Widows & Orphans Homeless

Financial

Armageddon

Disruption

An Economic DevelopmentPhenomenon

Funding for entrepreneurs!

Fraud & Scams?

CROWDFUNDING Beyond the Headlines & Hype

revolution!

CJ Cornell @cjcornell

serial / parallel entrepreneur

• 10+ companies

• $250M Funding 4 Exits (great !)

• $3B Revenues 4 Failures (awful !)

• Lots of lessons. Chaos, Pain and Joy.

• EIR, Venture Partner

• Angel Investor

• 5 Companies

• 9 Boards

• 3,000 Tylenol Caplets.

• Ego and Brain Atrophy.

Investor, Venture Capitalist

CJ Cornell is ...

• Professor of Digital Media & Entrepreneurship• Arizona State University, SJSU, Stanford (Lecturer)• New York Institute of Technology • Knight Center for Digital Media Entrepreneurship• Research in digital media, behavior, entrepreneurship

University ProfessorAdvisor, Mentor, Author

• ASU – Skysong, Venture Catalyst, RSS etc

• Arizona Commerce Authority / Venture ready

• Arizona Innovation Challenge

• Book: Age of Metapreneurship. Blog/Articles

1 #

AZ Entrepreneurship

10top

Places to do business …

46th in the U.S.A.

venture capital, equity investing

$28 Billion

that’s with a “B”

3,900

VC deals in 2013

1,900

# seed/early stage deals

1,900

# lottery millionares in US each year

VC Deals and $$ 2013 Amount Invested

Stage of Development 2013

Qtr 1 Qtr 2 Qtr 3 Qtr 4 2013 Total

Seed $208,749,800 $224,891,100 $189,545,100 $319,766,900 $942,952,900

Early Stage $1,525,082,100 $2,532,942,200 $2,805,559,400 $2,895,229,600 $9,758,813,300

Expansion $2,059,163,900 $2,195,220,100 $2,587,292,100 $2,996,782,200 $9,838,458,300

Later Stage $2,207,377,900 $2,120,733,500 $2,339,208,100 $2,157,414,100 $8,824,733,600

Grand Total $6,000,373,700 $7,073,786,900 $7,921,604,700 $8,369,192,800 $29,364,958,100

Number of Deals

Stage of Development 2013

Qtr 1 Qtr 2 Qtr 3 Qtr 4 2013 Total

Seed 53 46 52 67 218

Early Stage 416 506 551 530 2,003

Expansion 237 231 241 275 984

Later Stage 203 194 188 205 790

Grand Total 909 977 1,032 1,077 3,995

Why does a startup need funding?

** yes, it needs to be asked ….

concept

IPO (market share, revenues etc )

Product(Risk, growth)

Entrepreneurial Growth

Funding Gap(s)concept->product->market->profit

$$

$

$

Venture Capital

Angels(accelerators/incubators)

Starting a company is easier than ever …

… but growing a company is harder & riskier than ever …

$520k(the average Angel deal)

** the HALO report

$22.9 Billion in 67,030 Deals

(Angels)

2012 numbers – Center for Venture Research

The Series-A Crunch

Crowdfunding

Crowdfunding

concept

IPO (market share, revenues etc )

Product(Risk, growth)

Entrepreneurial Growthconcept->product->market->profit

$$

$

$

Venture Capital

Angels(accelerators/incubators)

Crowdfunding

Crowdfunding

What is Crowdfunding ?

The safety of crowds

The passion of crowdsThe wisdom of the crowds

Crowdfunding

Crowdfunding

Source: http://theyec.org/making-sense-of-the-jobs-act-and-crowdfunding-infographic/

• Source – http;//crowdfunder.com

• Source – http;//crowdfunder.com

Crowdfunding has more than tripled in the past 3 years

What about Equity Crowdfunding?

5 April, 2012 (and … AugUst 2012, December 2012 …)

2015

Equity crowdfunding practical in US

FRAUD

Equity (investment) crowdfunding in US

0

FRAUD

cases

“THE KICKSTARTER MODEL”Rewards-based, Donation Crowdfunding:

ALL OR NOTHING

Perks &Rewards

Updates (and Blogging)

Updates (and Blogging)

Comments & Engagement

Equity Crowdfunding ...is here

WHY …Do people Crowdfund?

Lessons from Ethan Mollick’s “The Dynamics of Crowdfunding: Determinants of Success and Failure”

3 Why’s: 1. They connect to the greater purpose of the campaign

2. They connect to a physical aspect of the campaign like the rewards

3. They connect to the creative display of the campaign’s presentation

three main reasons why people unconnected to a

project or business would support it:

What Is Crowdfunding And How Does It Benefit The Economy - Forbeshttp://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy

The Real(Crowdfunding)

Why’s

• Passion– For the technology– For the industry– For the cause– For the product

• Affinity– For the Entrepreneur– For the region, industry etc

• Connection

• Every reason BUT R.O.I. …

emotional ROI.Not financial ROI

WYNTK(what you need to know)

Crowdfunding is about …

(when crowdfunding …)

“its not what you do, but why you do it,”

WYNTK(what you need to know)

http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-multi-touch-watch-kits

http://trendwatching.com/trends/infographics/presumers/

“Consumers who want products before they are developed”

Pre-ordersEarly adopters

Supporters

UH OH …The Kickstart Model..

