Lucky Ant Launches, Extending Kickstarter-style Crowdfunding to Local Merchants

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Over the past few years, Kickstarter has pioneered the idea of  crowdfunded creative projects, letting users give small donations to support efforts by artists and writers they like. Lucky Ant, a hyperlocal crowdfunding site that launched earlier today, hopes that this concept can be extended to the community level.

The service gives small business owners a way to raise money in the form of small donations to fund improvement projects (say a restaurant that wants to build an outside deck), while at the same time forging deeper connections with customers and encouraging loyalty. Community members, meanwhile, have a tangible way to support businesses they like while getting the opportunity to receive special rewards, VIP treatment and other perks. The service is currently only operating in New York, feautring one project per week, but has plans to expand soon.

Street Fight spoke recently to Lucky Ant co-founder Jonathan Moyal about how the site works and why he thinks consumers will be motivated to support these kinds of projects for local businesses.

Tell me about where the idea for Lucky Ant came from?
I had been obsessed with finding a way to really connect with merchants and I was talking to a lot of them. I became obsessed with the idea of what it is that we need at the merchant level — it’s not just all about getting new customers. It kind of hit me that what they really need is money — and there were no crowd-funding solutions for merchants out there.

I had seen a few of these merchants use crowdfunding, like Kickstarter, or IndieGoGo, but there wasn’t a local feel to it in the sense that I could fund someone that was three blocks away from me. Or, that I can fund the bakery that I get my coffee at every morning. There wasn’t that.

I’m originally from Morocco, and my great-grandfather ran a drugstore-type thing. Everybody knew him in the neighborhood as the drugstore guy, and when he needed a loan to expand, he didn’t go to a bank, because there were no banks back then. You would go to your neighbors and everybody would pitch in.  That’s how it works.  That’s very much the driving force behind how Lucky Ant was born.

What’s the name “Lucky Ant” all about? 
The slogan is, “No ant works alone.”  I was thinking about worker bees, and that wasn’t working out — it seemed like all the domains around that were taken. My sister said, “Bees? Why not ants?” Worker ants all work together, and there was this idea of people getting together to make something bigger happen.

What do people get out of donating money to small businesses in their area?
In a little tweak on the Kickstarter model is that I decided to do a one-project-a-week model as opposed letting everybody post whatever they want. I think that it will allow people to focus on one project and it will hopefully lead to a higher conversion rate, over time.  We’ll be able to fund as many projects as possible as opposed to diffusing everybody’s energy over all these different things.

In terms of rewards, I work with the merchants. I don’t impose anything on them, but I try to get them to understand that what they’re giving away shouldn’t just be free products or discounted products. If they want to give away a discount, they can run a Groupon; that’s a whole other business model. What they’re really selling, and what I’m really selling, is their story. What they’re really selling is a participation in their story — it’s being able to invest in your neighborhood; being able to see the benefits of investing in your neighborhood.

So the rewards can be products, services, or perks. Products: that’s simple, whatever they sell. Services tend to be a way to monetize some of the things that the store or business owner cannot monetize right now. For example, I’m working with a bakery and they might be looking into giving away baking lessons on Tuesday nights because they close early. That’s something they are not selling right now. And the perks are VIP-access-type things. It may be a VIP card that lets you skip the line in the morning — the kinds of things that will make users feel truly connected as opposed to “I came in with a Groupon, I bought something, and I walked out.”  This, I hope, will drive people to feel like they have an “ownership” of how well this business does.

It’s really not about businesses saying: “Help us make more profit.”  It’s more about, “Help us take add a terrace. We need money for a permit to build it, and you would benefit from us having that terrace because it’s hot in the summer.”

Is there an email list component to the site, like Groupon?
There’s a landing page like Groupon with a demo video that requests, but doesn’t obligate, an email, a city, and a neighborhood.  Right now, the only city is New York and the only neighborhood is “Downtown,” but eventually, it will hopefully have the same type of interface that any of these deal sites have on the way in.

Since it’s a project a week as opposed to a deal a day from Groupon, users get an email at the beginning of the week, usually on a Tuesday, depending on when the project goes live.  I’m not trying to build a listserv of 60 million people. If this is going to succeed, it’s going to succeed on a community of users that’s truly active. Kickstarter, I think, had their millionth user pledge a couple weeks ago, but they only really have 50,000 who pledge consistently.

The other way we’re getting users is that we are setting up kiosks in the businesses that are having their projects launched, so that they can get the word out to their current customers about the projects. These are regulars, people that already know them that might want to help out or go that extra mile.

Do you think people feel the same way about local small businesses as they do about Kickstarter projects? Obviously, they want the ones that they like to stay in business, but why do you think they love these businesses enough to support them in this way?
On a general level, people aren’t interested about the businesses in their neighborhoods, but people love their communities. And these businesses are part of community, part of your neighborhood.

I think the real issue is that right now, we don’t know the businesses in our neighborhoods, especially in a big city like New York. I walk into the same place to get coffee every day and I know the guy’s name is Jeff because it’s on his name tag. Realistically, I don’t even know if he’s the owner. I think what I’m selling. People in communities are rooting for these guys to succeed.

Everybody is complaining about how small businesses are getting killed in the current economic climate, and nobody is happy when a Starbucks opens and across the street it shuts down a small, quirky café.

Right now, my real push is for Mom and Pop shops, and on the homepage I get started with a video pitch. The person on that pitch really needs to be able to convey to the user why they really need this help. It’s really not about businesses saying: “Help us make more profit.”  It’s more about, “Help us take add a terrace. We need money for a permit to build it, and you would benefit from us having that terrace because it’s hot in the summer.” It’s a win-win, in that sense.

How do you find the right kinds of projects?
The businesses that I have spoken to are very different in terms of the projects that they are interested in. The first project I’m doing is for a fitness studio, which has a special workout method where they really kill you and you’re in pain all week because it’s such a strain. They developed this method and they found that people have been starting to rip them off, so they need to trademark their brand. They opened six months ago and they can’t afford to trademark their brand, and they live in this constant fear that an Equinox or a New York Sports Club is going to come in and use what they’ve built without having any kind of repercussions.

Another example is the Sullivan Street tea shop. They are doing a website.  They have a great little store that sells tea, but they have no web presence whatsoever. They can probably put together some patchwork website, but that would kill their entire brand.

I would also like to get to a point where it’s not just funding businesses that are existing — I’d like to get to a point where I’m funding a guy who wants to open a restaurant, or open a food truck.  I don’t know that we’re there yet, but these are the dreams that small businesses have on a daily basis.

From the experience I’ve had talking to these guys, they all have a list of things that they truly believe will help them get to the next level that they can’t do because they never have the cash flow for it. And then they get stuck in a rut, feeling helpless because either they have to go out and get major investors, or wait there and stay a small café. That’s the problem I’m trying to solve.

This interview has been edited for length and clarity.