Practical

CrowdfundingWorkshop

www.propelarizona.com

Practical

CrowdfundingWorkshop

Agenda1. Crowdfunding overview2. Crafting the Idea and Campaign3. Preparing the Visuals4. Perks and rewards5. Running a successful campaign

www.propelarizona.com

Crowdfundingoverview

1.

The Funding Gap

Concept to Product to Growth

Concept to Product to Growth

$ $ $$

Concept to Product to Growth

$Entrepreneur IPO

Concept to Product to Growth

$Entrepreneur IPO

$Entrepreneur IPO

$

Venture Capital

Concept to Product to Growth

$Entrepreneur IPO

$Entrepreneur IPO

$

Venture Capital

$Entrepreneur IPO

$

Venture Capital

$

Angels,accel & incub

Concept to Product to Growth

$Entrepreneur IPO

$

Venture Capital

$

Angels,accel & incub

Crowdfunding

$$

Concept to Product to Growth

$Entrepreneur IPO

$

Venture Capital

$

Angels,accel & incub

Crowdfunding

$$

Crowdfunding$

Concept to Product to Growth

$Entrepreneur IPO

$

Venture Capital

$

Angels,accel & incub

Crowdfunding

$$

Crowdfunding$

Crowdfunding$

Concept to Product to Growth

$Entrepreneur IPO

$

Venture Capital

$

Angels,accel & incub

Crowdfunding

$$

Crowdfunding$

Crowdfunding$

Crowdfunding$

Crowdfunding

Soliciting & Collecting relatively small amounts of money (funding) from a large number (crowd) of people

What is Crowdfunding

What is Crowdfunding

What is Crowdfunding

What is Crowdfunding

Crowdfunding Concepts

• Debt Crowdfunding– microloans– P2P lending

• Donation Crowdfunding– Charity/Causes– Kickstarter Model– Rewards Based– Pre-Order/Presumer

• Equity Crowdfunding – JOBS act

Equity Crowdfunding - JOBS• Eliminates ban on general solicitation and general advertising in connection

with private offerings to accredited investors under Regulation D (Rule 506) and to qualified institutional buyers under Rule 144A.

• Exemption from Securities Act registration “crowdfunding” transactions (involving access to small amounts of capital through the internet).

• Exemption to allow issuance of up to $50 million of securities in any 12-month period, up from the current $5 million threshold

• An increase in the number of shareholders a company may have before being required to register its common stock with the SEC and become a public reporting company from 500 to 2,000 total shareholders (including up to 500 “unaccredited” shareholders)

• Amount each person may invest in offerings of this type, tiered by the person's net worth or yearly income.

Real Crowdfunding – that works.

Today

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

ALL OR NOTHING

Perks &Rewards

Updates (and Blogging)

Updates (and Blogging)

Comments & Engagement

Kickstarter 2011

• Let’s look at some statistics for 2011:• Launched Projects: 27,086• Successful Projects: 11,836• Dollars Pledged: $99,344,382• Rewards Selected: 1,150,461• Total Visitors: 30,590,342• Project Success Rate: 46%

Why ?(do people crowdfund)

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

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

There are three main reasons why people unconnected to a project or business would support it:

• 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

• 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/

WHY Crowdfunding?

• 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 rate of return.

Not financial ROI

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-orders• Supporters

UH OH …The Kickstart Model..

http://www.indiegogo.com/blog/2011/11/indiegogo-insight-campaigns-with-teams-raised-180-as-much-money-as-individuals.html

What you need to know

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

HOW to Crowdfund?

1. PRE - Preparing

2. PUSH - Running the campaign

3. POST – Delivering on your Promise

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”

2.Crafting the Idea and Campaign

HOW to Crowdfund?

1. PRE - Preparing– Build Credibility– Sharpen Pitch & Post– Perks and Rewards– Timefames & $$

first …

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/1719196889/iceblink-engine?ref=home_location

http://www.kickstarter.com/projects/812916345/magnet-comic-a-custom-magnetic-and-dry-erase-comic?ref=home_popular

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://www.kickstarter.com/projects/374405221/mary-elizabeths-sock-the-first-book-collection?ref=home_location

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

7 habits of highly successful campaigns

• They already have fan bases• They build off of something familiar• They are simple• They are (usually) NOT about the founders• They appeal to a specific interest ….

Before you start, remember …

• For your target, It's about emotion• It’s about elitness• being part of the cool group• feeling like you're important - • feeling powerful! Influential

First Exercise(s)

Checklist

1. Idea-check: (focus on target)– About “them” not you.– Emotional appeal: Passion, exclusivity, emotion.

2. Funding Level– Realistic (for you and them)– Use of proceeds

3. Timeframe4. Possible perks (not yet)

Assignment

1. Idea– What’s the story– What’s the emotional appeal, benefits

2. Who are the targets– Benefits. Connections

3. Describe, tell story.4. What visuals should you provide.5. How much, how long? When done?

Preparing

the Visuals

3.

Perks

and 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 them unique & Exclusive

2. Target them

3. Give them a connection

The Cocktail Party Effect

The Restaurant Effect

The Carey School Effect

Assignment

1. What is important to your target?2. What rewards can connect them to you or

your project3. What rewards are part of your project4. What unique rewards can you think of (that

others are not doing)5. What rewards will get them talking to others!

Running a

successful campaign

5.

HOW to Crowdfund?

1. PRE - Preparing

2. PUSH - Running the campaign

3. POST – Delivering on your Promise

HOW to Crowdfund?

1. PRE - Preparing– Build Credibility– Sharpen Pitch & Post– Perks and Rewards– Timefames & $$

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.

Your mission: To get them talking about your project

http://www.kickstarter.com/projects/1209578799/projecteo-the-tiny-instagram-projector?ref=home_popular

• 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, including their second and third degree connections.

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

Continue the story…

Social Engagement

– Transparency & Trust– Social Proof & Viral FX

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

1. Create:- 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

HOW to Crowdfund?

POST - campaign• Thanks …• Perks and rewards• Updates• Completing your goals !!

The most important secret is …

Showing Momentum

(the perception of momentum)

The most obvious secret is …

Credibility

= trust, competence & follow-through

Practical Crowdfunding

Workshopwww.propelarizona.com @PropelArizona