Investment
People power
Using crowdfunding as a way of getting a project off the ground can allow architects to be proactive, but it does have its pitfalls. Kath Hudson finds out the pros and cons from the people who've done it
In times of austerity, with cash-strapped local authorities and banks frequently reluctant to lend, many projects languish on the drawing board. However, crowdfunding offers an alternative access to funds and is becoming an increasingly influential way to breathe new life into old buildings or get brand new projects and kooky ideas off the ground.
Bjarke Ingels, who used crowdfunding to finance the steam ring generator (see boxout), is a fan:
“Often architects are the last ones to enter the game of imagining the future of our cities, because they have to wait for someone to announce a competition, or a developer to give them a project,” he says. “One of the inhibitions of the architecture profession is that it is often limited by the vision the clients put forward. Platforms like Kickstarter are a great place for architects to be proactive and get their ideas out there.”
There are a number of other advantages to crowdfunding. A successful campaign, which the community has been happy to buy into, means your idea is a goer and you have a ready-made audience.
Choosing the right platform
On the downside, it’s not an easy way of getting cash. Studio Octopi’s Chris Romer-Lee, who has worked on a couple of crowdfunding campaigns, says they are intense and hard work.
“I’ve not worked out a way to do a campaign which isn’t completely draining. It’s so intense and time-consuming,” he says. “For the 30 days of the Thames Bath campaign, I was getting five hours sleep and retweeting in the middle of the night. It’s all about keeping the churn going.”
Romer-Lee says the choice of platform is important. The Thames Bath project – to create a floating freshwater swimming pool on the River Thames – had global appeal because it was in the heart of London and could also be transferable to other places, so Kickstarter was chosen.
For Peckham Lido, a community project in London, Spacehive was a better fit because it’s more suited to local initiatives, from a few thousand up to about £100,000 ($131,000, €117,000).
Kickstarter requires rewards for pledges, so a five-tier system was put in place for Thames Bath, including free swims for life for the platinum membership, down to the lowest tier of 12 free swims and a swimming cap for a £50 ($65, €59) pledge. “Rewards have to be carefully calculated so that you don’t give away more than is pledged,” says Romer-Lee. “We aimed for 7-10 per cent.”
Hitting the tipping point
The risk with crowdfunding is that if a campaign is unsuccessful then you don’t receive any of the money pledged. Spacehive runs this model to safeguard the individuals who are pledging money: if a campaign doesn’t hit its target, it’s less likely to happen and people will receive nothing in return. However, even if a campaign is unsuccessful, at least it’s a learning experience.
“If a project isn’t successful it’s because either the public don’t want to buy into it, or you haven’t sold it well enough, so you have at least learnt that,” says Harriet Gridley, community development manager at Spacehive.
Gridley says the tipping point for a successful campaign is 59 per cent. “If they hit that they tend to go on to be successful,” she says. “It’s crowd psychology: if one person ran out of a room screaming you’d think they were weird. If two more left you might think something is happening, but if more than half leave, you might join in.”
Reaching the community
She says to be crowdfundable a project needs to be novel, have a strong design element, capture the public imagination, appeal to different audience groups and be deliverable.
“Crowdfunding campaigns can get the seed funding to attract attention to a project. You can use the money to demonstrate it to a community. If the public likes it, then local businesses come on board, the council and the corporates,” she says.
“It empowers citizens to change their community with a bottom-up approach. We are seeing lots of green space projects, such as cleaning up a lake or a forest education centre, as well as repurposing old buildings. Governments like it because it takes the issue away from them.”
Like many platforms, Spacehive gives a lot of support to its clients, including running webinars. There are a few golden rules according to Gridley. Restrict the campaign to four to 12 weeks, so the momentum and excitement can be maintained.
“Do 90 per cent of the work before the launch. Warm up contacts, have all the visuals, graphics, video and promotional material ready to use on social media. Each day do something to push it.”
Romer-Lee warns it’s crucial to be clear in the campaign because weakness will be picked apart. He also says celebrity endorsement goes a long way. Actor James Norton, who lives in London, backed the lido campaign and artist Tracey Emin – a keen swimmer – came on board for Thames Bath.
Detroit City Football Club
Platform: MichiganFinders
Amount raised so far: $725,500
When it needed a new home, fast-growing, semi-pro soccer team Detroit City Football Club decided to go the crowdfunding route to raise the funds to renovate a 79-year-old stadium in Michigan.
The largest community-financed project in US sports history, the $3m (£2.3m, €2.7m) renovation will replace the artificial turf with real grass, update the lighting and renovate the restrooms and locker rooms. Hosted by MichiganFunders.com, the campaign raised $250,000, (£190,799, €224,315) from 125 investors, in the first month.
The club chose this route after being unable to borrow sufficient funds from the bank and reluctant to give up equity in the business to raise capital. “Crowdfunding allowed us to leverage the connections we had made with the local community to create this private-public partnership, where we invested in the renovation of a community asset and offered investors a meaningful financial return as part of the process,” says Todd Krupp, co-owner of the club.
Krupp says there are a number of advantages to crowdfunding: investors help to tell the story of your business and it gives the community an opportunity to contribute.
