without crowds

crowdfunding

bernardo.balboni@unimore.it

Serial Crowdfunder https://www.indiegogo.com/projects/glass

up-augmented-reality-glasses-that-

display-messages-from-your-

smartphone#/

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

Sto

len

fo

rm ©

Dan

iele

Ferr

ari

Backers invest in equity

shares of innovative start-up.

Backers fund the projects and

receive rewards

Backers donate some money

for the NGO’s activities

Backers borrow an amount of

money and receive some

interests

Crowdfunding Platform

Campaigns focused on

start-up growth potential

Campaigns focused on

the project outcomes

Campaigns focused on

NGO’s activities and

mission

Campaigns focused on

the request for a loan

Demand EQUITY

REWARD

DONATION

LANDING

Offer

Crowdfunding Models

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) 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

Funding a project promoted by firms,

entrepreneurs, teams, individuals

Funding the market validation of a

prototype (idea, event, service, product)

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)

Source: Italian Crowfunding Report - Starteed

December 2017 67 established platforms

• 5 lending • 16 equity • 46 reward

What about Italy?

2005 2010 2011 2012 2013 2014 2015 2008

Produzioni

dal basso Smartika

BuonaCausa

Iodono

Prestiamoci Rete del

Dono

Cineama

Com-Unity

Letsdonation

Musicraiser

Smartika

Starteed

Eppela

Commoon

DeRev

Fidalo

Ginger

Micro Crédit

Artistique

Proposizione

Terzo Valore

Werealize

Assiteca Crowd

BeCrowdy

Bookabook

Funditaly

Innamorati della

cultura

Progetto Civibanca

2.0

School Raising

StarsUp

Universitiamo

Upspringer

Vizibol

WithYouWeDo

Crowdfundme

Cubevent

Giffoni Innovation

Hub

Mecenup

Next Equity

SportSupporter

Tip Ventures

Triboom

WOOP food

2016/2017

Borsadelcredito

Soisy

OpStart

Investi-re

200 Crowds

Bact-to-Work 24

Source: Italian Crowdfunding Report 2017 - Starteed

Italian Crowdfunding System

Total amount raised till today

Total amount raised in 2017

Growth rate (2017 vs. 2017)

The Equity Crowdfunding Italian System

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

Fragmented. Of course

Equity-Based campaigns Overall, 194 equity-based campaigns in Italy (during 48 months)

of which 107 successfully funded (60.3%).on 169 closed campaigns

www.osservatoriocrowdinvesting.it

N. of projects

Equity collected

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

Go back home,

choose a crowdfunding platform,

explore the projects,

fund a project you like

or you find it worthy to be implemented

Homeworks

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)