crowdfunding without crowds bernardo.balboni@unimore.it
Serial Crowdfunder https://www.indiegogo.com/projects/glass up-augmented-reality-glasses-thatdisplay-messages-from-yoursmartphone#/ https://www.youtube.com/watch?v=qxiw WEPrX3s
What crowdfunding is Crowdfunding is the practice of funding a project or a venture by raising monetary contributions from a large number of people, typically via the internet in order to make the project (or the venture) succeed
What crowdfunding is not Philantropy 2.0 A form of revenues The solution for the «funding/equity gap» A trend/fashion is A fundraising tool A market validation tool A tool to fund a project s industrialization An option to fill the «funding/equity gap» A increasing phenomenon
The pillars of crowdfunding Peers/Community Emotion Trust Money... and Web
The aim of a crowdfunding campaign is to generate a particular type of reaction from the target audience
Crowdfunding Models Offer Campaigns focused on start-up growth potential EQUITY Demand Backers invest in equity shares of innovative start-up. Campaigns focused on the project outcomes REWARD Backers fund the projects and receive rewards Crowdfunding Platform Campaigns focused on NGO s activities and mission DONATION Backers donate some money for the NGO s activities Campaigns focused on the request for a loan LANDING Backers borrow an amount of money and receive some interests
Equity vs. Reward Funding the equity gap of an innovative start-up (high risk) Funding the organic growth of the start-up (market growth, product portfolio, diversification strategy) Funding a project promoted by firms, entrepreneurs, teams, individuals Funding the market validation of a prototype (idea, event, service, product) Complex financial tool (could include also preferred shares) Enterprise value estimation is needed (it requires the involvement of lawyers and financial experts) Corporate governance and accountability become more difficult with an increasing the number of shareholders Rewards (products/services) has to be industrialized and delivered Communications investment (video, mailing, external agencies, etc.) is needed Legitimation of the campaign, and its promoter, is based on the ability to effectively deliver the reward on time
The world of crowdfunding Regional Online Alternative Finance Market Volumes 2013-2016 ( EUR)
What about Italy? Produzioni dal basso Smartika BuonaCausa Iodono Prestiamoci Rete del Dono Cineama Com-Unity Letsdonation Musicraiser Smartika Starteed Eppela Assiteca Crowd BeCrowdy Bookabook Funditaly Innamorati della cultura Progetto Civibanca 2.0 School Raising StarsUp Universitiamo Upspringer Vizibol WithYouWeDo Borsadelcredito Soisy OpStart Investi-re 200 Crowds Bact-to-Work 24 2005 2008 2010 2011 2012 2013 2014 2015 2016/2017 December 2017 67 established platforms 5 lending 16 equity 46 reward Commoon DeRev Fidalo Ginger Micro Crédit Artistique Proposizione Terzo Valore Werealize Crowdfundme Cubevent Giffoni Innovation Hub Mecenup Next Equity SportSupporter Tip Ventures Triboom WOOP food Source: Italian Crowfunding Report - Starteed
Italian Crowdfunding System Total amount raised till today Total amount raised in 2017 Growth rate (2017 vs. 2017) Source: Italian Crowdfunding Report 2017 - Starteed
The Equity Crowdfunding Italian System Fragmented. Of course Consob has approved 24 equity-based platforms: 22 (ordinary) 2 (special) 16 platforms are effectively working Starsup AssitecaCrowd NextEquity CrowFundMe MamaCrowd OpStart Investi-re Tip Ventures 200 Crowds Bact-to-Work 24
Equity-Based campaigns Overall, 194 equity-based campaigns in Italy (during 48 months) of which 107 successfully funded (60.3%).on 169 closed campaigns N. of projects Equity collected www.osservatoriocrowdinvesting.it
Equity and Lending in UK (vs. the rest of Europe) The UK Alternative Finance Industry Report 2014 - Nesta
The weak side of the Italian context Digital Divide (technological and cultural) Limited knowledge of English language Relatively low use of online payment system Limited crowdfunding culture Scarce support from public and private (financial) institutions
Some final remarks Crowdfunding relies on peers rather than crowds Crowdfunding is an excellent validation test for the launching of new products and services Crowdfunding is not suitable for every kind of project Crowdfunding is not for free Crowdfunding campaign cannot be extemporaneous. Money doesn t fall from the sky. Promotion and commitment are essential Crowdfunding campaign is really useful for its comments and feedback also when it doesn t achieve the funding goal. And it s possible to try again (and again, again, again, again, again, again, again, )
Do you think that a good idea is enough to make crowdfunding succeed?
Tips for the campaign 1. Target analysis 2. Economic sustainability of the overall project 3. Budget definition 4. Identification of your stakeholders 5. Other funding sources (essential to generate trust ) 6. Team for the crowdfunding campaign 7. Length (30-45-60 days) and period of the campaign 8. Platform? or DIY? 9. Rewards 10. Project description 11. Video 12.On-line and off-line promotion 13.Feedback/community management
Homeworks Go back home, choose a crowdfunding platform, explore the projects, fund a project you like or you find it worthy to be implemented
Contacts and more mail bernardo.balboni@unimore.it twitter @bbalbon Papers http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2430463 https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/a lternative-finance/downloads/2018-ccaf-exp-horizons.pdf http://www.crowdfundingreport.it/#fourth (Italian CF report)