1. Crowdfunding:A role for thecrowd inresearch?Claire Ingram, Stockhom School ofEconomicsRobin Teigland, Stockholm School ofEconomics

2. 2014-10-21 3Image: http://blog.getnarrative.com/ 3. 2014-10-21 4 4. 2014-10-21 5Accumulation of small investments inindividual projects by large number ofindividuals (the crowd) via or with help ofthe Internet and social networks(De Buysere et al., 2012)Image: FundedByMe 5. Investment Role and Type Investment Value, 20122014-10-21 6AngelInvestorsInvest large amounts, make fewinvestments and take equityshare.3.3-3.9 billion SEK p.a.(approximation, based on 2008data)Soft LoansState loans at high interest rates,but which can be written off onenterprise dissolution.2.4 billion SEK p.a. (ALMIalone)VentureCapitalistsInvest large amounts, make fewinvestments and take equityshare.1.8 billion SEK p.a. (2010 data)CrowdfundingEither donation, pre-purchase/reward-based or equity,depending on platform andentrepreneurs preferences.Estimated 100 million SEK(2014)Ingram & Teigland, 2013 6. 2014-10-21 7Research Funding in Sweden? Research funding in Sweden is worth about0.87 percent of Swedish GDP. It is predicted to increase to an estimated totalof 32.9 billion SEK in 2014. The Swedish Research Council will receive anestimated combined total of 22.1 billion SEKworth of R&D funding in 2014 7. 2014-10-21 8Where are the gaps? Unorthodox projects Small projects, including experiments Purchasing software Commercialisation? Human trials?The Valley of Death 8. Form of Funding Benefits for Funders2014-10-21 9Donation Donation Intangible benefits.Reward Donation or pre-purchaseRewards in addition tointangible benefits.Equity Investment Return on investment ifcompany does well.Rewards sometimes also offeredand intangible benefits maymotivate too.Debt Loan Repayment of loan withinterest. Alternativelyintangible benefits if loan giveninterest-free.Royalty Royalty Royalties on creation. Alsopotentially intangible benefits. 9. 2014-10-21 10Why Crowdfunding?Obtain fundingScreening device for investorsTest the market or establish a user baseMarket your product or serviceReach investors further afield or people without the rightconnectionsBecause you think its easy (its not!)Source skills and connections?Because you cant find other funding (be careful)Ingram & Teigland, 2013 10. 2014-10-21 11Setting it all uphttp://youtu.be/vdi-Lg9pwkY 11. 2014-10-21 12Skoglund & Stiernblad 2013 12. 2014-10-21 13A real, credible person I want to see a Facebook page being connected.Basically, the more social services are connected thebetter because that adds to credibility, you can check upon the person and see if they are who they say they areand if theyre cheating. 13. 2014-10-21 14 14. 2014-10-21 15 15. 2014-10-21 16Who are the funders? Educated experts? 85 % of respondents have university degree (vs 16% ofwomen and 22% of men in general population, 2013) 42% had knowledge in same field as project they funded 49 % reported to have been better at judging projectquality due to previous experience The in-crowd 47 % of the crowd classified themselves as entrepreneurs compared to only 7 % of Swedish population (2012) 77 % never bought shares in unlisted company before 41 % risk loversSkoglund & Stiernblad 2013 16. 2014-10-21 17 17. 2014-10-21 18Agrawal et al, 2011 18. 2014-10-21 19Where are the funders? A study of funders of music through Sellaband in NL The average distance between artists and investors isabout 4 800 kms (3 000 miles Still, distance does play a role. Local investors investrelatively early, and they appear less responsive todecisions by other investors. Early investors are typically local (friends and family?),later invester thought to respond to this signalAgrawal et al, 2011 19. 2014-10-21 20Marketing principles still apply Make the project easily understood Make it personal Often, means telling a story This also helps with sharing and social media But when you attract a crowd, you need to keep themhappy too so keep in touch! 20. 2014-10-21 21 21. 2014-10-21 25 22. 2014-10-21 26 23. 2014-10-21 27 24. 2014-10-21 28 25. 2014-10-21 29Thank you!Image via NewYorker.comClaire IngramStockholm School ofEconomicsclaire.ingram@hhs.se@Claire_EBI