Seed Chicago: Chicago's Curated Kickstarter Page Highlights Crowdfunding's Advantages

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Small businesses are critical to the economy for a variety of reasons. They bolster their communities with sales and tax revenue. They create jobs. They also have a greater level of agility, allowing them to respond more rapidly to consumer demand than larger businesses, resulting in more innovative products. As an entrepreneurial platform, small businesses also represent opportunities for immigrants, young people and retiring workers seeking to increase their savings.

Small businesses require capital to cover startup or expansion. But the past several years have proved difficult for entrepreneurs to gain access to capital. Taking the financial risk associated with a small business seems counterintuitive to traditional lenders in the face of weak sales, diminished asset values, elevated uncertainty and tight credit market conditions.

Could crowdfunding serve as an alternative source of funding for local entrepreneurs? Crowdfunding websites function as online platforms for innovators to pitch their ideas and raise early capital. Rather than invest for a financial return, funders use crowdfunding websites to pledge support for an entrepreneur, motivated by eventual access to their product (e.g. a neighborhood coffee shop) or in support of the entrepreneur’s mission (e.g. creating community art).

Seed Chicago, World Business Chicago’s curated Kickstarter page, was developed as an initiative under Chicago Mayor Rahm Emanuel’s Plan for Economic Growth & Jobs. A central Plan strategy calls for developing and deploying neighborhood assets in pursuit of regional economic growth. Through Seed Chicago, small businesses harness technology to capture needed financial resources to incubate businesses, people and real estate within the city’s neighborhoods.

By aggregating local Kickstarter projects on a central page, Seed Chicago drives attention to worthy individual projects in Chicago, increasing their ability to meet their funding goals. Seed Chicago is currently highlighting both small businesses and community development projects which facilitate economic activity, revitalize neighborhoods, create new jobs or promote education and training – with a particular focus on neighborhoods with a history of disinvestment.

Beyond sourcing startup capital for small businesses, crowdfunding platforms can play other critical roles in urban development. Seed Chicago, for instance, serves as a meaningful tool for community engagement. Through the page, Chicagoans are directed to options for transformation potentially occurring within their communities. By backing a project, Chicagoans can offer input on their neighborhood’s retail character or prioritize job creation opportunities. Demetria Hayden, owner of the hair salon Altogether Lovely, is seeking funding on Seed Chicago to open a hair-braiding institute. According to Demetria, youth from the Englewood community seek her out, asking to learn this profitable trade – and she’s pleased to serve as positive local influence. Meanwhile, her storefront can help anchor a retail corridor.

The Kickstarter platform employed by Seed Chicago also allows entrepreneurs to test the marketplace. Manny Hernandez, owner of the locally infamous Tamale Spaceship foodtruck, has launched a campaign on Seed Chicago to see if there’s community support for opening a restaurant in Chicago’s Pilsen neighborhood. Just as launching his foodtruck tested appetite for his tamales, launching his Seed Chicago project helps Manny understand his customer base.

Crowdfunding can also help communities work cooperatively to address a need. Another Seed Chicago project, the Garfield Park Community Council, will use funds from a successful Kickstarter campaign to create a fresh food market where neighborhood residents can shop. The market will increase fresh food options while building community and potentially attracting customers from outside the neighborhood.

Seed Chicago is a pilot program to test the crowdfunding model. While fulfilling a gap in small business financing, the program also provides a way for Chicagoans to engage and shape their communities, and for neighborhoods to address specific needs. In addition to highlighting worthy small businesses and community development projects, Seed Chicago is surfacing a range of advantages related to crowdfunding.

Seed Chicago will feature another round of projects this summer. Small businesses interested in being featured can submit their information here.

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