The maker movement continues to gain momentum, broad strategies for funding and creation have emerged. This page discusses several of these strategies with examples and links to makerspaces developed using these strategies.
1. Using Founder Income
Like many small businesses, funding can come out-of founder’s-pockets. Many makerspaces got their start this way. NYC Resistor funded their space, when 9 of the members threw in $1000 each as seed money and then raised the rest through membership dues.
2. Start a Maker Club
A maker club to raise money for the project, engaging the campus and local community. Conduct a “tool drive” within the community to donate tools. People have many extra tools have in storage that aren’t being used.
Search for civic organizations, societies and religious groups to bring the community into what the students are making in the schools. For example, the local Rotary Club may not have heard of the maker movement, but why not bring a mini-Maker Faire to them? Maker clubs and teachers can showcase student work at a local Rotary meeting. This strategy worked for Casey Shea, who created a makerspace at his local school.
3. Crowdfunding and Campaigning
Kickstarter, Indiegogo and DonorsChoose are a method of funding creative projects like makerspaces by locating financial backers online. Project creators set a funding goal and deadline. If people like a project, they can pledge money to make it happen. Funding on Kickstarter is all-or-nothing — projects must reach their funding goals to receive any money. All-or-nothing funding might seem scary, but it’s amazingly effective in creating momentum and rallying people around an idea. To date 44% of projects have reached their funding goals. Creators maintain ownership of their projects.
Crowdfunding platforms are also a way to get the word out about the makerspace. Makerspaces are seen as a positive community tool and a campaign can attract investors and donors.
4. Membership Funding
Offering membership pricing options which vary due to term and accessibility, similar to a gym membership, is an obvious technique to maintain a revenue stream after the makerspace opens. Rates can vary from daily drop-in memberships, basic memberships, family and lifetime memberships and full-access memberships.
5. Business Sponsorship
Another potential source of funding are businesses. Asking businesses to donate supplies, space or back up expenses takes off a lot of pressure for start-up costs. Makerspaces are a good match for businesses in the IT, tech and science industries. TechShop got some funding from Intel to fund their move to a new location in California. It is important to try to establish relationships with businesses early on, as the earlier the relationship is established, the more value the company will get out of the sponsorship. After all, who doesn’t want to say I supported them first when a venture is successful.
Don’t be afraid to wheel and deal. Sponsors will want something in exchange for money, such as free marketing, their logo on your website, access to the makerspace – so be ready to give in to some of their requests. Just remember, you are in this to make money and reduce start-up expenses, so don’t give up too much – i.e prime time for private members to use the space, sole access to high-end tools (even if the business sponsor bought them) etc.
6. Bank Loans or Private Investment
Like any business venture there is opportunity for funding through the bank or private investors. Bank loans or private investing for businesses involve a similar process as obtaining insurance, in that the loaner will want to see a detailed business plan, with profit expectations and succession planning. Private investors interested in funding your project will want a share of the company and thus realize a percentage of the profit earned by the business venture.
Discussion: What do you think is the best way to fund a makerspace venture? Have you heard of other funding strategies that were successful? What differences do you see in the challenges of funding a commercial makerspace vs. non-profit or educational ones.
Discussion Summary: After ETEC522 2013 Winter Term 1 cohort discussions, ideas in addition to what has been mentioned above include:
- Kickstarter seems like a good option because there is less debt and the owner keeps 100% of the company.
- Business sponsorship also might help raise the initial funds necessary. If it is a big makerspace, a bank loan and private investors might be necessary, whereas crowdsourcing might be more viable for smaller makerspaces.
These ideas really iterate the research and affirm initial descriptions of possible fund raising methods. Please view the cohort experience in the comments below. If you are accessing this OER after November 3, 2013, you are welcome to further contribute to the discussion.
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I love the idea behind Kickstarter. For me it has 2 main benefits. One, the people are basically voting for or against the idea, but the vote is important enough to put money on it. Two, you keep 100% of the company. For me a new company must be able to use all of it capital to help grow the business and not have to worry about debt, royalties, interest rates, etc..
With regards to commercial makerspace vs. non-profit or educational ones, I think on of the biggest challenges for education is the fact that governments already give so much funding towards education and its divers programs. Potential investors might not was to get involved in all the bureaucracy around education and having to “compete” with/against the government.
Hello @agfarooq,
The opportunities that crowdfunding has brought to entrepreneurs really change the game, for the reasons you’ve mentioned and more. As our ETEC522 course content mentions, it’s similar to the difference between farmer’s markets and supermarkets: At a makerspace, you are supporting the community of buildings and yourself, as more than a passive consumer. I think this is one way in which makerspaces may win out with many segments of the market, as there is the potential to supersede the bureaucracy around education, and bring the locus of control of the process (both educational and creation) back to the learner. Often times, makerspaces are not constructed as “traditional” educational spheres, even though there may be a tremendous amount of teaching/training/learning going on. In addition, the genre of education in these spaces tends to be somewhat different than one would find in a typical school setting. What do you think?
The idea of education traditionally being a government funded/sanctioned entity is something that could threaten for-profit makerspaces, as the general public would not want to pay for something they are already getting for free through their education system (or municipal library). Thus, for-profit makerspaces must provide clients with an experience not seen in schools of municipal libraries. The tools, equipment and experience within the Makerspace must have a sort of “shock and awe” appeal to it, while providing an alternative outlook on how learning should occur.
I think it really depends on what type of makerspace you are looking to create. If you want to create a large, for-profit space, bank loans and investment will be necessary to raise the large amount of capital necessary to support such a venture. A smaller space where profit is stressed less than can be funded by crowdfunding, membership investment, and donations.
Kickstarter is a GREAT way of raising money, but the “all or nothing” philosophy can be limiting. Personally, one project I backed did not hit goal but the creator re-made the project with a smaller goal (less than the original amount pledged) to see his product get to those who wanted it.
From my perspective it seems that founder income and membership dues would be necessary for initial and early funding, as I cannot see many banks willing to take on the risk of loaning to a makerspace until it was established and perhaps wanted to expand.
There are many local businesses that would give money, supplies, or employee volunteers to a worthy makerspace to show support to the cause. The support of a business would sway some people into believing in the venture.
Very true Jason. Many makerspaces start small and rely on seed money from funders. They guess at waht membership fees might cost, but often once the space gets up and running and they realize what the actual expenses are (i.e. utilities, insurance, etc) membership rates quickly go up, sometimes almost doubling. One makespace I think started their membership in the $50 range and quickly had to up rates to $75/month once opening.