Community Funded

McCabe Callahan had already lived several entrepreneurial lives by his mid-20s. He opened Mugs Coffee Lounge in Fort Collins, Colorado in 2002 while still in college, grew to five coffee shops, and then took on heavy debt. By his account he was carrying roughly $650,000 to $700,000 in debt, much of it hard-money and promissory-note financing, while barely making money. He sold most of the shops and kept his downtown location.

In 2010 he wanted to re-expand with a second location near Colorado State University. He had a lease ready and was looking for only $150,000 to $200,000, but after about 11 months of trying with banks and the SBA, he could not secure a loan. His past debt and weak earnings left him with few assets to borrow against.

The turn came when a regular customer offered to chip in, and others followed until a group of customers had funded the new shop. About five months later, McCabe heard an NPR story about Kickstarter and connected the dots: what had happened in his coffee shop could work as a platform for communities. He and friends started building on nights and weekends.

The company was self-funded for its first eight months to a year. It then raised a first round of $475,000 'to build the product and get our first customers,' with a slight pivot along the way. When universities began signing up, it raised a second round, opening at $1.6 million and closing at $1.81 million in August. McCabe put total funding at roughly $2.3 million.

Pricing was built around higher education: an implementation fee of about $5,000 to $10,000 and an annual subscription of about $12,000 to $25,000, with some $50,000 to $60,000 deals for multi-campus institutions.

Community Funded found its footing selling to universities. By the interview it served 30 higher education institutions, including Texas State University, University of Illinois, Penn State, and Colorado State University. The sales cycle was long, but the company saw traction quickly, and many contracts were three to five years with annual renewals. Investors bought into the vision of a global platform connecting people, ideas, and capital, even while the company focused on one market.

In 2016 the platform supported about 460 projects that raised roughly $2.5 million, and the company reported $550,000 in revenue. For 2017 it projected $1.2 million in revenue and passed its Q1 goal of $100,000 within the first three weeks. Sales were concentrated in Q2 and Q3 because of university fiscal-year buying cycles.

The main friction was adoption. McCabe said many institutions are steeped in policy and large-organization leadership challenges, which makes it hard for them to act on advice about running online fundraising.

As of the interview, Community Funded was expanding into healthcare and other markets, and it planned to add a percentage-based model and monthly fees for smaller nonprofits. McCabe's stated goal for 2017 was to push total money raised through the platform above $3 million.