That plan? Figure it out later.
They heard it would take four to six months to get through the application process, and in that time, they’d come up with the best way to reach out to the community for funding.
“And two weeks later, we were granted our permit by the state, way, way, way, way ahead of any schedule we had imagined,” said Lance Knobel, Berkeleyside’s co-founder.
It was great to get through the process so fast, but for the for-profit local news site founded in 2009, it also meant they were totally unprepared to take advantage of the opportunity right away.
In September, the site announced its plan: Offer $800,000 in preferred stock to bankroll its expansion and growth. California residents could buy up shares, made a tidy profit and support a “pioneering local news business,” according to Berkeleyside.
Berkeleyside’s direct public offering permit expired in February, at the one-year mark, so the news organization applied and was approved for another year. It’s now raised $556,000 of its $800,000 goal. That money, which comes in a minimum of $1,000 investments, means the site has gone after regular readers as well as big investors.
Since first applying for a direct public offering, the staff at Berkeleyside has learned that success means reaching out to a bigger audience than they originally anticipated. Here are a few things that are working:
Use that megaphone
“One of the strengths of a news site like ours for this form of capital raising is we have this built-in megaphone,” Knobel said. “We’re reaching people every day anyway.”
Berkeleyside has a call to action on-site, but just asking for money isn’t usually enough.
So they have house parties
Berkeleyside’s website might plant the seed, but parties hosted by community members have been an important way of turning fans into funders.
“It really is the personal contact that makes all the difference,” Knobel said.
So far, the site has had four parties with about 100 people each. They have a few more scheduled for the rest of the year. Knobel and company have discovered that those house parties have another benefit, too.
Sometimes, people who might come in willing to chip in $1,000 leave considering offering a lot more.
Then they have to follow up
After reading the site and attending the parties, most people still need a follow-up call or email to persuade them to invest.
Berkeleyside doesn’t have a separate staff to help woo investors, so co-founders follow-up with the people they’ve met.
“Most journalists aren’t used to asking people for money because in most journalism you shouldn’t be asking people for money,” Knobel said.
But being dogged in pursuit of something?
“That’s a very journalistic task.”
Time your announcement carefully
Berkeleyside’s timing of its initial announcement, around the time of the 2016 presidential election, helped, Knobel said.
Berkeleyside isn’t covering Washington, but “we don’t actually need to do much emphasis on why independent journalism matters, because people are seeing every day, every week, on a national and global scale why it matters.”
Location, location, location
Being in the Bay Area, home to Silicon Valley, has its advantages, including attracting a generation of people for whom the idea of investing in something they admire doesn’t take any convincing.
“I think the most surprising thing has been some of the investments that have come in from somebody just sending in $10,000 out of the blue,” Knobel said. “I’d love it to happen more often than it does.”
Knobel’s been surprised that since Berkeleyside announced they’d do a direct public offering, other local sites haven’t joined them. For all the advantages that are Berkeley-specific, this could work anywhere, he said.
“If you have started something, if you’ve got some traction, if you’ve got a community that really cares about you and reads you, I think anywhere in the country you’ll find a good reception to something like this.”
Berkeleyside has until April of next year to make that last $244,000.