CROWDFUNDING. What Is It and How Can We Use It? Robert Kovacev 2015

CROWDFUNDING What Is It and How Can We Use It? Robert Kovacev 2015 To get from this . . . To get from this . . . to this . . . To get from this...
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CROWDFUNDING What Is It and How Can We Use It?

Robert Kovacev 2015

To get from this . . .

To get from this . . . to this . . .

To get from this . . . to this . . . takes this . . .

How can we get money to fund our project? • Use your Life Savings? • Tap FF&F? • Borrow it?

• Sell Equity?

How can we get money to fund our project? • Use your Life Savings? • Tap FF&F? • Borrow it?

• Sell Equity? • Get Donations from Believers

How can we get money to fund our project? • Use your Life Savings? • Tap FF&F? • Borrow it?

• Sell Equity? • Get Donations from Believers • This is the basis of CROWDFUNDING

CrowdFunding has a long history • 17th Century – Literary groups pooled resources in a

subscription model to fund publication of interesting books • Today – Crowd Funding is Everywhere Motion Pictures

Civic Projects

Charitable Causes

Books

Band Tours

Environmental Causes

Lawsuits

Pop Group Albums

CrowdFunding has a long history • 17th Century – Literary groups pooled resources in a

subscription model to fund publication of interesting books • Today – Crowd Funding is Everywhere Motion Pictures

Civic Projects

Charitable Causes

Innovation Books

Band Tours

Lawsuits

Start-Up Enterprises

New Product Development

Internet Apps Environmental Causes

Pop Group Albums

Projects

The Big Gap

Bridging the Gap . . . Must Create Awareness and Motivation to Participate

• Belief • Passion • Desire to be a part

• Make a Contribution

Why Do People Participate? • Innovative Orientation -- People who want to support

innovation and be part of making new ideas successful. • Social Identification -- People who identify with the

content, cause, or project that sparks the desire to be a part of the initiative. • Monetary Gain – People who are motivated to participate

in expectation of some type of monetary or other gain.

Recent Innovations that Make CrowdFunding Work for Us

S

Today, Awareness Is Created By Social Media • Twitter -- Creates BUZZ about the project • Facebook -- Links people to the project through friends • Instagram & Pinterest – Makes the project real by

broadcasting visual images • YouTube – Broadcasts videos of the project progress • Google+ -- Ties the project to Google search engine • Campaign Web Site – Destination for Social Media Activity

The goal of the Social Media campaign is to create a high degree of interest and direct that interest to the CrowdFunding Platform website

Two Major CrowdFunding Platforms • Kickstarter.com (Founded 2009) • Fixed Funding Campaigns Only [“All or Nothing” (AON)] • Fee = 5% of Proceeds Only if Goal Met; Otherwise Zero • Campaigns >150,000

• Average Campaign = $5,000 • Success Rate = 44%

• Indiegogo.com (Founded 2007) • Fixed Funding (AON) or Flexible Funding [“Keep It All” (KIA)] • AON Fee = 4% of Proceeds Only if Goal Met; Otherwise Zero • KIA Fee = 9% of Proceeds • Campaigns >200,000 • Average Campaign = $3,700 • Success Rate = 20%

What does it take to have a successful campaign? Four Phases . . . • Phase 1 -- Preparation • Phase 2 -- Creation • Phase 3 -- Execution

• Phase 4 -- Follow Through

Phase 1 -- Preparation • Get Inspired and Learn What to Expect • Select an Effective Platform • Indiegogo.com or Kickstarter.com • Long-Term Thinking • Detailed Project Plan • Brainstorm the Basics • Target Audience; Resources; Your Team; Expectations • Assemble Your Team • Team More Effective Than an Individual • Campaign Media and Materials • Scripts; Videos; Photos; Testimonials; Prototypes

Phase 2 -- Creation • Focus Your Idea • Meaningful Size for CrowdFunding • Think Beyond the Money • Establish Timeline • Start Only When Really Ready • Optimum Campaign 40 Days or Less • Develop Your Pitch • Create Perks • Physical Items v. Personal Contact v. Experiential • Strategically Price Perks ($25 Perks v. $100 Perks) • Set Goals and Funding Types • Fixed (All or Nothing) v. Flexible (Keep It All)

Phase 3 -- Execution • Launch Big • Get Early Momentum from Your Team Networks • Early Momentum Works Magic • Promote! Promote! Promote! • E-Mail; Social Media; Blogs; Journalists • Use Platform Sharing Tools • Engage Contributors Personally

and Individually • Use Platform Dashboard to Manage Campaign • Work Your Perks • Introduce New Perks; Start Fulfillment Early; Promote Best Perks

Phase 4 -- Follow Through • Perk and Promise Fulfillment • If Flexible Funding – Must Fulfill • Fixed Funding + Goal Met – Must Fulfill • Fixed Funding + Goal Not Met – Return Money • Collect Your Money • PayPal v. Amazon Payments v. Credit Card • Multiply Marketing Value of Campaign • Use Contributor Lists to Expand Marketing Contacts • Continue Updating Contributors • Continue Campaigning • New CrowdFunding Campaigns for Product Improvements • New Product Campaigns

Campaign Costs (Indiegogo) • Strategy Choices • Keep It All (KIA) – Flexible Funding • Keep whatever you get even if goal not reached

• All or Nothing (AON) – Fixed Funding • Keep the proceeds only if goal met or exceeded

Flexible Funding (Keep It All)

Fixed Funding (All or Nothing)

Goal Reached

4%

4%

Goal Not Reached

9%

0% (Contributors get refunded)

Third Party Fees

3% to 5 % Processing Fees for PayPal or Credit Cards plus International Funds Processing Fees and Wire Transfer Fees

Case Study -- Coolest Cooler Project (Kickstarter)

Coolest Cooler CrowdFund Rewards LEVEL

AMOUNT

PARTICIPANT S

REWARD

1

$5

1,078

2

$ 25

311

Party Cup & Coolest Blended Drink Guide

3

$ 55

133

Commemorative T-Shirt, Party Cup, & Coolest Blended Drink Guide

4

$ 165 / $185

57,346

One Coolest Cooler & Coolest Blended Drink Guide

5

$ 225

2,455

One Coolest Cooler, T-Shirt, Party Cup, & Coolest Blended Drink Guide

6

$ 500

31

One Coolest Cooler & Two Personal Telephone Calls with Founder

7

$ 1,750

304

Ten Coolest Coolers

8

$ 2,000

8

Name Engraved on Founder’s Cooler

First Cooler off Assy Line & Founder Tends Bar at Participant’s Party

Case Study -- Coolest Cooler Project (Kickstarter)

Some Observations . . . • Influence is Important: Knowing who backs a

campaign helps sway other potential investors. • Momentum is Critical: Initial funding begets new

funding. • Validation: Having once raised money successfully

online is proof that you can do it again. • Customer Engagement: People who fund your

CrowdFunding project are also your customers.

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