However, he warns of some potential pitfalls: “Depending on business case and risk level, you may have to offer a higher rate of return than what you would pay in interest for traditional financing. In our case we were receiving funds from local people, so it was extremely important to us that we could deliver on our promise to pay people back in the timeframe we stated in our offering materials.
“Also provide enough time for people to consider the investment and sign up. Our campaign stretched across four months and we were nervous right up until the very end as to whether we’d hit our funding target.”
Peckham regeneration
Platform: Spacehive
Amount raised: Peckham Coal Line £75,757
Peckham Lido £65,000
If everything goes according to plan, the South London borough of Peckham will be transformed thanks to community-led crowdfunding. A crowdfunded feasibility study is currently underway to create a 1km elevated urban park on the site of some coal sidings which have been derelict since the 1950s. The Peckham Coal Line would provide some valuable green space in a very urban area and link into the national cycle route.
A second crowdfunding campaign, launched in May, raised £60,000 ($78,500, €70,407) to resurrect the Peckham Rye Lido, which closed in 1987. Plans include the creation of an Olympic-sized pool and a wild swimming pond channeling the River Peck, which runs directly under the site. The site will include a “Peckham Beach”, gym, yoga studio, café and community space as well as an outdoor cinema.
After seeing the community invest in the Peckham Lido, Southwark Council pledged £10,000 ($13,082, €11,734) and the Mayor of London £7,500 ($9,825, €8,814). The largest individual contribution was £3,000 ($3,930, €3,525), from a local tech entrepreneur and the smallest was a few pounds.
BIG’s steam ring generator
Platform: Kickstarter
Amount raised: $29,520
BIG launched a $15,000 (£11,447, €13,458) campaign to finance the prototype of a smoke ring generator: a tower fixed to a power plant in Copenhagen, to emit a symbolic ring of steam for each ton of CO2 the plant emits. The plant, also designed by BIG, incinerates trash to generate power, and includes a functional ski slope, complete with trees and half pipes.
Currently being prototyped, the smoke ring generator is slated for completion in 2017. Each of the 399 backers, who pledged a total of $29,520 (£22,528, €26,487) to bring this project to life, will get their name engraved on the generator.
BIG went the crowdfunding route because there were no takers to finance it: it’s a piece of public art not essential to the plant, with a radical message. “Architects don’t have access to the same grants as artists. We managed to get half of the necessary funding, but the rest we decided to pursue through Kickstarter,” says head of communications at BIG, Daria Pahhota.
“Bjarke Ingels gave a talk at their offices in Brooklyn and it seemed like an interesting way to go about it. It’s also very close to the concept of the steam rings – the idea of radical transparency, so it made sense to let the public decide the project’s destiny.
“We would absolutely do it again, but like everything else, it needs to be done well and with consideration and respect. It’s not a PR tool, but if done with good intentions and in a smart way, the rewards are great.”
Miami Marine Stadium
Platform: Indiegogo
Amount raised so far: $109,800
The National Trust has been working to restore Miami Marine Stadium since 2009, when it was added to the annual list of America’s 11 Most Endangered Historic Places, but it was the partnership with Heineken which spurred the crowdfunding effort.
“We were inspired not only by Heineken’s enthusiasm for the stadium and its iconic status in Miami, but also for their desire to engage a younger generation in the movement to save it,” says Jason Clement, director of community outreach at The National Trust. “We are hopeful this partnership with Heineken proves crowdfunding is a viable tool for engaging more people in our work to save places.”
A fully restored Miami Marine Stadium would cost more than $30m (£22.9m, €26.9m), too much for a crowdfunding campaign, so the National Trust settled on a project which was achievable with Heinekin’s support. They decided to replace the stadium’s seats, as the first step in its transformation into a world-class concert and events venue.
“Crowdfunding requires a very specific project and equally specific funding goal that’s attainable in a short period of time,” says Clement. “Crowdfunding engaged people who have probably never donated to a preservation campaign. Not all platforms work the same way and for some, if you don’t reach your goal, the funds raised might not be awarded to you. It takes a lot of work to run these campaigns, so it’s important that you know exactly how your platform does things – win or lose.”
Powder Mountain
Platform: Private funding drive
Amount raised: $40m
A group of young US entrepreneurs crowdsourced a Utah ski resort, Powder Mountain, in 2013, persuading 110 investors to pay between $1m (£0.76m, €0.9m) and $2m (£1.5m, €1.8m) for one to two acre plots (see CLAD 2016 issue 1).
Co-founder of Summit Powder Mountain, Elliott Bisnow, says they chose this route in order to bring in as wide and diverse an investor and supporter group as possible, rather than be held hostage by a traditional private equity firm or institution.
“The experience was time consuming, because the majority of investors had not gone through a process like this before. While they believed deeply in the project and had an understanding of the possibilities, the actual process of making this happen was long and complicated,” says Bisnow. “In a normal scenario you would go to one investment firm and they would fund the project. We went to dozens of families, across the globe, who individually each contributed a small amount.
“However, in the end the process was a tremendous success and allowed us to build momentum with incredible backers who believed in our vision and put community first, rather than profits.”
