PORTLAND, Ore. – Industry entrepreneurs have turned to crowdfunding – microfunding from online donors – to finance everything from the documentary about John Penton to race teams to aftermarket products.
A couple with an auto racing history thinks the industry can do better. Race driver Guy Cosmo and his wife Louisa last month launched First Gear Project, a crowdfunding platform dedicated to motorsports industries.
“We walk through the paddocks every week. There are a lot of guys that have great ideas but they don’t want to deal with investors,” said Louisa Cosmo. “We are trying to create a community for motorsports, as well. We want a space like Kickstarter, but where people really understand the industry.”
Crowdfunding caught on with websites like Kickstarter and Indiegogo, which manage crowdfunding campaigns for all comers. The catch is that because they take all comers, they may not understand the nuances of a particular industry or market.
As Beth Dolgner noted in a January Dealernews article, just 25.39 percent of past motorcycle-related Kickstarter campaigns were successful. “Sites like Kickstarter tend to be all-or-nothing. You can make 99 percent of your goal and still no get funding,” Cosmos said. With First Gear Project, “any amount of money you earn, you can keep.”
The site launched publicly about a month ago. It has categories across the motorsports spectrum, from motorcycles, ATVs and snowmobiles to karting to auto and drag racing. So far there are two active projects: a concept car and an auto racer looking for sponsors. Cosmo said seven more are in the pipeline.
Unlike many other crowdfunding sites, the Cosmos want to help First Gear Project users develop pitches tailored to motorsports-savvy donor investors. The person seeking funding goes onto the website to create a project profile. A page can be live within 24 hours, Cosmo said.
“The minute you click the button on your project, it goes to us to review it,” she said. “We learned a lot from [beta] projects about what information people are sharing, and making sure people understand the legitimacy of the projects. We try really hard to be available to the users, to help people talk through their ideas or reward levels or whatever.”
So far, the projects have been auto-related, but Cosmo said they are eager to get powersports and marine projects as well – “anything with a motor.” The project itself need not be motorized. Artists, filmmakers and others can launch campaigns, as long as they are motorsports related.
For donor-investors, the site takes any type of credit or debit card and the donors can set their own contribution levels. “You can donate any amount of money,” Cosmo said. “There is a free number you can fill in. Or you can pick a tier level you like if there is a reward you are interested in.”
First Gear Project is backed by Vital Enterprises, an Oregon technology firm with revenues approaching $40 million. Even so, Cosmo said it will be “a long time” before they recoup the investment and make money. The site takes a 7 percent commission off of a project that reaches 60 percent of its funding goal; the commission drops to 5 percent if the campaign reaches 100 percent of the target number. Campaigns below that level still get paid.
"This is a project of a lifetime for me, because being in the sport for so many years I've seen firsthand how critical funding is," said Guy Cosmo. "We have designed First Gear Project to not only be an opportunity for someone to transform their vision into a marketable reality but it is also a chance for backers to witness the impact of their support. It's a place for our whole community to actually participate by building programs or supporting them. We are trying to change the industry, and we and our investors believe that this is the best way to do exactly that."