Crowdfunding. Alameda County SBDC. Reach Center San Leandro March 30, 2018

Transcription

1 Crowdfunding Alameda County SBDC Reach Center San Leandro March 30, 2018

2 Thank you to Our Sponsor

3 Local SBA Ecosystem

4 Partnership and Hosting

5 Our Services Free One-on-One Consulting Free & Low cost Seminars

6 Seminar Examples Access to Capital Starting a Business Social Media Marketing Worker Owned Businesses Starting a Restaurant Starting a Food Business Finding Your Core Customer Website Development Successful Business Plans Meet the Lenders Government Contracts Law for Entrepreneurs Buying a Business Crowdfunding and Alternatives How to Pitch Your Company Exporting Home Based Businesses

7 ACSBDC Consultants Cynthia Mackey Social Media Deagon Williams Food & Restaurants David Bokash Business Technology Ron Barrett Loans Paula Mattisonsierra Retail Mari Lovalvo Human Resources David Mitroff Social Media Lee Lambert Director

8 ACSBDC Consultants Tom Yeh Strategy Paul Bozzo Equity Funding Dorian Webb Operations Mary Passarella Accounting Ed Duarte Construction Bob Komoto Export/Import Tom Camerato Financial Modeling

9 How to register for services

10 Our Client Results ALAMEDA COUNTY: 2013 through 2017 (5 Years)

11 Presentation Download

12 Lee Lambert Director, Alameda County SBDC since 2014 affiliated as advisor since 2008 Founder/CEO, Simple Buyout Plans and Hollywood Partners Founder, Cambridge/Samsung Partners (venture fund) Samsung Electronics, Van Kasper & Co., Deloitte, Ernst & Young Harvard Business School, UC Berkeley

13 Crowdfunding Crowdfunding is forecasted to pass venture capital as a source of business funding in the near future 2014: $16.2 billion worldwide 2015: $34.4 billion worldwide 2020 forecast: $90.0 billion (World Bank) 2015 Venture capital: $124 billion 2015 Crowdfunding - $34.4 billion, up from $16.2 billion

14 Crowdfunding Segments Source: Massolution

15 Platforms

16 Crowdfunding Players Rewards Based Donation gets you a promised product Donation Giving for nothing in return Equity Owning a part of the project Lending Money returned, with interest Kickstarter GoFundMe Wefunder LendingClub Indiegogo CrowdRise StartEngine Prosper PledgeMusic YouCaring Seedinvest Kiva RocketHub Causes Equitynet FundingCircle Barnraiser GiveForward Rockethub SoFi Crowdtilt Fundrazer Angel List SoMoLend Source: Crowdfundingpr, social media & marketing campaigns

17 Crowdfunding Purposes

18 Large and Successful Fundings

19 What is Crowdfunding? 3 Basic Models Reward/Donation Lending Equity

20 History of Global Crowdfunding

21 Recent History 2003: Artistshare website for artists to raise funds to make recordings Example: Maria Schnieder (Jazz) raised $130,000 Premiums: $9.95 first right to download $250 name listed on notes $10,000 listed as Executive Producer Won a grammy in 2005!

22 Rewards Based Sites Rewards Based Sites take Off! 2008: Indiegogo 2009: Kickstarter Rewards Based sites encompassed arts, social causes, entrepreneurs and small businesses

23 Kickstarter Through March 28, ,000 campaigns All or Nothing launched 141,174 successful projects (36%) $3.6 Billion from 14.4 million backers 31.8% over $10, % over $100,000

24 Famous Kickstarter Campaigns

25 Indiegogo Through August 20, ,000 campaigns launched $1 Billion raised from 11 million backers Lower average funding raised than others 47% of campaigns are run by women Lower success rate than Kickstarter

26 Indiegogo Notable Campaigns

27 Most Popular Reward Platforms Kickstarter Need US Bank Account Must reach your goal 5% fee 3% bank fees Must be approved to start Indiegogo Accepts Paypal Do not have to reach goal 5% fee to goal 3% bank fees 3%-5% Paypal Fee No approval process

28 Donation Based Crowdfunding 2010: GoFundMe platform launches Charitable giving Medical bills, Disaster Relief, Little League Teams Over $3 billion raised About 8% fee all-in Charitable fundraising often done on Kickstarter and Indiegogo, + many other sites

