Etsy Is Moving Into Kickstarter Territory

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McBride’s TM1985 is one of approximately 100 Etsy shops invited to participate in Fund on Etsy, a two-month pilot program currently in progress—the Brooklyn-headquartered marketplace’s answer to en vogue crowd-funding platforms like Gofundme, Kickstarter, and Indiegogo. Previously, Etsy was merely a space to buy handmade clothes, jewelry and home décor, plus wedding and pet paraphernalia. Now anyone with an Etsy account can invest in a product they’d like to see manufactured. According to Etsy’s senior manager of public relations, Nikki Summer, the program allows sellers to build 15, 30, 45 or 60-day fundraising campaigns. About 60 of the campaigns began on June 16th, Etsy’s 10th anniversary.

"We looked at a mix of criteria to find sellers who we thought would most benefit from crowd funding and who had also expressed a desire to grow their business," Summer said. Following the program’s conclusion on August 16th, Summer said Etsy will be "looking at everything we’ve learned, [and] listening to feedback from buyers and sellers." Etsy has 20.8 million active buyers, which Summer defines as anyone on Etsy who has made a purchase in the previous 12 months. Etsy became a publicly traded company in mid-April, which Summer said is when Fund on Etsy sellers first had access to the online tools to build their campaigns.

To lessen both investment anxiety and seller pressure to deliver completed goods below budget, "The buyer’s card is only charged once the campaign is complete and the seller has reached their funding goal," said Summer. Kickstarter uses a similar strategy, which they call "all-or-nothing funding."

"We’ve heard from many sellers over the years who want to grow that financing is one of the biggest hurdles that they face, and we thought this would be a great way to find a smooth, seamless fix for them—on the same site that they sell on," said Summer. Same as with regular transactions on the site, Etsy receives a 3.5% commission on each credit card charge applied to Fund on Etsy, she said.

Melissa Herold of NightBlooming—which stocks natural hair care products and non-damaging hair accessories from Winona, Minnesota—helmed the first successful Fund on Etsy campaign, raising the $600 she sought in just four days. As of press time, Herold’s campaign more than doubled its goal, at 219% funded. Now they company will be able to purchase a food-grade liquid filling machine that will enable NightBlooming to fill bottles with more efficiency. Like McBride, Herold opened her Etsy shop in 2008.

Although Herold isn’t certain why she was chosen to participate in Fund on Etsy, in last year’s annual seller survey distributed to Etsy storeowners, she indicated that she was keen to learn more about fundraising initiatives, she said.

"My customers are very excited and they’re very engaged," Herold said. "So I wanted to pick what I felt was an achievable and realistic goal that regardless of any external marketing."

To receive a place in the pilot program, store owners had to sign a non-disclosure agreement stipulating that they would not publicize Fund on Etsy before its June launch.

"I think I might have worn the letter off my F5 key—I was refreshing the page constantly and it was also really exciting because I was getting emails and handles from friends and family and customers who were also watching the campaign and were super-excited about it," Herold said. She cites word of mouth and other people’s social media stewardship for quickly reaching her goal—"it really was the customers who were the ones pulling in other people." In exchange for their donation, NightBlooming customers will receive a bottle of vegan and organic Selkie Herbal Detangler by November, Herold said. "I think it’s a great program," Herold said but added, "I don’t think it’s for everyone." She cited active, enthusiastic repeat buyers as the "keystone" of her fundraising, along with the trust she’s built with her customers. "Sometimes crowd funding goes bad and people get their money taken without ever getting anything in return," she wrote in a follow-up email. "If a seller doesn't have a long history of positive customer interaction, that can make a potential backer feel less than confident and decide not to participate in an Fund [on Etsy] campaign."

Another quickly-funded campaign was run by Dave Laituri and his teenage son, Calvin. They operate Onehundredco, a company dedicated to making products within 100 miles of Boston (they live in Wayland, Massachusetts). "I spent most of my career working in China, and that’s fun and all, but the question in my mind was, Can we make things in our own neighborhood?" Laituri said. This time, they crowd-funded a self-assembling birdfeeder called the Brdi Cafe.

Laituri, who set up his Etsy shop in 2013, has run seven crowd-funding campaigns, raising an estimated $480K for various projects. Compared to his previous endeavors on Kickstarter, Laituri said Fund on Etsy was, "homey." "Kickstarter’s got, music and bands and technology and multi-medial projects. It’s sometimes hard to get your arms around all of it. The things on Fund on Etsy are nice and simple. They’re, you know, herbal balms they’re greeting cards that have some really interesting artwork, our little birdfeeder that you assemble yourself, just simple stories with simple messages and it’s just kind of refreshing."

