We all hear the words "Kickstarter," "Patronicity," and "GoFundMe" on an almost daily basis, but how much good do those campaigns actually do? Here in Ypsilanti, quite a lot – although more for some demographics than others.
Over the past five years, Ypsi residents have raised over $670,000 across 32 crowdfunding campaigns, yet only 5 percent of those funds were raised by people of color. This is despite 40 percent of the over 72,000 residents between the city of Ypsi and Ypsi Township being people of color.
The first question that comes to mind is why? Why is the power of these new tools in community capital reaching some populations, but not others? And once we have a better insight into why, what can we do to change this trajectory in the next five years?
Digging into the numbers
Ypsi residents launched over 120 crowdfunding campaigns over the last five years; however, only 32 of them raised over $2,500 and completed their capital raise. Of those 32 campaigns, four were launched by founders of color: CreditCardShavers.com, We the People Growers Association (WTPGA), Ypsilanti Heritage Mural Project, and Hero Nation Ypsilanti. The total amount crowdfunded by people of color was $35,821, compared to $634,187 for white founders.
For some perspective, compare this data set with the Community Capital 500. This list comes from Investibule, the first site to aggregate crowdfunding campaigns across dozens of platforms so users can search by sector, state, campaign type, or founder demographic, such as minority-owned or women-owned. In 2016, Investibule's first year of operation, the organization cataloged data from 501 campaigns. Among those campaigns, 12 percent of capital was raised by minority-owned businesses.
By comparison, the venture capital sector has long been ridiculed for the tiny 1 percent of funding it gives to minority founders. So Ypsi sits somewhere between venture capital and the country as a whole.
Friends help friends
When we dug into how local founders of color came to launch a successful crowdfunding campaign we began to see a trend – the "friends help friends" law.
"Friends and people I knew in the community helped me," says Melvin Parson of WTPGA, which organized two successful crowdfunding campaigns in recent years. "I'm not sure if there's community sources that someone can go to with that help."
Ylondia Portis, founder of the minority-owned BrandHrt Digital Insights and Strategy, is a local entrepreneur who has been interested in launching a crowdfunding campaign, but has had some hesitation.
"One of the reasons that people of color may experience less opportunity with funding sources like GoFundMe is that it's highly network-based, and when you don't have that network around you that's knowledgeable in those types of funding sources, or you're not privy to consistent conversation about it, you're kind of at a disadvantage," she says. "It becomes incumbent upon us to go find those networks, but when you don't know those networks exist it makes it hard to take advantage. That's part of why I think this discrepancy exists between the two audiences. Places like Bamboo Detroit, which regularly features presentations around these kinds of conversations, is a great way to plug in."
Building those new connections can be a challenge for people who are busy running their business and working hard to find new customers to fuel their growth. Sometimes, however, those connections can be virtual and not local. That's what helped Jermaine Dickerson with his campaign for Hero Nation Ypsilanti.
"Most of the money came from my following on Twitter," Dickerson says. "I am used to seeing people of color, a lot of artists, in my community doing crowdfunding campaigns so I had a lot of examples to look at."
Looking beyond your network
When you don't have a virtual or a local network of friends to help you through the crowdfunding process, what do you do then? You do what Xavier Clemons did with CreditCardShavers.com and do some good old-fashioned Googling.
"It wasn't that difficult," says Clemons, who holds the distinction of having crowdfunded the most money of any person of color in Ypsi. "I did it all on my own. I didn't ask for assistance. I just went to Google and did research and looked at all of the crowdfunding campaigns. I kept coming up with Kickstarter and Indiegogo as the most popular."
Google wasn't the only help Clemons received, however.
"Although I basically did it by myself without any help, I did from time to time go to the WCC Entrepreneurship Center and they were very helpful with any type of entrepreneurial questions you may have," Clemons says.
In fact, the Center for Entrepreneurship at Washtenaw Community College noticed a trend of people walking in asking about crowdfunding resources, so the center decided to include the topic in its 2017 programming.
"Last year we held a free workshop on crowdfunding specifically, and we had a panel of three Ypsilanti business owners who all did successful campaigns – all female and on three different funding platforms," says Kristin Gapske, director of the center.
Changing the trajectory
Tapping into community capital to support Ypsi's growing minority-owned business sector is an opportunity that has the ability to change the community's future. Some community members are already taking steps to increase access to crowdfunding resources. Cultivate Coffee and Tap House has begun hosting a meetup the second Tuesday of each month called Entrepreneurs Shaping Our Community, where crowdfunding and other topics are being discussed.
Another example is the Circles program, launched earlier this year by Ypsi nonprofit Friends In Deed, which offers a variety of resources to those in poverty. The Circles program matches a person in poverty with at least three middle- or upper-income partners for at least 18 months to build relationships. The goal of these relationships is to break the cycle of generational poverty by creating circles of support and connections with people who are committed to making change in the community.
Cultivate cofounder Ryan Wallace, one of the 28 white Ypsi entrepreneurs who raised crowdfunding capital, puts it succinctly.
"The truth is that white people typically have more access to funding streams," Wallace says. "We need to gather those in the community who know this to be true and ask them to make a concerted effort to change this power dynamic. This will require a community to listen to people of color and invite them to the tables they sit at currently. This invitation needs to be done not out of guilt, but out of a real belief that we are all better together as a diverse and thriving community."
Angela Barbash is the co-founder of Revalue, a 50 percent minority-owned registered investment firm located in downtown Ypsi, and a licensed financial advisor. She is a national leader on the topic of impact investing and a local advocate for financial access through coalition-building and entrepreneurial mentorship.
All photos by Doug Coombe.