29 Peer to Peer Lending Born out of Financial Crisis of 2008 Dissatisfaction in consumer & small business lending market Global P2P market expected to be $900 Billion by 2024, up from $26 Billion in Lending Club, Prosper and Upstart are the top players. Can be expensive Kiva-0% Loans from your network & extended parties Source: Transparency Market Research

30 Peer to Peer Costs Lending Club Rates

31 Equity Crowdfunding Emerged in 2011 with Regulation D Platforms Microventures Tech companies CircleUp Branded consumer products and retail Reg D allows only accredited investors Generally, $1 million net worth other than home Or, income of $200,000 last 2 years ($300,000 if married) and expectation to continue at same level

32 JOBS Act of 2012 Allowed advertising for many types of crowdfunding offers Opened up market to solicit non-accredited when regulations published by the SEC in May, Intended to help small companies raise up to $1 million per year Many requirements before offering securities and ongoing reporting requirements. - Up front attorney/accountant fees to make an offering - Ongoing financial reports

33 Equity Crowdfunding Options

34 Equity Crowdfunding Sites

35 Crowdfunding vs. Venture Capital Potential Advantages: Easier to access Valuation may be higher Investment terms may be better Publicity Broader stakeholder base Note: VC s don t like to be side by side with unsophisticated investors some won t consider investing after a crowdfunded equity offering.

36 Regulation CF Intended to help small companies raise up to $1 million per year Many requirements before offering securities and ongoing reporting requirements. - Up front attorney/accountant fees to make an offering - Ongoing financial reports

37 Reg CF - JOBS Act

38 Reg CF Deals through 2017 Source: Wefunder

39 Reg CF Deals to September 2017 Source: StartEngine

40 Top 10 CF Raises in 2017

41 Another Way to Use Reg CF Use Reg CF to obtain a loan Example: Red Bay Coffee (Oakland) Raised $160,000 on Wefunder Terms: Repay with 5% of net revenues until investor is returned 150% of investment (early investors received 200%). Forecast return in 3-5 years

42 Strategy

43 Tell Your Story 1. Have a character (can be family, neighborhood, etc.) 2. Share a problem/opportunity that character encounters 3. Make your donor a guide in your story 4. Give them a plan 5. Call them to action 6. Study unsuccessful campaigns to know what not to do

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45 Examples

46 Steps to Launch Build Your Team Team Leader Social Media Killer Networker Extraordinaire Funder Liaison Content Developer PR Maven

47 Starting Your Campaign Name Your Idea Set Your Funding Goal Set Campaign Length

48 Create Your Media Database

49 Set Rewards Digital > Tangible Set reward tiers & themes $25 & $100 most popular tiers What can you give away that is meaningful? Doesn t need to be expensive

50 Build Your Fan Base Create Your Story Create Facebook/Twitter Accounts Create Newsletter signup What can you give away that is meaningful?

51 Build a Campaign Calendar

52 The Kickoff Personal to friends/family Have them donate right away After 15-20% in then blast to crowd

53 Spread the Word Update your signature Send out a newsletter Facebook/Twitter Tap existing networks Mainstream media

54 What to Share Quotes from funders Behind the scenes pics/videos Endorsements Specific perks/rewards Media coverage received

55 Facebook Facebook once a day Ask questions Ask for shares/likes Include photo Always include a call to action

56 Twitter Tweet all the time Ask for retweets (RTs) Thank RTs Use popular #hashtags Seek influencers Always include call to action

57 Platform Updates 1-2 times per week Be personal Include them in the story Ask for continual help

58 Extras Add perks half way through campaign Find more partners to cross-promote Continue reaching out to blogs/mags/newspapers Release more short videos

59 Homestretch Final week create a sense of urgency Campaigns that reach 50% of their goal are 95% likely to succeed On Indiegogo, over 90% of successful campaigns have repeat contributors

60 Lastly Collect the Money Fulfill the Rewards Don t Forget Your Funders

61 Key Statistics Per Indiegogo statistical study: Day campaigns work best Keep updating the campaign page makes a difference Start strong, finish strong 42% of funds 1 st and last 3 days Add new perks after launch successful campaigns add 12 more after launch Work with a team team approach raises 3x more Include a pitch video raises 4x more

62 Thank You! Questions?