Admittedly, part of Laituri’s fundraising strategy is setting very modest goals. Though Onehundredco only solicited $200 this time, even with his past successes on other sites, being part of a pilot program meant that Laituri couldn’t predict the outcome. As of press time, they are 622% funded. "Etsy’s stuff is a little more crafty and there’s a little more of a handmade component to it. Ours are stamped by a machine. We were never sure how we’d be received in the world of crafty things with our manufactured thing, but they’ve gotten behind it. It’s exciting." Laituri said he "absolutely" recommends Fund on Etsy, calling the platform, "the perfect thing for their audience."

In hindsight, Ursula Inka Manaf and Emily Teitel of Brooklyn’s EarthSeaWarrior longed for the seemingly endless expanse of fundraisers Kickstarter provides. While Teitel longed for more fundraising categories to provide context for browsers, Manaf said, "I wish there was more competition, like a higher caliber of asking…We wanted to be that company that kind of pushed Etsy’s community to see that this funding doesn’t [have to be capped at] a couple hundred dollars, which is a lot of the campaigns. Or a couple thousand dollars for like a sewing machine or a space for a couple months."

Manaf and Teitel are running the most ambitious Fund on Etsy campaign, trying to raise just over $13,000 to put their line of asymmetrical 3D butt-shaped lollipops, Tushiez Popz, into production. For Tushiez Popz, the EarthSeaWarrior team applied their popular porcelain sculptures (inspired by the lower half of collectible German Bisque dolls) to candy. "It’s appropriate for kids but it’s also funny for adults," said Manaf. To have make prototypes, they went ahead and purchased their custom candy mold, which alone cost over $5,000.

On the eve of a Kickstarter launch for Tushiez Popz, EarthSeaWarrior as invited to join the Fund on Etsy pilot program. "We were like, ‘This is perfect," said Manaf. "This is the platform that we grew up on. Like Etsy really catapulted Earth Sea Warrior—I cannot ignore the fact that this company might not even exist if it were not for Etsy. In 2010 there were not ecommerce companies that were welcoming artists, who were able to catapult them and give them the exposure that Etsy was giving people."

Through no fault of Etsy, Teitel said EarthSeaWarrior spent a lot of time "beating ourselves up" in the initial days of the campaign, which as of press time is 53% funded with six days to go. "Because we spent so much time focusing on getting the content right, we didn’t even, I guess, have the bandwith within ourselves to plan out a press plan, a launch plan for contacting people…we should have been more prepared." And while a video component of their campaign wasn’t required, high-achieving EarthSeaWarrior struggled putting there’s together on a tight deadline (Etsy provided them with an extension).

"I feel like there’s this trust that you build with your funders, that they’re going to receive something in return and it’s not like they’re just anonymously donating."

Manaf says that compared to other crowdfunding platforms, Fund on Etsy’s provision that "every donation has to have an exchangeable, tangible item. Period," very much appealed to her sensibilities. "I feel like there’s this trust that you build with your funders, that they’re going to receive something in return and it’s not like they’re just anonymously donating," she said. However, not everyone has a need for Miley Cyrus-worthy lollipops. "I think there are a lot of Kickstarters where you’re supporting an act or a business rather than just a product," said Teitel. Concluded Manaf, "In retrospect, for us it wasn’t the best fit. Because we were trying to build a larger brand and grow the brand and the product line, which is a little bit outside of what Etsy was doing."

With a fellow five-figure fundraising goal, TM1985’s McBride can relate to EarthSeaWarrior’s learning curve. "I tend to be a little bit overambitious which most entrepreneurs tend to be," said McBride, who saw Fund on Etsy as a chance to create a whole ready-to-wear collection. His aimed-for $10,000 would go towards development fees, samples, and other research and development costs. So far, with just five days remaining, only 10% of McBride’s campaign has been funded.

"It’s been interesting," McBride says of being a Fund on Etsy guinea pig. "We weren’t able to reach out to press right away, we weren’t able to kind of share our upcoming project with a lot of people," said McBride. "So that was a little difficult but I mean obviously it wasn’t anything new and larger companies want to protect that information and we totally stood by that, and we’re just happy to be able to express all of our enthusiasm about it now."