Launched on June 16th and running through August 16th, online crafts and vintage marketplace Etsy has jumped into the crowdfunding game with their pilot program, Fund on Etsy.
Fund on Etsy is designed to address a major issue among many sellers, which is having the money to produce their product in order to sell it. Up-front funding issues can include materials, tools, working space and extra help to ramp up production. By launching a crowdfunding campaign, Fund will allow the merchants the opportunity to raise the extra capital to expand.
Joe Lallouz, Product Lead for Etsy’s Maker Innovation team, states in a blog post, “Over 10 years, we have learned how sellers work from beginning to end to bring products to market, and have developed products to serve their needs along the business spectrum, including tools to create and manage listings and payments, promote items, track orders and expand into new channels like wholesale. Fund on Etsy is intended to address another need — financing and product development — and fits in seamlessly with sellers’ business lifecycles.”
Right now, only about 100 sellers have been chosen to participate in the pilot program. The caveat is that all items in any Fund campaign must be handmade – no vintage reselling, craft supplies or items prohibited by Etsy. Outside manufacturers may be brought in under Etsy approval.
Will it take off?
It’s difficult at this time to say if Fund on Etsy will work or not. While we’ve noticed that some shops’ campaigns are close to or fully-funded with plenty of time to spare, the majority seem to be funded at under 50%, some with only a few days left at perilously low (single digit, sometimes even 0%) funding.
An underlying factor may be the fundamental differences between the Etsy sellers vs. crowdfund creators on more traditional channels such as Kickstarter or Indiegogo in regards to preparation. As so many crowdfunding advice sites agree, a lead time of up to a few months ahead to ramp up social media efforts and connect with influencers is crucial – and those running traditional campaigns know this, understand it and act upon it in preparation for their campaigns to go live. There was no mention about the Etsy announcement prior to the June 16th launch date (participants signed non-disclosure agreements not to talk about it before then), giving the initial pilot program participants no chance to cultivate a build-up/following or to prepare. During random spot checks, many of the Fund by Etsy participants had little to no active social media promotion going on, some with accounts that had not been updated since mid-2014.
Could it also be the perception that the traditional crowdfunding campaigner is starting from scratch and has more of a stake invested, whereas Etsy sellers already do have a shop set up with at least some active inventory? That backers may be more inclined to support a cause that is in development rather than to fund an already-functioning business? I personally recall a lot of backlash when a local food truck with a thriving business turned to Kickstarter to raise money for truck repairs – it made many people question their operating model.
Since Etsy went public in April, their stocks have had mixed performance; with the threat of Amazon’s new Handmade marketplace looming in the horizon, the next 6 months into holiday season could prove to be very challenging.
Regardless how Fund on Etsy plays out, we applaud their support of the makers and artists community and are looking forward to Etsy’s next steps and innovations.