crowdfunding anne strachan - business west sussex · crowdfunding anne strachan @crowdfunduk...
TRANSCRIPT
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!
Why crowdfunding
What is crowdfunding?
Statistics
Globally
2012 £1.8 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 2011.
Over 43,000 members
Raised £1.5 million for its own growth 2013
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
Planning
Choose Platform
The Pitch
video
Written pitch
Campaign time
Campaign
time!
Social networks
Target reached
(or not)
How crowdfunding works
What links …
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
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.
The Pebble
$10.26 million
£40,000
Is Daddy Coming Back in a Minute
£11,270
Ouya games console
$8.9 million
Draw Like a Boss
£51,833
40-50% succeed
Risks
• due diligence
• legal structure of organisation
• reputation, social capital and the crowd
• no money changes hands – until success
• 50-60% don’t reach their
target (£19% equity)
• fraud
• those that fail honestly
… and safeguards
Questions so far?
Why would you donate/invest your money?
You meet someone, or receive and
email, asking you to invest
(donations) in a new business
• What would inspire you?
• What will encourage you to donate?
• What concerns would you have?
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
Crowdfunding – equity
Strength of the business case
Tax relief
Quality of the pitch
Experience of the team
CEO personal investment in the business
Crowdfunding – loans
Ability to repay debt in medium term
• Strength of the business
• Director’s track record
Crowdfunding – donations/rewards
Strength of the idea
Quality of the pitch
Value of the rewards
AND MOST IMPORTANT
Wide engaged social networks
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
Business - equity
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!
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
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
So what’s your business idea?
What does a crowdfunding campaign need?
A strong “crowdfundable”
proposition that fits the model
An engaging pitch
Creative rewards
The personal touch
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
Final thoughts or questions?