UK CrowdfundingJo Briggs, Northumbria UniversityPrincipal Investigator on RCUK projectA Taxonomy of UK Crowdfunding

Crowdfunding

Online crowdfunding platforms enable

individuals, groups and businesses

(project ‘founders’), to raise money for

creative, charitable and entrepreneurial

activities through the solicitation of multiple

micro-payments from 'the crowd’ (‘funders’)

Why is it Topical?Technological innovation

New way of connecting those seeking funding for a given cause or commercial initiative (‘fundraisers’), with those wishing to give to or invest in it (‘funders’)via the Internet…

Involves collaboration tools, social media and ‘platforms’ Is facilitating thousands of new products, services and social

innovations

Societal changes Facilitates individual/grassroots empowerment/social action e-tail/e-commerce; ‘digital natives’ era

Economic challenges For fundraisers: shrinking budgets/constraints to accessing finance For funders: lucrative, novel and accessible investment opportunities

Part of the crowd economy; one of several new ‘economies’ (‘collaborative economy’; ‘sharing economy’ e.g. Airbnb, Uber)

Rapid UK Growth

2013 UK estimated* economic value:

£20.5m for rewards-based (387 percent annual growth)

£310m for donation-based

£28m for equity-based (600 percent annual growth)

Collins, L., Swart, R. and Zhang, B. The rise of Future Finance: The UK Alternative

Finance Benchmarking Report , Nesta with universities of Cambridge and Berkeley

December 2013*

Donation-based crowdfunding is more philanthropically/community motivated. UK Spacehive aims to facilitate the improvement of local public spaces and amenities

Rewards-based crowdfunding (or, pre-sales) for which the funder usually receives a material reward e.g. Kickstarter

Definitions

And, in the (variously labeled) loan-based crowdfunding, peer-to-peer, peer-to-business or ‘non-bank’ lending, platforms such as Funding Circle broker deals for borrowers from funders on pre-agreed terms.

Equity crowdfunding is profit driven e.g. Crowdcube solicits multiple venture capital investments for businesses in exchange for which funders receive a share of equity/bonds

Definitions

“Keep it all” The fundraiser keeps whatever is raised

“All or Nothing” A funding goal must be reached for money to be exchanged

“DIY” Run your own version from your website

Hybid models offer a mix of these

Definitions

BUT crowdfunding always involves more than just people's wallets

"Disruptive" - but not just in terms of access to finance...

…and we still don’t understand much about people’s online behaviour

So, what makes a successful campaign?

Don’t ask for running/operational costs, needs to be part of an overall strategic plan and specific offering

Careful and transparent budget

Clear narrative (KISS), well presented (film, write up etc.); tell a good story

Digital communications plan

Realistic and responsible reward structure (or share offering)

Follow-up plan

Crowdfunding is not just about raising cash…

It brings with it a whole raft of challenges and opportunities for SEs, charities and mutuals

It’s very hard work! Success rates for some sites/sectors are low

How might "clictivism*" help or hinder social change membership and community organisations? [*“the use of social media and other online methods to promote a cause”]

**Successful campaigns rely on excellent communications and marketing planning**

In turn, campaigns usually bring changes to an organisation's profile and relationships with its customers/ users - for better or worse!

Small Businesses and Groups

Nae Pasaranhttps://www.kickstarter.com/projects/debasers/

nae-pasaran-an-untold-story-of-chilean-solidarity

http://www.growossining.com/

Grow Ossining

Leeds Bread Coop

http://www.crowdfunder.co.uk/leeds-bread-coop

Creative Sector

Where to start?

Start with rewards-based crowdfunding (doesn’t involve taking on debt or giving away equity/IP)

Use Tim Wrights TAMP method (targets; audit; method; plan)

Targets: What/when/why/who…

Audit: Assets/skills/resources/tools

Method: Reward/equity/peer-to-peer/donation All or nothing/keep it all/duration/platform

Plan: Resources/responsibilities/schedule/publishing plan Before/during/after

ResourcesDirectory of platforms

CrowdingIn

‘Toolkits’ and ‘how to’ http://networkcultures.org/moneylab-toolkit/ http://www.nesta.org.uk/publications/working-crowd