Seed-ville: Grow-local op grows Carpe Donut

What if you take the concept of the local food movement, add a grassroots element, and apply it to the world of finance? It might look something like Seed-ville, which just launched a campaign to raise $15,000 for his rolling doughnuttery.

Carpe Donut's Matt Rohdie wants to expand with another food truck. UVA second-year Jessica Lee and her Seed-ville team want to start an incubator for small businesses to raise capital. Instead of going to a bank, they got together to use crowd-funding– sort of a Kickstarter for small local businesses.

"We have a very specific project that's a little outside our daily business," says Rohdie, who says he can't dip into operating capital to buy the additional truck.

"It's very hard for us to borrow money," says Rohdie. "We haven't been in business 20 years. We don't have deep pockets."

And one thing he really likes about the Seed-ville model: "We're not going to get in over our head in debt."

Here's how it works. Let's say you pledge $20 toward Carpe Donut. It's not a loan, and you won't own a piece of the business, but you will get a dozen doughnuts and a drink. If you pledge $1,000, your reward is a visit from the fully loaded truck (complete with chocolate machine and omelet station) to cater a party of 44.

"We're offering rewards that are closely held to what the value is," says Rohdie. "Lend us $10, and come on in for a coffee and doughnuts."

Rohdie calls the Seed-ville model "bottom up investing rather than outside investors," and he says he loves the idea that the fundraising has a local emphasis– much like Carpe Donut, which uses local products to make its organic doughnuts.

"It's a localized way to support a small business," says Seed-ville's Lee. "Carpe Donut had information on what they wanted to do. And they're one of the most popular small businesses in town."

Lee notes that Seed-ville is more business-oriented than the better-known Kickstarter, a platform that local filmmakers like Derek Sieg and Eduardo Montes-Bradley have used to raise money. She credits her three other Seed-ville team members, all UVAers, including third year Sinan Ulkuatam, who built the platform the pilot program uses.

A computer science major, Lee says she took a class on entrepreneurship and has a personal reason for her focus on small business: her dad, who owned a small car dealership, where Lee spent a lot of time as a child and where she pitched in to help the family enterprise.

"I've always grown up in that environment," she says. "I love working with small businesses."

Bob Fenwick, a key force behind the local Cash Mob, which serially showers money on mom-and-pops, agrees.

"It gets the message out," Fenwick says, "that small business is good for the community."

With the second truck, Rohdie plans to expand another Carpe Donut-like business into another city.

"We'll be in partnership with another entrepreneur," says Rohdie, describing it as collaborative entrepreneurship that will grow other small businesses.

The Carpe Donut campaign kicked off November 10, and two days later, 10 people had pledged $580. The campaign runs through December 19.


So basically they are just borrowing on their margins....that'll catch up to them at some point.

Ahhh...: They are basically ensuring they have the business and yes selling product up front before they make a large capital investment. I think kickstarter has shown that the idea has a lot of great potential.

That said, i am still unclear how this is different/better than kickstarter? It even looks exactly like kickstarter. I am a big supporter of keeping money local and especially on local innovation, but i worry that this is just the re-implementation of an already successful idea with little real difference.

We use our crowd-funding platform but our business is not the platorm itself. It is a means of small business financing, which is fundamentally different from Kickstarter's model. Kikstarter is also more focused towards creative projects, whereas we focus more on small business fund raising. Hope this clarifies a few things.

Oh, so is it free to run a campaign on seed-ville? That would certainly be a big difference.

I don't really understand how your focus of small business financing is different than what kickstarter does. It looks like you are set up quite similarly to kickstarter, where people basically pre-buy goods and services. This paradigm lends it self more towards projects with short term sellable outputs (like donuts), which is why you see the projects you do on kickstarter. What am i missing?

Checked out the platform and it's exactly like Kickstarter. If you're a small business owner, would you not want to crowd-fund through Kickstarter instead of these guys? KS has a much more established brand and larger base. BTW, love some Carpe Donut.

The crowd funding model is unchanged and a commission is charged for campaigns to cover our operating expenses. We do not fund creative projects or ideas, and redeemable rewards are part of our offer. Generally we will offer more experience-based rewards than physical products for lower-end rewards. There are going to be similarities to Kickstarter from the basis of a crowdfunding perspective; however Kickstarter won't work closely with its campaigners to help ensure their success. There are differences, but you are correct in assuming the pre-sale component.


I am not sure I get what you mean when you say you don't fund creative projects or ideas. So you only fund capital equipment purchases and not things like creating a movie or music?

It sounds like seed-ville does charge a percentage of funded projects, but that money is simply to cover the relatively low cost of keeping the website going and you intend to actually make a profit by offering professional services such as marketing and business development to the companies using your crowd sourcing platform. Is that right?

Kick starter charges nothing for unfunded project, but takes a 5% cut from projects that reach their funding goal. Have you figured out what seed-ville will charge for posting and handling dispersion etc?

Thanks for responding. This is an area i think will see huge growth and like that there is a local option. I am not trying to be hard on you, i am just trying to get my head wrapped around the business angle.

If it is a project such as a movie or a film that will help a small business expand or grow, then we will help fund it. To clarify, we are a tool for businesses to use to help meet their financing goals through an accelerated revenue and deferred cost stream which allows individuals to access services and opportunities not normally offered in their day-to-day operaions.

To answer your second question, we do offer additional services beyond our platform.

For the 3rd, I am not at liberty to release that information; however it will be a competitive and appropriate rate.

Sure, hope this helped clarify things.

I am still not all that clear about what separates seed-ville from something like Kickstarter. That said it doesn't necessarily need to be all that different. In fact Facebook and Google have both shown that you don't really need a better idea than the competition, you just need to execute the same idea better and get the right audience.

Best of luck to you.

Thanks man, appreciate it!

I'm a big fan of crowdfunding and I have supported a number of projects on Kickstarter. The one thing that concerns me about Seed-Ville is that they don't make it clear whether Carpe Donut will get any of the pledge money if the entire $15,000 is not pledged by the expiration date. This is important; it is a bad idea, in my opinion, to give them the money if the total is not raised, because they obviously can't complete the purchase without the entire $15,000, and what will then happen to the smaller amount of money they do receive? That's what I like about Kickstarter; if you don't raise enough pledges, you don't get the money and those who pledged are not charged.

Contrast that with Kickstarter's competitor Indiegogo. I once pledged money on Indiegogo to help a film project that only raised a tiny fraction of what the producer requested. Indiegogo charged me for my pledge anyway, as that is their business model, and the movie has never been made, and God only knows what the producer did with my money.

I sent an email to Seed-Ville asking them to clarify what they will do with the pledges if Carpe Donut does not raise all the money. Three days later, they have yet to respond.

Hey Carl,

Not sure which email you sent your inquiry to but I'm more than happy to answer your question. We use a tipping point system where if the tipping point is reached we will give the pledgers their contribution reward. If i is not raised they are refunded the full amount. Hope this clarifies things. Also, the tipping point for our current campaign will most likely be $8,000.