Munoz ’16 is one such example. “Fortunately, I have always taken great care of my credit so I was able to leverage it to secure business credit cards for the company at 0-percent APR,” he notes.

Munoz’s financial situation allowed him to create the startup Globalkinis, The Official Home of Flag Bikinis.

Globalkinis is exactly as it sounds, a custom swimwear company selling products that feature country flags from around the world. “Our startup costs totaled a modest $35,000, which we used to buy commercial grade equipment to begin testing our designs and build the e-commerce store in cyberspace.”

Millie Thonneson’s ’12 fundraising goals were more modest than Munoz’s. Earning her Bachelor of Fine Arts from NJCU, she had been experimenting with a prototype for a game in which players collaborate to create an abstract piece of art. Using $3,500 from her savings and a $5,000 loan from her family, she manufactured 350 copies of TAG the Art Game and introduced her creation
with a booth at the International Toy Fair in New York City. TAG the Art Game went on to earn near universal acclaim and an armload of awards, including two Creative Child Magazine Awards and the Dr. Toy Best Pick Award. TAG also earned the No. 5 spot in Family Fun Magazine’s 2015 Toy of the Year honors.

Entrepreneurs are known for “finding a way” when no way is readily apparent to others. Increasingly, that “way” is crowdfunding. In mid-2012, the American Dream Composite Index reported that individuals ages 24-35 are much more likely to participate in crowdfunding campaigns. Nearly 1,000 crowdfunding sites have popped up since it began taking off about five years ago, according to a World Bank report released in late 2013.

Leonard (Lenny) A. Williams ’08, ’14 M.B.A., works in the Dean’s Office in the NJCU School of Business and recently established an online education platform via the crowdfunding route. Called Trill or Not Trill, the site is designed to integrate relevant content with the world of student development and leadership.

Trill is a hip hop term,” explains Williams. “It’s a mashup of the words True and Real. We use current students to help provide content and are careful to be as cutting edge as possible in our use of terminology, pop culture icons and up-to-the-minute social media buzz. We explore what’s ‘true and real’ in the world today and what’s not.”

The average successful crowdfunding campaign is around $7,000, lasts around nine weeks, and is more likely to succeed if it can gain 30 percent of its goal within the first week. Leveraging social media is a critical factor in crowdfunding success. Williams confirms those statistics: “Prior to Trill or Not Trill, I developed an online educational platform aimed at positive motivation for millennials through documentaries and workshops.

I decided to set my crowdfunding goal at $5,000, using the GoFundMe site. I reached my goal in the first month. It helped pay for my business registration process; buy some necessary start-up equipment like upgraded computers, cameras, and the like; and create a documentary based around the project.”

GoFundMe is among the top five most visible and recognizable crowdfunding social media platforms, today. Many of the fundraisers on the site are everyday people supporting charitable causes. However, small businesses and would-be entrepreneurs, like Williams, are also well represented.

Laurent is now the founder and CEO of Marvell Media Group LLP, a full- service marketing consulting firm that specializes in web development, branding, social media marketing, content marketing, and printing. “I’m passionate about helping small businesses reach their full potential. Crowdsourcing is only one strategy for raising necessary capital but I am happy to say that [with LANORA] I have been part of a successful venture into this arena.”

“It was successful for me in two ways,” Williams explained. “The first was that I did not need a small business loan to start my business. I have had a small business of some kind since I was a teenager and, in every case, it was important for me not to incur a lot of debt to start up my idea.” The NJCU marketing major said that perhaps the biggest success for him came from gaining greater awareness for his business through social media. “Some individuals were unable to donate but provided me with advice, leads, and resources that got my business off the ground. Using social media to get the word out about my business idea led to people suggesting how to improve on the platform and offering to connect me with celebrity content providers.”

Despite Laurent’s and Williams’ success, raising money this way is a lot trickier than it seems. While crowdfunding looks like an easy route to start-up success, it’s incredibly hard work.

As with most things, it’s about who you know. And how many you know. The more friends you have, the more likely you are to be able to launch your idea. Crowdfunding platforms are not magical cash machines; they’re simply a more efficient way for you to reach many potential backers than calling them on the phone or meeting them in person.

Nearly 20,000 projects were funded on Kickstarter last year. Fewer than 41 percent get funded and another 20 percent of projects submitted were rejected by Kickstarter at the outset. In other words, approximately one-third of all attempted campaigns succeed in getting the capital they ask for.

There are ways to improve those odds. “I would suggest making sure your mission is strong,” recommends Williams. “You need to have a clear purpose and an easy-to-understand value proposition. Hesitancy from potential donors usually occurs when individuals are unclear about what your business is all about.”

Another key to success is in finding mentors and building alliances along the way. For Thonneson, “After I designed how the game would function, I took it to family and friends to test it. One of those people became an important business mentor who gave me advice and a loan, used his connections to help me with out-of-the-country sourcing, and helped me with legal matters. After hearing about my desire to license the game, he told me to create a viable revenue stream by producing a product first rather than approach a compatible company with only the idea. I decided to follow his advice—and that led me to a successful licensing deal.”

Crowdsourcing is not for everyone. “One of the biggest challenges I faced was how to market after the first year’s ‘new product’ euphoria ended,” Thonneson remembers. “I had initially relied heavily on the stores who wanted the most current fad, and the free press I got from the magazines and bloggers. But after that first year, I wasn’t ‘news’ anymore. I thought about crowdfunding just for the exposure, but the amount of work that was involved was daunting to me.”

Even though Globalkinis did not use crowdsourcing for funding, Munoz admits that social media has been critical to its success. “The most successful thing we have done to promote the brand,” says Munoz, was to leverage five social media platforms: Facebook, Pinterest, Instagram, Twitter, and Tumblr. We have been contacted by various models who have acted as brand ambassadors for our bikinis, small business owners who bought wholesale or in bulk, and media such as ELLE magazine, which had us send over products for an online promotion. Here we are in year three of our startup business with 700 items for sale on our online collection. And we’re preparing to scale up the company.”

Despite the many obstacles they face, the unique mindset of millennials makes them better prepared to survive in this brave new startup economy. They understand that career success will require them to be more nimble and independent than past generations. They understand how to achieve more with less money. They are less in thrall of the idea of managing others than they are in having an autonomous, creative work life. And they are young enough to fail. Many believe that starting a company, even if it crashes and burns, will teach them more in one or two years than what they can ever possibly learn sitting in a cubicle for more than 20.

Sure, starting a new business is a risk but, to more and more millennials, it is a risk well worth taking. NJCU

Wanda L. Rutledge, Ph.D., is chair of the Management Department in the NJCU School of Business. An entrepreneur, sports management and sports marketing consultant, she has more than 30 years of experience as a senior, global, non-profit sports management executive, working on four Summer, and one Winter Olympic Games and doing research on current issues and challenges facing women entrepreneurs.