Self-described serial entrepreneur Mark Baker formed a company in 2008 through which he developed a word-strategy card game called 5 To Close, but he never could develop a suitable strategy for producing the game and properly launching the business.

After three years, the Whitworth University associate registrar prepared tax returns for 5 To Close recently and considered checking the box on the form that said he was shutting the company down.

Before he let the business die, though, he heard about crowdsource funding, a revenue generation method for startup businesses through which a number of people pledge small amounts of money to a business, typically in exchange for goods or services from the company. Through a crowdsourcing website called Kickstarter.com, Baker started a crowdsourcing campaign earlier this month.

Four days in, six people—all strangers—had committed $144 to 5 To Close. While he still had to raise $6,856 and had 40 more days to do it, Baker had resurrected his aspirations for 5 To Close.

"It's a unique model because you don't have to give away equity in the company to raise capital," he says. "Honestly, I was completely amazed."

As of Jan. 17, Baker's 5 To Close was one of nine ventures in the Spokane-Coeur d'Alene area seeking funding through Kickstarter in what funding seekers describe as a growing trend. A search of the site showed that eight Spokane-based ventures had completed campaigns in the last couple of years, and six of those had been successful in meeting their goals and being fully funded. The successful ventures raised between $335 and about $3,700.

Some of those seeking crowdsource funding are bands that wanted to raise money to cut a CD or aspiring movie makers looking to raise capital to produce a film. Others have conventional small businesses—or small-business ideas—who say crowdsource funding provided them a way to raise capital for their businesses quickly when no other method was readily apparent.

"It's a great way to start when you don't have a lot, but you have a great idea," says Jackie Mustard, who owns Sweet and Stout Co. with her fiance, Dylan Waidelich. In a Kickstarter campaign last fall, the couple successfully raised about $2,100—surpassing their goal by more than $400—for their company, which makes cupcakes that use craft beer as an ingredient in each batch.

The crowdsourcing system varies depending upon which site is used. Generally though, a small business owner establishes a goal for how much is to be raised and in what period of time. Typically, the time period is between 30 and 60 days. The entrepreneur outlines what an investor will receive for various levels of funding and posts a pitch on the site—most include a short video, and those with successful campaigns strongly suggest a well thought-out video.

On some sites, the funding campaign is an all-or-nothing proposition; if a business doesn't receive commitments up to or beyond the goal, it gets nothing. On other sites, such as IndyGoGo.com, the business owner receives the amount raised, regardless of whether the goal is reached.

While the words "invest" and "pledge" are used interchangeably by some small business owners, crowdsource funding doesn't involve a conventional return on investment. Typically, the person who agrees to fund a business receives products, services, or other kudos in return.

Baker says, "You're almost preselling. The majority of the people are donating at a level where they get the game."

Entrepreneurs can get creative in the awards they provide to those who pledge money. Peter Taylor, a self-anointed SpiCEOlogist here who has started a business called SAVORx, which sells whole cooking spices and recipe spice packs, launched a campaign earlier this week to raise $12,000 for the business in just over 30 days.

Taylor says SAVORx is offering products and subscriptions to a recipe spice club for lower pledge levels, but Taylor is offering to name a spice blend after anybody who gives $750 or more and to have tattooed on his back the names of up to five people who give $5,000 or more. For $10,000, Taylor says he will take one backer on an all-expenses-paid trip to India, which he bills as the spice capital of the world.

At the other end of the pledge spectrum, Taylor has another unusual offering. With a professional videographer, Taylor made a video of a pitch in which he eats a ghost chili pepper, which is recognized by Guinness World Records as the hottest pepper in the world and is considered more than 400 times hotter than Tabasco sauce.

Taylor makes his pitch for SAVORx, then pops the ghost chili pepper in his mouth. For a $5 pledge, one receives a link to a video of his response to the world's hottest pepper.

Gimmickry aside, Taylor currently is working as executive chef at Cavanaugh Bay Resort at Priest Lake while operating the spice business out of a small processing center in Liberty Lake, and he is hoping crowdsourcing will help him take the business to the next level.

"I've bootstrapped it to date," he says. "I've put about $20,000 into it, and we're out of money."

If the campaign is successful, Taylor says the money will go toward a thermal printer he can use to make packaging, a greater spice inventory, and an online marketing campaign, among other items.

Of course, some of the money raised must go toward fulfilling obligations to those who made pledges.

Savor Sweets LLC, a Spokane company that makes all-natural, all-handmade hard candy, completed a crowdsourcing campaign last September through which it raised about $3,700, about 2.5 times its $1,500 goal.

Andrea Parrish-Geyer, who started Savor Sweets with her newlywed husband, Peter, says roughly 10 percent of the money it raised went to Kickstarter and to Amazon.com, which processes the payments. In addition, it sent almost 2,800 lollipops to its 168 backers.

With the remaining proceeds, Parrish-Geyer says, the company was able to buy professional induction burners, 100 candy molds, the natural ingredients that go into candy, and compostable bags, ribbons, and sticks used in the finished products.

For a food producer, Parrish-Geyer says, the startup costs are high, and the crowdsourcing funds provided funding for the goods needed once the initial startup costs were covered.

"We had to spend $3,000 before we could make a single lollipop commercially," she says. "You have to have every duck in a row, and that's really hard when you don't know if you'll have the money to go forward."

Mustard, who works as a graphic designer at the Journal of Business, says Sweet and Stout factored into its funding goal the cost of fulfilling pledges, which involved providing logoed stickers, pint glasses, recipe books, and shirts in addition to cupcakes. For people who live outside the Inland Northwest, they gave out goods with company's logo on them in lieu of cupcakes.

The goal, she says, was to net $1,500 that could be used to buy baking ingredients, commercial kitchen time, utensils, bowls, mixers, and liability insurance.

She says the company has enough money left from the campaign to fund "another round of kitchen time and ingredients."

Pledges that Sweet and Stout received ranged from $5 to $250. Mustard estimates the company received about half of its pledges from people in the Inland Northwest and about half were from people outside of the region.

While she says they promoted the campaign heavily through social media, the couple weren't acquainted with about half of the supporters when they made pledges.

Parrish-Geyer says she and her husband knew only about 15 percent of the people who pledged to Savor Sweets—and receiving pledges from strangers brought another benefit.

"Because of Kickstarter, we already have customers all over the country," she says. "It's opening up opportunities that otherwise would be incredibly hard to get."

Crowdsourcing often is a term coined for this particular manner of generating capital, but the term has other commercial meanings as well.

For example, a Jan. 17 Wall Street Journal article said AOL Inc. and other large businesses are using crowdsource labor, which involves farming out small parts of a large project to the general public through requests on a website.

Such an effort typically is considered faster and less expensive than hiring temporary employees or outsourcing the tasks to another company, the article said.