Crowdtilt Wants to Be the Next Kickstarter
BY Jill Krasny
The startup, which runs crowdsourcing campaigns for everything from new business ventures to group vacations, has scored $23 million in capital from Andreesen Horowitz.
Not just anyone can grab the attention of Andreesen Horowitz. But on Monday, Crowdtilt, a San Francisco-based crowdfunding startup, announced it had secured a $23 million second round of funding led by the venture capital firm, along with San Francisco angel firm SV Angel, Sean Parker, and Silicon Valley Bank. Crowdtilt, a Y Combinator alum, plans to put the investment toward hiring employees and taking its service worldwide.
Crowdtilt's site bills itself as the "easiest way to pool money in your group." It's intended to be a crowdfunding platform for the everyman, where entrepreneurs, nonprofits, and even organizers of tailgate parties can all come to find capital.
"You’ve got a company capable of rapidly building a team in a bunch of broad use cases," Andreesen Horowitz partner Jeff Jordan, a former CEO at OpenTable, told USA Today. The idea is to be able "to fund virtually anything--we think the sky’s the limit."
But why would entrepreneurs, many of whom have been hugely successful on other crowdfunding platforms such as Kickstarter and Indiegogo, be inclined to use Crowdtilt instead?
The answer, according to Crowdtilt chief executive James Beshara, is that it’s just simpler to use. When launching a campaign, entrepreneurs use Crowdhoster, Crowdtilt's open-source platform. “Its flexibility is pretty unrivaled,” Beshara tells Inc. “You can do A/B testing and add in subscription-based crowdfunding; you can even accept Bitcoin."
If a fundraising campaign is successful (or "tilts"), Crowdtilt takes a fee of 2.5 percent of the money raised. At first blush, it may seem like there isn't a lot of money to be made from this model. But the sheer volume of campaigns that Crowdtilt can host make it a good bet, says Quentin Fleming, adjunct professor at the University of Southern California's Marshall School of Business.
"In many respects," he says, "if you go to traditional bricks-and-mortar fundraisers, there are a lot of horror stories. Over half the money they raise goes toward the administrative cost of raising it, whereas with this, it's somewhat electronic. They almost do all of the work and you just click to facilitate it."
Of course, soliciting funds over e-mail or Facebook isn't an easy feat, either. Traditional communication tools don't offer a means to transact. "You always have to introduce some other tool," Beshara says. But on Crowdtilt, "there's not a huge barrier to entry."