1. Crowdfunding = New “1st Money” for ventures($10k - $50k average– but wild exceptions)

2. Equity Crowdfunding is Still Far away3. Rewards based Model IS Crowdfunding today4. All or Nothing Crowdfunding – Standard5. Perks and Rewards: Pre-order Crowdfunding6. Social Media & Content Intensive

www.propelarizona.com

WYNTK(what you need to know)

What does success look like?

• The iPhone-friendly Pebble watch earned $7.6 million more than its $100,000 goal.

• And the Galileo iPhone platform closed its Kickstarter campaign at $702,000, far surpassing its $100,000 goal.

• Ouya raised $2 million in one day for a new Android gaming console (it’s raised more than $5 million to date),

• the Nifty MiniDrive, external memory for Apple MacBooks. The tiny storage company is more than 2,000% above its $11,000 goal with 15 days left in the campaign.

What do successful campaigns have in common?

http://www.kickstarter.com/projects/hop/elevation-dock-the-best-dock-for-iphone

Projectio

http://www.kickstarter.com/projects/1209578799/projecteo-the-tiny-instagram-projector

http://www.kickstarter.com/projects/mikebond/ti2-sentinel-titanium-cache?ref=home_popular

http://www.kickstarter.com/projects/poots/kingdom-death-monster?ref=home_popular

http://www.kickstarter.com/projects/smartthings/smartthings-make-your-world-smarter?ref=category

http://www.kickstarter.com/projects/thejumpshot/jumpshot-a-new-weapon-to-battle-pc-frustration?ref=category

http://trendwatching.com/trends/infographics/presumers/

Successful campaigns took an average 11 days preparing for their launch.

http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

Campaigns ran an average 49 days in 2012, as opposed to 60 in 2011.

Successful campaigns fundraised for 39 days.

http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

Crowdfunding Myths & Mistakes

• Myth #1: If You Build It, They Will Come• Myth #2: Cash is Free• Making it about you• Unrealistic Expectations• Lack of clarity• No call to action• Expecting to be found: (No Marketing)• Ignoring Small Donations/Donors

http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-themhttp://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804

www.propelarizona.com

WYNTK(what you need to know)

Successful Crowdfunding Campaigns Focus on

The new 4 P’s …

PEOPLEthe

1. PITCH

the

2. PROMOthe

4. PERKSthe

3.

focus on “them” – not your company

WHO are they?What motivates them?Interests, Values … PEOPLE

the

1.The new 4 P’s of Crowdfunding ..

www.propelarizona.com

PITCHthe

2.You are pitching to “them”

TELL A STORY !!

WHY is more important than $$

VIDEO(s) & VISUAL(s)

Tell the story in small ‘chapters’

VIDEO(s) & VISUAL(s)

And even smaller “sound bites”

Give them a Story they can tell to others.

PERKSthe

3.$$ Value is a negative driver !

UNIQUE

It’s about THEM

EXCLUSIVE

And what is important to “Them”

FIRST

Make sure it is …

BUZZWORTHY

PROMOthe

4.It’s a daily/hourly effort …

SOCIAL MEDIA

It’s a conversation …

UPDATES, BLOGS, NEWS

Provide Value, and Talking PointsRE-POST, TWEETable

It’s about … for their network

VALIDATION & EVIDENCE

Crafting a

Successful

Crowdfunding Campaign

2.

Some initial rules ….

1. Crowdfunding takes work, new skills.2. It takes a strategy, and preparation. 3. The rules are different.4. You can’t just post and run …5. It’s a public success or failure – that “stays on

your resume”

www.propelarizona.com

WYNTK(what you need to know)

Components

of a

Crowdfunding Campaign

Title & Short Description • (repeatable & compelling)

Long Description (“The Pitch”)• Make it a story … about “them”

Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN

• Repeatable Messages• Daily “routine”• Traditional marketing too

Crafting the “Pitch”

First: Who What Why When …

• The 3 Who’s:– Who are the donors? (affinity & passion)– Who is benefits? (the market)– Who are you?

• The 3 Why’s– Why would your donors care?– Why does the market care?– Why are you the right team to do it?

First: Who What Why When …

• What is your project & goal?– Understandable & Simple– Compelling & Intriguing– Repeatable & Memorable

• How and When– How will you achieve your goal? Realistic?– When, after funding? When will I get my perks?

Other Tips

• Tell a story• Make it about them• The History of the idea is intriguing• What is the Impact? – why is this important?• Try a FAQ• Call to action – get them involved!

