An Introduction to the Practice of Crowdfunding
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Transcript of An Introduction to the Practice of Crowdfunding
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Tim WrightTim Wright
An Introduction to the An Introduction to the Practice of CrowdfundingPractice of CrowdfundingUniversity of Glasgow 20th November 2014
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AgendaAgenda
• What is crowdfunding?
• Benefits and Risks
• How to do it – the TAMP Process
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ConsultancyConsultancy
•CrowdsourcingCrowdsourcing•CrowdfundingCrowdfunding•InnovationInnovation•Knowledge ManagementKnowledge Management
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Crowdfunding is a method of raising Crowdfunding is a method of raising money from a distributed group of money from a distributed group of funders (the crowd) who provide a funders (the crowd) who provide a large number of small sums forming a large number of small sums forming a significant total when aggregated significant total when aggregated together.together.
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$5 Billion 2013$2.7 Billion 2012
UK is a world leader
Individual projects raised up to $50 Million
Constant innovation in sector
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Government engagement
Empowering
Grown up with Social Media
Founded in the “Long Tail” distribution model
Platforms are the facilitators
It is hard work
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Why is it growing?Why is it growing?
TechnologicalSocial and Collaborative tools, Platforms
SocietalEmpowerment, ecommerce, “grown up digital” generationEmpowerment, ecommerce, “grown up digital” generation
EconomicCapital Constraint, investment opportunity Capital Constraint, investment opportunity
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Four Models of Crowdfunding
GIFTGIFT PERKPERK LOANLOAN EQUITYEQUITY
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Funds collected are gifts or donations with no tangible return to the provider.
Four Models of Crowdfunding
GIFTGIFT PERKPERK LOANLOAN EQUITYEQUITY
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Platforms – DonationPlatforms – Donation
Just Givinghttps://www.kickstarter.com/
Yimbyhttps://www.indiegogo.com/
Razzoo
http://www.razoo.com
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“Rewards” or “perks” of different value are offered to investors to purchase.
Four Models of Crowdfunding
GIFTGIFT PERKPERK LOANLOAN EQUITYEQUITY
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Platforms – Perk or RewardPlatforms – Perk or Reward
Kickstarterhttps://www.kickstarter.com/
Indiegogohttps://www.indiegogo.com/
Crowdfunderhttp://www.crowdfunder.co.uk/
BloomVChttp://bloomvc.com/
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A loan is constructed from many small loans collected from the crowd. Many are interest bearing.
Four Models of Crowdfunding
GIFTGIFT PERKPERK LOANLOAN EQUITYEQUITY
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Platforms - LendingPlatforms - Lending
Funding Circlehttps://www.fundingcircle.com/
Rebuilding Societyhttps://www.rebuildingsociety.com/
Lending Crowdhttps://www.lendingcrowd.com/
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Shares are sold in small parcels to a large group of investors.
Four Models of Crowdfunding
GIFTGIFT PERKPERK LOANLOAN EQUITYEQUITY
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Platforms - EquityPlatforms - Equity
Crowdcubehttp://www.crowdcube.com/
Seedrshttps://www.seedrs.com/
Squareknothttps://www.squareknot.co.uk/
ShareInhttp://www.sharein.com
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Additional VariationsAdditional Variations
Keep it allYou get to keep whatever you raise
All or nothingYou get to keep anything only if you reach your target
DIYYou run your campaign “of platform”
Hybrid modelsA mix of funding
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•Set targets•Select platform•Prepare
•Outreach•Updating•Promotion
•Crowd invests•Contact their crowd
•Target met•Rewards paid•Money collected
Idea to crowdfund
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Crowdfunding working in all sectors
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ValidationInward investment
Asset Development
Expertise
Advocacy
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Average Success Rates
30% 75%with with
coachingcoaching
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Better OutcomesBetter Outcomes
How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014
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Better OutcomesBetter Outcomes
Understanding Alternative Finance - Nesta, University Cambridge 2014
Non Financial Support – Equity CF
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Understanding Alternative Finance - Nesta, University Cambridge 2014
Better OutcomesBetter OutcomesNon Financial Support – Reward CF
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How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014
24%Quarterly increase revenue post crowdfunding
Better OutcomesBetter Outcomes
351%Increased revenue of equity crowdfunded companies
Value of every hour invested in a successful campaign
$813
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Within three months of a crowdfunding campaign…….
How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014
Better OutcomesBetter Outcomes
28%
43%
of companies had closed an angel investor or venture capital round.
were in discussions with institutional investors.
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Enduring AssetEnduring Asset
Crowdassets are the new source of innovation and economic growth.Open for Business — Moving from ‘Knowing’ to ‘Doing’! - Wright & Marom - EC Open Innovation Handbook 2014
Crowdfunding provides a perfect entry to the crowd empowered world!
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Open for Business — Moving from ‘Knowing’ to ‘Doing’! - Wright & Marom - EC Open Innovation Handbook 2014
Crowdasset FrameworkCrowdasset Framework
Crowdsourcing
Viral Marketing
Collaborative Economy
Maker Community
Turking
Deep Skills
Wiki Building
Open Source
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How to Do It?How to Do It?
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Introducing the TAMP ProcessIntroducing the TAMP Process
The Purpose of TAMP is to:
Establish if crowdfunding is right for your project.
Show how ready you are to crowdfund. Analyse which form of crowdfunding is best
for you.Build a plan that will help you to run a
successful crowdfunding campaign around.
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The TAMP ProcessThe TAMP Process
TT Targets
AA Audit
MM Method
PP Plan/Prepare
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TargetsTargets
What
When
Why
Who
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What do you need?What do you need?
How much do you want and need to raise?
? How did you arrive at the numbers
? Is it enough
? Is this a single funding round
? Do you want stretch targets
? Is it a costed amount in a business case
? Are you using sensible valuation schemes
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When do you need it?When do you need it?
? How hard are the timings
? Are they fixed, moveable, long or short term
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Why do you need it?Why do you need it?
Think strategically
Saying you want to fund a film is simply not enough!
? How does this fit with the wider plans for you or your organization
? Are you looking to take a product to market, expand, or even radically change your business model
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Who are you going to target?Who are you going to target?
Followers and Fans
Influencers
Communicators
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AuditAudit
Assets
Skills
Resources
Tools
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AssetsAssets
Items, artefacts, objects and components that you or your organisation holds.
Social and Relationship capitalIPPicturesMail listsVideoNewsletters
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SkillsSkills
Technical skillsWeb builder, reward maker, fabrication.
Communication skillsCopy writer, designer, video editor.
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ResourcesResources
TimeMoneyPeopleFacilities
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ToolsTools
CRMA serverMail list toolAnalytical toolsManufacturing tools
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MethodMethod
Reward
Equity
Lending
Donation
All or nothing
Keep it all
Duration
Crowdcube
Kickstarter
Crowdfunder
Funding Circle
DIY
?? ?? ??
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Prepare & PlanPrepare & Plan
ResourcesWhat do you need?
Publishing PlanChannels, Content, Timing, Monitoring, Responding
ResponsibilitiesWho will do what?Crowd
Fans, Influencers, Communicators
ScheduleWhen will things happen?
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3 Planning Phases3 Planning Phases
Before
After
During
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Followers
Communicators
Influencers
Finding your crowdFinding your crowd
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Components of a Good CampaignComponents of a Good Campaign
Run Your Own CampaignPreparation, Preparation, PreparationGet the Messaging RightGet off to a Good StartMonitor, Respond, UpdateShorter is Generally BetterVideo, Video, Video