When Aaron Hillis and his wife bought Cobble Hill’s Video Free Brooklyn—a well-loved but somewhat dingy relic from the age of VHS—they had rather lofty plans for the store. They would transform the outmoded space into hub of film culture that would redefine the role of the video store in the time of Netflix. It would be both a boutique offering personalized service and an event space (thanks to collapsible shelves) with screenings and discussions. But like many fledgling entrepreneurs, their plans far outpaced their pocketbooks—Mr. Hillis figured he would need about $50,000 to revamp the space.
They might have tried for a bank loan, or made do until they saved enough for the renovation, but neither option was very appealing, so the Hillises did what everyone with a creative vision and a lack of cash seems to do these days: they launched a crowdfunding campaign.
“I don’t think it’s any different or less valid than when PBS or NPR ask people to donate for a free tote bag, or the Kickstarter campaign in Detroit to build a life-size statue of RoboCop,” said Mr. Hillis, who has thus far raised about $7,000 (with two weeks to go on a $50,000 campaign) on Indiegogo. “As long as you’re transparent about where the money is going, you’re putting together something that people want to be a part of.”
Although it might seem counterintuitive—aren’t businesses supposed to get their money by selling things?—crowdfunding has become increasingly popular among entrepreneurs. Using online platforms like Indiegogo, Smallknot and Lucky Ant, businesses have raised money to cover everything from startup costs and special projects to operating expenses. For the business owner, the appeal is obvious: loans are hard to come by, while online fundraising provides access to what is essentially interest-free (and sometimes entirely free) capital, depending on the perks and in-kind services they offer in exchange—which run the gamut from being worth as much as the contribution to a thank you card.
In a place like New York, where hyper-gentrification has driven many popular businesses from neighborhoods, it’s clear that mom-and-pop’s, even popular ones, sometimes require more than patronage to stay afloat. And rather than bemoaning their demise, many people are willing to pay for the luxury of keeping them.
“I think that more and more people are recognizing that small businesses are integral to community identity and they’re also an endangered species in many places,” said Jonathan Bowles, the director of the Center for an Urban Future. “I do think that many people are going to be increasingly putting money up to ensure that their favorite small businesses stay viable.”
But what does it mean for the future of for-profits? Are small businesses capitalist enterprises whose success ought to be determined by the free market, or cultural institutions deserving of our protection and coddling? Can they be both?