Breaking Grounds

Starting a new business? Forget the bank loan—try the crowd

On a recent Monday morning, the scene inside Iconik Coffee Roasters is typical of a local, independent coffee shop. Friends chat quietly at handbuilt tables, an espresso machine hisses at the counter, and people hammer away at their laptops. This could be anywhere—a café in Brooklyn, Oakland or Portland. 

But for two of Iconik's owners, Todd Spitzer and Darren Berry, one thing stands out: the coffee.

"We're using a full-on innovative, geeked-out coffee culture buying, roasting and selling," Spitzer says over a shot of espresso (black). "You won't get a 24-ounce latte; we top it off at 12 ounce[s]. No hijacking Italian names. And it's more traditional brewing methods."

"We're huge geeks," Berry adds, laughing.

There is something else, though, that sets Iconik apart from the typical coffee shop landscape: They'd like your donations.

In April, Iconik launched a fundraising campaign on Indiegogo, a website that, along with Kickstarter, is a pillar of the nearly $3 billion crowdfunding industry. Crowdfunding uses direct, individual donations to fund new projects and organizations.

With sponsor levels starting at $10 and climbing steadily to $1,000, Iconik is offering free cups of coffee, branded mugs, T-shirts and other perks to anyone willing to peel open their wallet and make a donation. In total, Iconik seeks $20,000 to cover the cost of important building repairs, such as a new gas line, as well as a vintage coffee roaster they're having shipped in from Seattle. In addition to serving fresh, "direct-trade" coffee, they hope to roast and eventually distribute their own coffee throughout Santa Fe.

Since early crowdfunding made headlines for bolstering artistic and nonprofit projects, some may find it unusual that it can also work for traditional, for-profit businesses.

Yet according to Indiegogo co-founder Danae Ringelmann, helping small businesses has been one of the site's goals since the beginning.

"Many people think that crowdfunding is only for nonprofit companies or artistic endeavors, but this isn't the case at all," Ringelmann writes in an email. (Indiegogo would not disclose the percentage of projects that benefit for-profit businesses, as opposed to nonprofits.)   

"As I was growing up, my parents owned and operated a brick and mortar business," Ringelmann adds.
"Despite 30 years of hard work, loyal employees and steady growth, it was impossible to find the money to invest in a more sustainable future…Seeing the difficulties my parents faced inspired me to launch Indiegogo to fix this inequity and provide an equal opportunity platform for people to succeed."

To Spitzer, who recently moved back to New Mexico from the Bay Area (where Indiegogo was founded), it's a natural fit.

"At home, with Indiegogo or Kickstarter, everybody just does it. If someone is putting up something in the neighborhood, everybody does something because they are into people not wanting to borrow money from banks," he tells SFR. "People just want to help everybody out."

As of press time, however, Iconik had raised just $950, with six days to go—evidence that Santa Feans may be less generous when it comes to crowdfunding.

"I think there is a difference in attitude: Here, it's newer," Spitzer admits. Around San Francisco, he says, "They're in their own little economic bubble. Everyone's got disposable cash that they're ready to put down.
People here are a bit more cautious."

That may soon change.

Kate Noble, a special projects administrator at the city's Economic Development Division, says she was "blown away" by the number of companies that were considering crowdfunding at a recent business development boot camp for entrepreneurs. 

"It's been really interesting to watch," Noble says. "I would say that, in the past six months, I've seen a real spike in conversation and thoughtfulness [about crowdfunding]."

The city also plans to help facilitate crowdfunding, in conjunction with MIX Santa Fe—the monthly networking events for entrepreneurs, business owners and professionals. Currently, MIX is holding its second annual business plan competition, BizMIX. In November, the winners will participate in "MIXstarter," a fundraising event where, rather than promoting their projects online—as Iconik's three owners do in an 8-minute YouTube video posted on Indiegogo—entrepreneurs will be able to present their ideas to potential donors in person. 

To be sure, there's a flip side: Money that was previously invested in local banks now flows through out-of-state corporations like Indiegogo and Kickstarter, which take a percentage of the crowdfunded donations.

But Noble isn't worried.

"This is apples and oranges. I'm in favor of innovation," she says. "Community bank loans are one of the oldest forms of raising money. It's either that or borrowing money from your parents."

And even lenders seem positive about crowdfunding.

"There's been peer-to-peer lending out there for years now. Crowdsourcing is just another flavor of that," says Steve Wells, president of Los Alamos National Bank. "There are people that have gone into tough financial times, and may not be capable of obtaining loans. They may decide to try and get around the routine and rigamarole. Competition is healthy. I think it makes us better. And it makes everyone better."

Other local coffee shops also seem to welcome Iconik.

"There's a lot of room for positive competition," says Tai Ayers, the general manager of Ohori's Coffee.   
 
Bill Deutsch, who opened Holy Spirit Espresso more than 20 years ago, is more emphatic, going so far as to apologize for getting on his "soapbox."

"The more independent coffeeshops we can have in Santa Fe, the better—so we can drive out that whore from this state," he says, referring to Starbucks. "For someone to come in and go up against the Goliath, wow! Go for it, dude."

If Iconik fails to meet its $20,000 goal, it will keep the donations, rather than returning the money to donors (an option Indiegogo offers).

But Iconik's owners insist that it's not just about the money. They say their crowdfunding campaign is also a means of getting the word out.

"It's actually brought people in just to see the place, because they've seen the video," Spitzer says. "And that's good enough for us." 


Interested in donating to Iconik Coffee Roasters? Visit indiegogo.com/projects/iconik-hearts-you. Entries to MIX Santa Fe's business plan challenge are accepted through May 16; for more information, visit mixsantafe.com. 

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