Gimlet startup raises $200K in 2 hours when they invite the crowd to become shareholders

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Credit: Bill Selak.

 

A while back I wrote a story about the art of The Ask and Alex Blumberg’s new show StartUp.

The podcast is a naked portrayal of Blumberg’s journey to launch a podcast network.

Like the world’s most popular podcast Serial (season finale set to air today), StartUp was created by a former This American Life producer. This fall both shows premiered as part of an episode of This American Life, and like Serial, StartUp is demonstrating something important for reporters, storytellers and media entrepreneurs everywhere.

In the episode about how a startup can perfect their pitch to potential investors, Blumberg bombs, and not in a comedic way in front of a buddy or in a radio studio. He bombs on a street corner in front of VC Chris Sacca, an initial investor in Twitter, Instagram and other billion-dollar startups. 

It’s painful and embarrassing to hear, but it’s honest, and is a glimpse at the authentic, real-time feel that StartUp offers and seems to attract so many to Serial and This American Life.

Jeff Jarvis called the podcast watching the “entrepreneurial sausage made” in a buzzmachine.com post. I can understand why he made it required listening for students at Tow-Knight Center for Entrepreneurial Journalism at City University of New York.

Soon after that pitch bomb, the show and the company now known as Gimlet Media took off. 

(SPOILER ALERT) The investor who Blumberg fumbled in front of eventually kicks in $100,000. Others invested too and after receiving more than $1 million in private investment, Gimlet turned to the crowd.

The result: $200,000 in two hours on the Alphaworks equity crowdfunding platform.

In all $1.5 million was raised to get the company going, according to the Wall Street Journal.

Depending on who you ask, there are four different kinds of crowdfunding: reward, lending, donation and equity.

Reward-based crowdfunding, like the kind you see on Kickstarter or Indiegogo, may be best known to the public but it only accounts for about 20 percent of crowdfunding, according to the European Crowdfunding Centre.

Equity crowdfunding gives people the option to buy part of a company that is not on the stock market.

Before going ahead with the crowdfunding campaign, Blumberg aired the risks and rewards of crowdfunding with Alphaworks CEO Erin Glenn and Gimlet cofounder Matt Lieber.

“I’m a listener, I make $35K a year and Alex is asking me to give him $5K? What? Like fuck him. That’s what makes me uncomfortable,” Lieber said. “Our relationship with listeners ultimately is the most important thing we have in this company period, full stop. And if this creates discomfort or alienation that’s a really bad outcome.”

In the end this wouldn’t matter because they would come to understand that, by law, equity crowdfunding investors cannot be poor.

Currently equity crowdfunding investors must be an accredited investor, that’s someone who earns $200,000 a year for at least two consecutive years or have more than $1 million in assets, not including your house.

So the accredited investor requirement has to go away before equity crowdfunding can be brought to the average person.

Investments are inherently risky, and equity crowdfunding is super risky, Glenn said.

“As passionate as you are about the company and as confident as you are in the founding team and their ability to be successful investing in a business that doesn’t have any revenue is super high risk so only pay money in that you can either afford to either wait a really, really, really long time to ever see come back to you or it’s ok if you lose it,” she said.

To listen to StartUp check out the show on iTunes, Soundcloud or other podcast networks.

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Khari Johnson
Khari is founder and editor of Through the Cracks: Crowdfunding in Journalism. He also writes about bots and artificial intelligence for VentureBeat. He has built news startups in the U.S. and Europe for the last decade.

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