Fort Collins startup Community Funded raises $1.8M seed round

FORT COLLINS — Local crowdfunding startup Community Funded has raised a $1.8 million seed round of funding that the company will use to increase sales and marketing efforts and fine-tune its software in advance of scaling the business.

The Fort Collins-based firm sells white-label software to universities and other nonprofits that those clients can use to execute their own crowdfunding campaigns for any variety of needs or smaller groups within their organizations. So, for example, while university fundraisers making cold calls to alumni might be met with resistance, those same alumni might feel more compelled to give to an appeal directly from the captain of the club lacrosse team raising money for new equipment through her school’s Community Funded portal.

“The software is really just a way to better empower individuals throughout the organization to tell their own story,” Community Funded cofounder and CEO McCabe Callahan said Wednesday. “That authentic story I think is what resonates with donors more.”

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Community Funded already counts among its clients the likes of Colorado State University, the University of Colorado, the University of Denver and Penn State, as well as the education foundations for the Thompson School District in Loveland and the Jefferson County School District.

But the new infusion of cash the company received also coincides with Community Funded’s push into hospitals and other nonprofit health-care-related organizations.

Future Venture Capital Co. of Japan and existing investors Justin Crowley and Bill and Rachelle Fisher of Fort Collins all participated in Community Funded’s seed round.

“What we’re most excited about is scaling this into new markets … and providing a service where people can find things they care about and resources can be exchanged to make things happen,” Callahan said.

Callahan cofounded Community Funded with friend Ryan Stover in 2011 based on an idea Callahan got while trying to expand his coffee shop business, Mugs Coffee Lounge. In roughly 2009, Callahan had a lead on a site for an additional Mugs location. The only problem was that he couldn’t get a loan from the bank despite already being in business for eight years.  That’s when customers who learned of his predicament started chipping in funds to help Callahan get the new shop brewing.

That was before most of the world new what crowdfunding even was. But Callahan saw right away the impact that the emotional ties of an invested community had on people’s willingness to fund to a cause they cared about.

Since launching its platform in earnest in 2014, Community Funded has helped 600 projects raise $3.5 million.

Rather than charging a transaction fee, Community Funded charges nonprofits an initial implementation fee and then an annual subscription fee. Callahan said the company has doubled revenue for each of the past couple of years and will likely finish this year just shy of $1 million in sales, with another sizable leap projected for 2017.

Callahan said he expects the company to swing into profitability next year and pursue a Series A round of funding that will really aim to ramp up the growth.

Based out of Galvanize’s campus in Old Town, Community Funded employs 14 people. Callahan said he expects that number, which was just eight at the end of last year, to grow to roughly 22 by the end of 2017.

“We see a very clear path to profitability next year,” Callahan said.