Finding the Crowd 'Spring-Loaded' to Support Local Business
The Local Crowd CEO Diane Sontum Says Rural Crowdfunding Campaigns Find Success by Starting Close to Home
Devin: What do you see as your superpower?
Diane: I think it is a capacity to be visionary and to see a little bit around the corner. Like I heard a quote by a hockey player that I don’t go where the puck is. I go where the puck is going to be. And that’s kind of what I have the capacity to see a little bit where the puck is going to be.
“I always say crowdfunding is not rocket science, but it is a science,” says The Local Crowd CEO Diane Sontum. “We like to tell you the proven methods so that you can be successful with your campaign.”
Her best advice: “We tell people to get 30 percent of their goal committed before they hit the launch button. So, if you’re trying to raise $10,000, you need to get $3,300 committed.”
“We know that 80 to 90 percent of the results of a campaign come from the efforts of the crowdfunder,” she says. “People have the mistaken idea that if I post it, they will fund. That’s not true. It really takes a lot of work.”
The other thing she says science is teaching about crowdfunding is the power of the local community.
“If you put that person into a community that is ready and spring-loaded to support you, then you have used that science to have a super crowd to start because the host of the platform helps you,” Diane says.
The Local Crowd started in Wyoming and operates in rural New Hampshire and Vermont communities. Breaking down small-population states into hyper-local, small communities is a surprising strategy to some observers.
“A lot of people think it’s kind of counterintuitive to take crowdfunding to a local area because it’s like, ‘Don’t you want the biggest crowd possible and not make it smaller?’ But again, we’re using the leverage of that first tier that spring loaded to support it, and all of your contributors don’t have to be local,” she says.
Crowdfunding supporters can be anywhere, learning about the campaign via social media or email. Starting the campaign with a local community doesn’t limit potential so much as it catalyzes it.
Diane focused her efforts on local communities because of her experience as the state director for the Small Business Development Center in Wyoming. “I knew how hard capital is to get in rural areas,” she says.
One of the challenges is deal size. Crowdfunders typically raise between $10,000 and $50,000 on The Local Crowd. “That’s also a niche that a lot of banks don’t even want to deal with because you have to go through a lot of hoops,” Diane says.
Crowdfunding plays a critical role in business development. “We recognize that we are part of the ecosystem of funding and that if maybe somebody doesn’t qualify for a bank loan, they could do a crowdfunding campaign and prove their worthiness and then go get a bank loan,” she says.
She adds, “I saw in an investor magazine some years ago that said, don’t show me your business plan, show me your crowdfund. Because that proves that you can pull together a project, you can sell your idea; you can get people to support you with dollars.”
The Local Crowd is a rewards-based platform—not investment based—so it is an alternative to Kickstarter or Indiegogo, not Wefunder or StartEngine. Still, she sees backing a campaign to support your local coffee shop as “an investment in your community.”
That is meaningful for the entrepreneurs raising money, too. Recent research The Local Crowd did in concert with the National Science Foundation shows that “social capital is key to economic development success,” according to Diane. It’s hard to be successful without social capital in much the same way it is tough to make a go of business without financial capital.
The Local Crowd partners with local organizations like Chambers of Commerce or economic development teams to create local implementations in small communities. Diane is leading the transition to convert the LLC to a co-op owned by the partners around the country.
Diane attributes her success to her vision, her ability to see around the corner.
How to Develop Vision As a Superpower
She sees The Local Crowd as the prime manifestation of her vision. “At the time that we got into crowdfunding, it wasn’t really thought about as a business idea. And now, we’re using it to support business growth. Of course, that’s the norm now.”
She offers some advice for developing greater vision yourself:
What comes to mind is silence and solitude is being able to—and nature—being able to go out—even if it's in your backyard. You don't have to make a big camping trip and all that. You just be out.
It doesn't always have to be in nature. It could be a hot bath, you know, but just some solitude and some silence. I think that's really key to being able to open that visionary sense, that inner eye, to be able to see and contemplate on things.
She provides additional advice that applies to developing any superpower.
I'm envisioning the new order of superpowers cannot be used by anyone without a pure heart. Now, that's an imagination thought experiment. So what does that have to do with my work? Well, I like that thought experiment. I like the idea of being powerful only for goodness.
The name of your podcast, “The Superpowers for Good.” I love that.
One of the ways I implement it is realizing that my work is about purification of my heart. And I will become more and more and more powerful the more pure my heart is and. Then The Local Crowd is TLC, which is tender, loving care.
It has been my intention all along that it provides a platform for people to show their care for one another. That really is the intention of the platform and. And I think the more pure of heart I become, the more brave I become. Because courage is the French word that means large heart.
Having been in the business world for so long, these ideas of loving kindness and tender loving care are kind of dismissed and denigrated in some ways. I remember I was at one meeting and somebody said, “We can't let relationships get in the way of business.”
I'm thinking, no business happens without relationships. I kind of have a little bit of PTSD having been through that. But I really believe that the future of superpower is through the pureness of our hearts, and that's how communities can come together.
I love her vision of using superpowers exclusively for good and honing our abilities by purifying our hearts toward tender, loving care.
You can make vision a superpower by following Diane’s example and advice, enabling you to do more good in the world.