In the old days, if you wanted money to finance a project or new business (like a shooting range), there were only a few ways to do it. You could talk to local business investors, obtain a small business loan, or beg a rich uncle. And if none of those worked, then you put the project on the back burner and waited to win the lottery.
It didn’t matter that there were tons of people who wanted whatever product or service you had to offer. If the people with the money weren’t convinced, then you really didn’t have any other options.
In 1997, fans of the British rock band Marillion broke that norm. They wanted to see the band go on tour despite the untimely bankruptcy of their record label, so the fans paid for it themselves. They set up an online campaign where people could donate whatever amount of money they could afford, and within a short period of time, they had raised enough money to send Marillion on a 21-date tour.
It wasn’t long before others caught on and started websites to fund bands, albums, movies, and art projects. Inventions and games soon followed with the introduction of gadgets like the Pebble Watch ($10.3 million raised) and an online video game called Star Citizen which raised more than $14 million through crowdfunding campaigns on its own website as well as Kickstarter. Thousands of other campaigns have been successful in the few short years crowdfunding has existed with a total of $2.7 billion being raised in 2012 alone.
But it wasn’t until the JOBS (Jumpstart Our Business Startups) Act was signed in April 2012 that all of this meant much to small businesses. This new legislation opened the doors for startups to solicit equity financing from the general public pending implementation of regulations by the SEC. While that piece of the JOBS Act has yet to go into effect, small businesses are still finding ways to get their ventures off the ground through crowdfunding sites.
Business partners Rob Krop and Matthew Jones are doing just that with a campaign to build an indoor shooting range in Frederick, Maryland, called The Machine Gun Nest. The pair started the project with two goals in mind: build an indoor range in a neglected area and create responsible gun owners one experience at a time. To meet those goals, they decided to reach out to the community through crowdfunding.
“Right off the bat, there were really only two crowdfunding sites that would allow us to do what we wanted to do. It was Indiegogo and GoFundMe,” Krop said. “One of the big reasons we chose Indiegogo was because they had better reviews, we saw better products, we saw more activity, and we also saw larger donations.”
Indiegogo allows people to donate to The Machine Gun Nest’s campaign by purchasing one of several perks including pistol and machine gun rentals, one year memberships, family memberships, and lifetime memberships. They also offer more extensive perks for larger donations of $5,000 and $10,000 like premier access to new machine guns and having a shooting lane named after you for sponsor donations.
The Machine Gun Nest has seen initial success with nearly $22,000 raised in the first 24 hours of the campaign being launched, but beyond donations, their campaign through Indiegogo has increased the project’s visibility and built awareness among their future customers.
“This provides a venue where we can not only raise capital, but we can raise awareness and reward people for believing in us before the project is created by giving them discounts for their donations,” Jones said. “It creates awareness. It creates a buzz. And everyone can see it happen right there on our campaign. They see dollars that are going toward something that they also care about.”
Other shooting ranges have attempted to finance themselves through Indiegogo in the past, but only one managed to raise more than $195 after a full 60-day campaign. The difference with The Machine Gun Nest campaign, Krop says, is that they’re hitting the pavement and talking to people about it in person as well as online.
“One of the things that has really helped us is just getting out in front of people. We got a booth at the local gun show and that was huge. We got a great response. People seeing that we’re moving forward and that we’re out there in person gave a lot more validity to what we’re doing, and people felt more comfortable donating,” Krop said. “The more we get out in front of people and talk to them, the more they see that it’s a real thing and not just something online.”
For both men, that determination comes from more than just a desire to own a profitable business.
“This is a cause as well as a business, and it matters to us,” Jones said. “We want to create an environment where we can show safe and proper use and training for firearms so the public can see that firearms do have a place in the hands of responsible citizens.”
Only 43 days are left in the campaign, and Krop and Jones both plan to continue face-to-face and online efforts to reach their campaign goal of $500,000 – a very tall order in the world of crowdfunding – but whether they reach their goal or not, they still plan to open the shooting range with the help of community investors.
Opening the range may not be their biggest achievement, however. The Machine Gun Nest has the chance to become the first shooting range ever to be successfully financed through crowdfunding and may pave the way for other ranges like it. With crowdfunding expected to explode in the next year and with the implementation of public equity financing coming soon, the shooting range industry has a unique opportunity to bypass traditional financing options and get direct support from the shooting community itself. While there are likely to be many failed campaigns along the way, there will also be those who rise to the top and pioneer a new business model for shooting ranges everywhere.
Despite its ease, there are issues with using crowd funding for raising start up capital. The first issue is offering memberships through crowd funding. If a business projects needing a certain number of memberships to keep viable, crowd funding them removes them from the bottom line and transfers the money to the initial equity injection needed to qualify for a loan. All the money usesd as equity injection is removed from monthly debt service.
The second issue deals with the loan process itself. Many banks will not issue loans without the equity seed injection (which ranges from 15%-25% of the total loan requested). Suppose that you’re able to crowd fund 50% of your goal and that’s it. What will you do with the money already raised? Wait it out? Issue refunds?
The third issue is public apathy. While you might raise a little bit from the public, most people will not care to contribute unless they have an incentive to do so. And I’ve already discussed the problem with using memberships as an incentive.
One phrase you’ll hear time and time again with range projects is “good luck.” By the time you’re done raising money and filling out all the bank’s paperwork, you’ll be tired of hearing those two words.
Good luck!
Passion of the partners and gun enthusiasts will enable this to happen! Great article!
Great Article. This is what they speak of when they talk about that good’ol American hardworking spirit. Resourceful, tenacious, ingenuous, creative.
This is actually my passion, and I’m determined to build a gun range here in Orlando with my partner under the umbrella of our firearms business “Global Dynasty Corps.” We are veteran owned, operated, and preferred. I hope this Article Inspires others. I was especially pleased with they’re stressing of our having a responsible gun community, and the passing on and extending those values and knowledge to our new shooters, and avoiding possible accidents that reflect badly upon us all when irresponsibly people use guns.
Great Article again, really enjoyed it!