Tom Snee, Office of Strategic Communication, 319-384-0010 (office), 319-541-8434 (cell)
The University of Iowa is helping a new business get off the ground. Its focus: helping other new businesses do the same.
Seedlauncher.com, a start-up micro-lender of sorts that’s owned by UI student Jeromy Sonne, is headquartered in the Bedell Entrepreneurial Learning Laboratory (BELL), the university’s student business incubator.
“It lets people who want to invest small amounts of money in the local economy put that money into small businesses in their communities,” says Sonne, a senior political science major and economics minor at UI.
Potential investors use the seedlauncher.com website to find businesses looking for financing and each business’ financing goal. Investors use their credit cards to invest anywhere from $1 to the maximum amount of funding the owner is looking for.
In return, the participating business provides investors with various perks, discounts, and other rewards.
Sonne says seedlauncher.com was borne from his own frustrations trying to secure funding for a hot dog stand that he and a friend wanted to open.
“We were laughed out the front door of every bank where we applied for a loan,” he says.
“It was frustrating. Then one of my friends said, I’ll throw you $50, and it made me think what would happen if all my friends threw me $50, and if I could get 100 friends to give me $50, that would go a long way to starting the business.”
He notes that 70 percent of start-up businesses can’t get funding from traditional sources, so the owners wind up relying on their own credit cards with high interest rates and inflexible terms—not a good way to start out on the right foot.
On top of that, Sonne says many businesses are just too small and need too little financing for a bank to give them a loan.
“It made me realize that the small business funding system is broken, so there’s a market for a crowdsourced financing business like this,” says Sonne, who lives in Des Moines while interning at Dwolla and finishing his UI coursework online.
He started seedlauncher.com in January in the BELL and took the business live in July. He already has two clients in the Iowa City area—Molly’s Cupcakes, a start-up cupcake bakery that’s using seedlauncher.com to raise capital to buy a dishwasher, and Yotopia, a year-old frozen yogurt business that is raising capital to switch to biodegradable spoons and serving cups.
In the future, Sonne said he hopes to add Dwolla—which facilitates online cash transfers—as a tool to help investors finance his clients, and also provide an option for an investor to take an ownership stake in the business they’re investing in.