Exercise –

Craft the Pitch

Crafting your Pitch Title & Short Description

• (repeatable & compelling) Long Description (“The Pitch”)

• Make it a story … about “them” Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN

• Repeatable Messages• Daily “routine”• Traditional marketing too

Tell a storyMake it about themThe History of the idea is intriguingWhat is the Impact? Why is this important?Try a FAQCall to action – get them involved!

The 3 Who’s:Who are the donors? (affinity & passion)Who is benefits? (the market)Who are you?

The 3 Why’sWhy would your donors care?Why does the market care?Why are you the right team to do it?

What is your project & goal?Understandable & SimpleCompelling & IntriguingRepeatable & Memorable

How and WhenHow will you achieve your goal? Realistic?When, after funding? When will I get my perks?

Pitch Notes - 1• Who (donors, market)• “Why” – the story

• Impact (on the market)• Impact (on the donors)

Pitch Notes - 2• Story, and History …• FAQ

• Perk Ideas (what’s important to donors)• Calls to Action

Visuals 3.

The Importance of Visual Media• 64% of successful campaigns in had pitch videos.

• Campaigns with videos under 5 minutes were 25% more likely to reach their goal than those with videos that were longer.

• Average campaign video length for campaigns was 3 min, 27 seconds. Campaigns that reach their goal are 16 seconds shorter.

• On average, successful campaigns uploaded 6 media to their gallery.

• http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

Perks & Rewards 4.

Directed by

Patrick Million

Executive Producer

CJ Cornell

a Patrick Million FILM

American Grandmaster

Rewards Crowdfunding

• Incentives & perks• Pre-Orders• Pre-Sumers

• Market Validation

Rewards don’t have to worth $$

• $25 perk is the single most claimed perk, representing nearly 25% of all perks that are selected.

• While the $25 dollar perk is only responsible for raising 11% of total funds.

• $100 perks raise more money than any other perk price and make up nearly 30% of total funds. A $100 perk combined with the next three perk price points: $50, $500, and $1000 makes up about 70% of total money raised by perks

some

Rules for Rewards

1. Make perks unique & exclusive

Avoid T-shirts, Mugs & Hugs

2. Target them

3. Give them a connection

“The Cocktail Party Effect”

“The Restaurant Effect”

“The Carey School Effect”

The less tangible the perk,

the more public (visible) & EXCLUSIVE it needs to be.

The Campaign 5.

How much $$ ?

How long?

Discussion

• How much should we raise?– Have you raised money before? Return?– Do you/did you work at a highly visible position?– *** Your social network? Large? Followers? – Idea - big market? How unique?– How much (marketing) work will you do?

HOW to Crowdfund?

PUSH - Running the campaign• Social Media• Comments & Updates• Networking• Personal Pitches

Your mission: To get them talking about your project

Now that you’ve launched …

Continue the story

Social Engagement

– Transparency & Trust– Social Proof & Viral FX

– Engagement & “The Fundamentals”– Twitter– Facebook– Blogging

most successful projects receive about 25-40% of their revenue from their first, second and third degree of connections.

This could include friends, family, work acquaintances, or anyone that the owner is connected to.

• http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy/

1. Create: (of course)

- A Facebook Account- A Twitter Account

(for your campaign)

2. Tweet & Post –Frequently–Uniquely–Personally

3. Post Updates & Blog•About your progress•About the subject•About the industry•About the People

4. Go 1-1•Reply to comments•Retweet/Repost

Your fans and donors are your most powerful advocates!

5. Target, Measure & Adjust•Different Messages for different groups

•Google, Hootsuite, others•Learn and Adjust focus

Metrics

http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

Metrics

http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

the importance of google analytics to track and improve performance

• + perks from fivvr

• http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

Campaign CheckistSocial Media Create a schedule 2-5x / week Use an automated tool Eg HootsuitePost interesting info – Not just pleas for moneyNot just updatesVary your targetsCall to action 1/3-1/2 time

Use analytics and other metrics

Traditional Marketing

Pitch Events Press Releases Demos Testamonials Use an automated tool

What to Communicate:1. Your Progress2. Successes, Evidence of success3. Ammunition for your supporters4. Industry Info, Factoids5. People Info

Plan, Schedule & Update

Your Social Network is a Force Multiplier – but you have to give them help.

Success Factors 6.

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http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-more-money-than-campaigns-that-dont.html

http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-more-money-than-campaigns-that-dont.html

http://www.indiegogo.com/blog/2012/07/indiegogo-insight-winning-the-middle-game.html

successful campaigns raise, on average, 49% percent of their goals during the first and

last 10% of the campaign length.

The most important secret is …

Showing Momentum

(the perception of momentum)

The most obvious secret is …

Credibility

= trust, competence & follow-through

www.propelarizona.com

Crowdfunding

Entrepreneurship & Innovation

Arizona Economic Growth

Practical Crowdfunding

Workshop

www.propelarizona.com

@PropelArizona

Slideshare/PropelArizona

daysCrowdfunding is measured in …

Entrepreneurship