Crowdfunding-------

New forms of financingROBIN TEIGLAND & CLAIRE INGRAM STOCKHOLM SCHOOL OF ECONOMICS

OCTOBER 2015ROBIN.TEIGLAND@HHS.SE

Banking is essential, but banks are not.

Bill Gates

The FinTech space is growing….

Tech

Big Data

IoT

Internet Infrastructure

MobileTechnology

OpenAPI

ArtificialIntelligence

Cloud

Robotics

Bitcoin protocol

Private banking

FinCommercial

banking

Investmentbanking

Securities

AssetManagement

Insurance

Fraud

Algorithms

FinTechPayments

Raising fundsVirtual currencies

Advice

Foreign exchange

Real estate

3

FinTech in StockholmCompany Founded Business

Klarna 2005 E-commerce payment services

MyLoan 2006 Loan broker

Trustly 2008 Online payments

TrustBuddy 2009 P2P lending

iZettle 2010 Mobile payments

FundedByMe 2011 Crowdfunding, crowd equity

Kivra 2011 Digital mailbox

Tink 2012 Personal finance

Safello 2013 Cryptocurrency exchange

KnCMiner 2013 Cryptocurrency mining equipment

Toborrow 2013 P2P lending for companies

Cryex 2014 Cryptocurrency clearing house

Local Stockholm success story:

Flippin’ BurgersMoney raised: SEK 36,502 / €4,000

Number of investors: 186

Date funded: September 2011

Sector: Food

Enabling local, small-scale solutions

Top 5 Best American Restaurants in Europe

http://travel.cnn.com/best-americana-restaurants-europe-023346

What is crowdfunding?Accumulation of small investments in individual

projects by large number of individuals (the “crowd”) via or with help of Internet and social

networks (De Buysere et al., 2012)

Picture: FundedByMe

Crowdfunding is enabled through peer-to-peer (P2P) transactions on multi-sided Platforms

(MSPs)

http://sloanreview.mit.edu/article/strategic-decisions-for-multisided-platforms/

A system that activates the untapped value of all kinds of assets through models and

marketplaces that enable greater efficiency and access.

- Botsman

The Sharing Economy

Harvard Business Review, 2014

The Sharing Economy: Embracing Change with Cautionhttp://www.slideshare.net/eteigland/sharing-economy-webb

Four forms of crowdfunding

Form Benefits for funders

Donation-based Donation Intangible benefits.

Reward-based Donation or pre-purchase

Rewards in addition to intangible benefits.

Equity-based InvestmentReturn on investment if company

does well. Rewards sometimes also offered and intangible benefits may

motivate too.

Debt-based LoanRepayment of loan with interest. Alternatively intangible benefits if

loan given interest-free.

Ingram & Teigland 2013

Crowdfunding across the EU

Crowdfunding growth 2012-2015

USD 34 bln E

How big can crowdfunding be?By 2025 global crowdfunding could reach USD 90 to 96 bln 1.8 times today’s global VC industry)

Growth potential greatest in emerging markets?USD 50 bln in China by 2025?

P2B lending in Sweden

Toborrow.se

Crowd equity

Ingram & Teigland 2013

Why crowdfund?Difficulty in raising funds from traditional sourcesTest market or establish user baseMarketing & publicity for your product or serviceFaster time to marketFunding (may not be large amount of money though)Screening device for investorsAccess greater pool of investors: further afield or

people without right “connections”Skills, connections, and other resources?

For all ages - including teenagers

http://www.indiegogo.com/projects/afripreneurs-and-the-leapfrog-effect

Measuring demand in advance

“It’s not just about the money.”

685 people talking about product on

social media

Australia’s “Major Disaster Department”World’s largest telecom

One step in the financing chain

Nesta

How to succeed?Choose right platform– and crowdfunding form

Going global or local?What do you give in return (thank you, reward, pre-

purchase, shares)?Keep in mind platform fees

Define the concept Make it easily understoodMake it personal?

Feed the crowdEnsure initial critical mass (social media, newspapers)Keep followers up to date

MAGIC

http://www.slideshare.net/eteigland/crowdfunding-in-sweden

Robin Teiglandrobin.teigland@hhs.sewww.slideshare.net/

eteigland@RobinTeigland

If you love knowledge, set it free…

If you like this presentation and would like to contribute to our research, we accept bitcoins: 14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC.Thank you!!!!!

Appendix

Who are the funders?Educated experts(?)University degree Knowledge and previous experience in same field

“In-crowd”“Entrepreneurs”Risk lovers

Skoglund & Stiernblad 2013

Who are the funders?Educated experts(?)85% respondents have university degree (vs 16%

women/22% men in general population, 2013)42% had knowledge in same field as project they

funded49% reported to have been better at judging project

quality due to previous experience“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

http://www.fundable.com/blog/crowdfunding-infographic---the-jobs-act-explained

Going global? Going local?Reward-based? l Niche product or

service?l Global appeal?l What are rewards?l How do you reach

international audience – and stand out?

l Community-specific product or service?

l Local appeal?l What are rewards?l Does community know

about you – can you reach them?

l Local benefits

Equity-based? l Looking to scale up?l How much equity?l How to value your

project?

l Looking to establish foothold?

l How much equity?l How to value your

project?l Local benefits –

experience, connections etc?

Lots to think about....

Trends in crowdfundingPeer to peer lendingNicheCommunityHybrid platformsEnterprise sponsoredInternal corporate crowdfundingLIVE!Economic developmentCelebrities…

Crowdfunding for research

Strategic partnership

+

Celebrities entering the scene

Executive Producer Robert RedfordNarrated by Jodie Foster

Donald Trump’s crowdfunding siteOpen to anyone

Internal corporate crowdfunding

iFundIT

More than 300 participantsEntry-level workers to VPs

Given $2,000 to invest over 8 week period Choose internal projects in which to invest

Enabling entrepreneurs anywhere

Ushahidi of Kenya

Kenya

Venture capitalists are the travel agents of yesterday – here today, gone tomorrow.

Venture capitalist in Silicon Valley –

June 2013

What’s next?