Crowdfunding. Anne CrowdfundUK.org

Transcription

1 Crowdfunding Anne CrowdfundUK.org

2 What I will cover Introduction to crowdfunding the three models the process risks and safeguards The crowd What investors, lenders or donors are looking for Case studies Come to the workshop to find out more!

3 Why crowdfunding

4 What is crowdfunding?

5 Statistics Globally billion 2013 Set for 3.5 billion Kickstarter 22 million pledged for UK projects in one year 17.1m for successful projects Crowdcube Over 13 million for 71 businesses since February Over 43,000 members Raised 1.5 million for its own growth 2013

6 Crowdfunding models Equity = crowd-investing Works best for larger investment in the whole business model. Must be able to offer share capital (NB Community Shares) Loans/debt = crowd-lending Works best for business or enterprise that does not wish to give away equity but can repay a loan, with interest. Social lending possible. Donations or rewards = crowd-funding Works best for a well connected enterprise/entrepreneur with a clearly defined product and deadline. All-or-nothing or all you raise you can keep

7 How crowdfunding works Planning Choose Platform The Pitch video Written pitch Campaign time Campaign time! Social networks Target reached (or not)

8 What links

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11 Why crowdfunding It gives access to capital But - its not just about the money loyal customers (evangelists) pre-sales marketing and PR different inputs and ideas Incubation - proof of concept can be easier than obtaining grants or loans free if it fails

12 What Crowd-funding is not It s not a funding stream If you build it they will come It s not easy 40-50% success rate If you don t ask, you don t get Only those projects which actively fundraise succeed.

13 The Pebble $10.26 million 40-50% succeed Ouya games console $8.9 million 40,000 Draw Like a Boss 51,833 Is Daddy Coming Back in a Minute 11,270

14 Risks 50-60% don t reach their target ( 19% equity) fraud those that fail honestly and safeguards due diligence legal structure of organisation reputation, social capital and the crowd no money changes hands until success

15 Questions so far?

16 Why would you donate/invest your money? You meet someone, or receive and , asking you to invest (donations) in a new business What would inspire you? What will encourage you to donate? What concerns would you have?

17 Why do people donate? Personal contact - family and friends, wider personal/organisational networks (they like you or believe in what you are doing) Closeness values, professional or geographical (what s in it for them) Support creators or causes (community of interest) Seek rewards (they want the product) Loans and equity they want a return on investment

18 Crowdfunding equity Strength of the business case Tax relief Quality of the pitch Experience of the team CEO personal investment in the business

19 Crowdfunding loans Ability to repay debt in medium term Strength of the business Director s track record

20 Crowdfunding donations/rewards Strength of the idea Quality of the pitch Value of the rewards AND MOST IMPORTANT Wide engaged social networks

21 Business - equity Near Desk The oyster card for desks: rent office space by the Hour at various locations around the UK 134,500 for 7.71% equity 139 investors investments from 10-51,000 25% of investors had invested in crowdfunding campaigns before EIS eligible

22 Business - loans Pants to Poverty - Bonk of Pants Campaign on Buzzbnk 58,365 raised of 30k target Growing an ethical supply chain for fair traded underwear 104 backers Ethical market crowd of existing customers 10.2% interest 3% cash 7.2% in pants!

23 Business - donations Bonnie Bling Campaign on Bloom VC 8,130 raised of 7,500 target Laser cutting machinery to keep production in Scotland 136 backers Niche market crowd of existing customers Rewards were appealing Backing Scottish business

24 Community Enterprise Home Baked Campaign on Kickstarter 18,725 raised of 13,000 target An oven for a cooperative bakery in Anfield 494 backers from all over the world Community support Effective social media campaign

25 So what s your business idea?

26 What does a crowdfunding campaign need? A strong crowdfundable proposition that fits the model An engaging pitch Creative rewards The personal touch

27 What does a crowdfunding campaigner need? a team a creative and innovative approach meticulous planning marketing and social media skills time and energy AND AGAIN - MOST IMPORTANT wide engaged social networks

28 Final thoughts or questions?