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Crowdfunding rising source of cash for Detroit projects

Karen Dybis
Special to The Detroit News

When Vinnie Dombroski and the Orbitsuns decided to record their next album, they wanted to involve their fans, retain their master recordings and not lose their shirts on the cost. So they did what more rock-and-roll stars are doing: They created a crowdfunding campaign to cover their studio fees.

The self-described “purveyors of lowdown and dirty outlaw country” launched a PledgeMusic project to raise $10,000 with a 5 percent donation to a local teen outreach charity. The project, which is nearly fully funded with a week to go, made sense from a business and marketing standpoint, Dombroski said.

“It’s a win for the fans and it’s a win for the band,” the Orbitsuns singer said. “For fans, it’s a lot more fun and interesting than just getting an album download. From an artistic point of view, there’s no one at a record label telling us what songs to record, how to record them or who to record them with. It’s a fantastic opportunity for a band to do things their way.”

Rockers do it. Artists flock to it. Inventors stand by it. Crowdfunding has grown over the past five years from a curiosity to become an organized platform to launch just about anything. It is now an international phenomenon, changing the way Michigan entrepreneurs test ideas, find investors, cultivate clients and boost advertising.

“It gives everybody an opportunity to be an entrepreneur,” said Michael Bernacchi, a University of Detroit Mercy Business Administration professor who described the quick growth of these sites as a “feeding frenzy. It gives people an opportunity to feel like you’re somebody; you can pitch an idea, take ownership of it and find out whether it has a chance to success in the marketplace.”

There are plenty of examples. Dombrowski said both of his bands, Sponge and The Orbitsuns, have had fully funded crowdfunding projects, inspired in part by other rockers like Sum 41 and Megadeth running similar ones. Detroit’s Orbit Magazine and Wayne State University’s press recently did one at Michigan-centric crowdfunding site Patronicity. Midtown Detroit raised more than $50,000 to create a “Green Alley” by its Detroit headquarters the same way. Troy-based business owner Tom Nardone test marketed a bullet-proof baseball cap and backpack panel with crowdfunding on Kickstarter.

Nardone has done five crowdfunding campaigns. Some have been hugely successful, such as a fundraiser to replace swings in Detroit’s playgrounds with his group the Detroit Mower Gang. “If people like the product, it will take off. It will live on its own,” Nardone said.

Crowdfunding saw its best year in 2014. Popular sites such as Kickstarter had 22,252 projects last year, raising $529 million compared to $480 million in 2013. GoFundMe, which is closing in on the top crowdfunding position, said it raised $470 million in pledges last year. According to Massolution, a crowdfunding industry group, the global crowdfunding market will reach $34.4 billion in 2015.

Indiegogo, which does not release its funding levels, did say it had a 1,000 percent funding increase over the past two years. Indiegogo said Detroiters have been particularly active, pledging $4.1 million to 1,371 projects over the past six years. Of those, the largest category was music with about 350 projects. Others have included film, art, design, games, technology, fashion and food.

Critics contend crowdfunding is an unprofessional money grab, particularly when for-profit businesses use it to secure money. Some would rather see them get small-business loans or find another means.

However, sites including Detroit-based Patronicity along with big players contend they serve a increasingly important purpose in the lending community. They say crowdfunding provides untraditional or up-and-coming businesses funding options to traditional bank loans or venture capital. It allows more female-led companies to establish a base. They say crowdfunding can streamline the process of getting money, especially in the form of grants, into the right hands and back into the economy.

“It created this huge opportunity for individuals to become patrons of the arts, something previously reserved for the very wealthy or philanthropic investors. Here, anyone can support an idea with a small contribution,” said Ebrahim Varachia, an organizer behind Patronicity.

Karen Dybis is a Metro Detroit freelance writer.