crowdfunding: how to raise $1m

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Crowdfunding: how to raise $1M George Mikaberidze Co-Founder and Managing Director API Moscow, August 13

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Crowdfunding: how to raise $1M

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Page 1: Crowdfunding: how to raise $1M

Crowdfunding: how to raise $1M

George Mikaberidze Co-Founder and Managing Director

API Moscow,

August 13

Page 2: Crowdfunding: how to raise $1M

Fun Facts about Crowdfunding

• Creative works were funded this way for centuries

– Mozart, Beethoven, Whitman, Twain, and other artists funded works in similar

ways – not just large partrons, but by soliciting money from smaller partrons, often

called subscribers. In return for their support, these subscribers might have

received an early copy or special edition of the work. Kickstarter and Indiegogo

are extensions of this model, turbocharged by the web.

• Social Media is Critical

– If you have 10 Facebook friends you have a 9% chance of succeeding with 1000

friends you have a 40% chance of success

• Mega Money is Available

– Last year the amount of money raised worldwide on crowdfunding sites more than

doubled to $6B

• >$1,000,000 Campaigns

– Kickstarter has 76 Campaigns

– Indiegogo has 17 Campaigns

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Page 3: Crowdfunding: how to raise $1M

Benefits of Crowdfunding

• Provides access to capital without giving up

equity

• Hedges risk by gaining market validation and

proof of concept

– Provides direct feedback from potential customers on

feature sets, price points, messaging

• Free PR that will generate significant new traffic

to your website and social media pages - viral

benefits as word spreads

• Opportunity to pre-sell product

• A successful campaign can attract major

investors

• A successful campaign can attract major retailers

and distributors

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Page 4: Crowdfunding: how to raise $1M

Key Crowdfunding Sites

• Over 700 platforms around the world; new ones every day

• Kickstarter is the most well-known (founded 2009)

– Companies or individuals starting projects must be based in the

U.S. Canada, UK, Australia and New Zealand (contributions can

come from anywhere in the world with a major credit card)

– All or nothing funding; 5% fee if project is successfully funded

• IndieGoGo is a global platform (founded 2008)

– Option of flexible or fixed funding

– Flexible has a 4% fee if goal is met, 9% if goal is not met

– Fixed funding has a 4% fee if goal is met

• 73% of funds raised are from people contributing $11-$100

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Page 5: Crowdfunding: how to raise $1M

Company Product Raised Platform

Ubunta Edge Smart Phone/PC Device $12M + Indiegogo

Pebble E-paper Watch $10M + Kickstarter

OUYA Video Game Console $8M + Kickstarter

Vengo P-O-P Digital Media Kiosk $2M + SeedInvest

Canary Smart Home Security $1.9M Indiegogo

Zuli Smartplugs Bluetooth Outlet Plugs $1.5M Fundable

Pirate3D 3D Printer $1.4M Kickstarter

HealBe 100% Automatic Body Manager $1M + Indiegogo

Crowdfunding Successes Examples

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Page 6: Crowdfunding: how to raise $1M

Examples

Page 7: Crowdfunding: how to raise $1M

Record-Breaking Crowdfunding Success

In April 2014, Healbe™ launched a campaign on the well-known crowdfunding platform Indiegogo in order to introduce GoBe to the market.

supported the project on Indiegogo

>4500 funders

raised in the first two weeks

total funds raised during

the campaign, making it

one of the top campaigns

of all time

$700,000 $1,080,000

Page 8: Crowdfunding: how to raise $1M

Getting Started

• Pick your platform

• Develop the pitch

– Concise story about product and why you’re raising

money

– Use photos and make it visual

– Include the project team - make it personal

– Video is important - so is keeping it to three minutes

in length

– Call out the spirit of collaboration; invite people to be

part of something special

• Set goal and deadline for campaign

• Establish perks –incentives for contributions

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Page 9: Crowdfunding: how to raise $1M

Tips for Success

• Raise awareness pre-event

– Start 2-3 months before campaign

launches

– Use social media, networking, and

PR to create the buzz

– Create a blog and follow other

bloggers

– 20-30% of funds should be raised

before the start from friends and

family. Leverage partners and their

contacts

• The “herd effect” drives

crowdfunding success and others

will contribute to what looks

successful

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Page 10: Crowdfunding: how to raise $1M

Tips for Success

• Longer campaigns do not mean more money

– 30-40-day campaigns are most successful

• Use your website to direct people to the campaign and vice

versa

• Campaigns that are working will get premier placement on

most sites and through the platform’s social media outreach

and press

• Communicate frequently with your backers during and after

campaign

• Plan to sell product directly from your website after the

campaign to benefit those who are late to the party.

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Page 11: Crowdfunding: how to raise $1M

Expect Unexpected

• Mass of questions from

consumers and competitors

• Bad media is also media

• Money blocked: Russia is not

well perceived global wise

• Delays are always happened

August 13, 2014 | 11

Page 12: Crowdfunding: how to raise $1M