Crowdfunding Anne Strachan - Business West Sussex · Crowdfunding Anne Strachan @crowdfunduk...
Transcript of Crowdfunding Anne Strachan - Business West Sussex · Crowdfunding Anne Strachan @crowdfunduk...
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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!
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Why crowdfunding
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What is crowdfunding?
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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
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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
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Planning
Choose Platform
The Pitch
video
Written pitch
Campaign time
Campaign
time!
Social networks
Target reached
(or not)
How crowdfunding works
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What links …
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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
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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.
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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
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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
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Questions so far?
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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?
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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
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Crowdfunding – equity
Strength of the business case
Tax relief
Quality of the pitch
Experience of the team
CEO personal investment in the business
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Crowdfunding – loans
Ability to repay debt in medium term
• Strength of the business
• Director’s track record
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Crowdfunding – donations/rewards
Strength of the idea
Quality of the pitch
Value of the rewards
AND MOST IMPORTANT
Wide engaged social networks
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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
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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!
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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
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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
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So what’s your business idea?
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What does a crowdfunding campaign need?
A strong “crowdfundable”
proposition that fits the model
An engaging pitch
Creative rewards
The personal touch
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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
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Final thoughts or questions?