alameda county sbdc...2017/03/07 · equity crowdfunding emerged in 2011 with “regulation d”...
TRANSCRIPT
Crowdfunding
Berkeley Public Library
March 7, 2017
Alameda County SBDC
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Equity Funding
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Lee Lambert
Director, Alameda County SBDC – affiliated
since 2008
Founder/CEO, Simple Buyout Plans and
Hollywood Partners
Founder, Cambridge/Samsung Partners
(venture fund)
Samsung Electronics, Van Kasper & Co.,
Deloitte, Ernst & Young
Harvard Business School, UC Berkeley
Crowdfunding
Crowdfunding is forecasted to pass venture capital as a
source of business funding in the near future
2014: $16.2 billion worldwide
2015: $34.4 billion worldwide
2020 forecast: $90.0 billion (World Bank)
2015 Venture capital: $124 billion
2015 Crowdfunding - $34.4 billion, up from $16.2 billion
Crowdfunding Segments
Source: Massolution
Platforms
Platforms
What is Crowdfunding?
3 Basic Models
Donation/ Reward
Lending
Equity
History of Global Crowdfunding
Recent History
2003:Artistshare – website for artists to raise funds to
make recordings
Example: Maria Schnieder (Jazz) raised $130,000
Premiums: $9.95 – first right to download
$250 – name listed on notes
$10,000 – listed as Executive Producer
Won a grammy in 2005!
Rewards Based Sites
Rewards Based Sites take Off!
2008: Indiegogo
2009: Kickstarter
Rewards Based sites – encompassed arts, social causes,
entrepreneurs and small businesses
Kickstarter
Through March 6, 2017
342,000 campaigns “All or Nothing” launched
121,000 successful
$2.9 Billion from 12.5 million backers
31% over $10,000
2.8% over $100,000
Famous Kickstarter Campaigns
https://www.kickstarter.com/projects/ryangrepper/coolest-
cooler-21st-century-cooler-thats-actually
https://www.kickstarter.com/projects/getpebble/pebble-e-
paper-watch-for-iphone-and-android
Indiegogohttps://go.indiegogo.com/wp-content/uploads/2015/12/Indiegogo-Statistics-Infographic-2015.jpg
Indiegogo Notable Campaigns
https://www.indiegogo.com/projects/flow-hive-honey-on-
tap-directly-from-your-beehive-environment--5#/
https://www.indiegogo.com/projects/super-troopers-2#/
Most Popular Reward Platforms
Kickstarter
Need US Bank
Account
Must reach your
goal
5% fee
3% bank fees
Must be approved
to start
Indiegogo
Accepts Paypal
5% fee to goal
or 9% if partial
3% bank fees
No approval
process
Donation Based Crowdfunding
2010: GoFundMe platform launches
Charitable giving
Medical bills, Disaster Relief, Little League Teams
Over $3 billion raised
About 8% fee all-in
https://www.gofundme.com/success
Charitable fundraising often done on Kickstarter and
Indiegogo, + many other sites
Peer to Peer Lending
Peer to Peer Lending
Dominant sites: Lending Club & Prosper
Kiva – 0% Loans from your network and extended parties
Peer to Peer Lending
Other than Kiva, lending sites can be very expensive for
businesses, especially start-ups.
Community lenders and Kiva are generally your lower cost
alternatives.
Peer to Peer Costs
Lending Club Rates
Equity Crowdfunding
Emerged in 2011 with “Regulation D” Platforms
Microventures – Tech companies
CircleUp – Branded consumer products and retail
Reg D allows only “sophisticated” investors
Generally, $1 million net worth other than home
Or, income of $200,000 last 2 years ($300,000 if
married) and expectation to continue at same level
JOBS Act of 2012
Allowed advertising for many types of crowdfunding
offers
Opened up market to solicit “unsophisticated investors”
when regulations published by the SEC in May, 2016.
Complicated restrictions (see chart next page)
Equity Crowdfunding Options
Equity Crowdfunding Sites
Crowdfunding vs. Venture Capital
Potential Advantages:
Easier to access
Valuation may be higher
Investment terms may be better
Publicity
Broader stakeholder base
Needs to be structured to allow VC investment – VC’s
don’t like to be “side by side” with unsophisticated
investors
Regulation CF
Intended to help small companies raise up to $1 million
per year
Many requirements before offering securities and
ongoing reporting requirements.
- Up front attorney/accountant fees to make an offering
- Ongoing financial reports
The new administration has stated it will seek ways to
lower the costs/red tape for this process to make it
easier to raise funds
Reg CF - JOBS Act
Reg CF Deals to September 2016
Another Way to Use Reg CF
Use Reg CF to obtain a loan
Example: Red Bay Coffee
Raised $160,000 on Wefunder
Terms: Repay with 5% of net revenues until investor is
returned 150% of investment (early investors received
200%). Forecast return in 3-5 years
https://wefunder.com/red.bay.coffee
Strategy
Telling Your Story
“Kickstarter as a phenomenon is made much
more comprehensible once you realize that it’s
not following the logic of the free market; it’s
following the logic of the gift.”
-Rob Trump
Storytelling
1. Have a character (can be family, neighborhood, etc.)
2. Share a problem/opportunity that character encounters
3. Make your donor a “guide” in your story
4. Give them a plan
5. Call them to action
Examples
https://www.indiegogo.com/projects/books-on-b-new-hayward-bookstore-independent-
community--2#/
https://www.kickstarter.com/projects/480091182/temescal-brewing-a-new-oakland-
brewery-and-beer-ga
https://www.indiegogo.com/projects/mr-dewies-cashew-milk-ice-cream#/
https://www.kickstarter.com/projects/1764790454/core-kitchen-the-worlds-most-
nourishing-restaurant
https://www.indiegogo.com/projects/the-core-wireless-speaker-system#/
https://www.indiegogo.com/projects/who-gives-a-crap-toilet-paper-that-builds-toilets#/
Steps to Launch
Build Your Team
Team Leader
Social Media Killer
Networker Extraordinaire
Funder Liaison
Content Developer
PR Maven
Name Your Idea
Set Your Funding Goal
Set Campaign Length
Starting Your Campaign
Create Your Media Database
Set Rewards
Digital > Tangible
Set reward tiers & themes
$25 & $100 most popular tiers
What can you give away that is meaningful?
Doesn’t need to be expensive
Build Your Fan Base
Create Your Story
Create Facebook/Twitter Accounts
Create Newsletter signup
What can you give away that is meaningful?
Build a Campaign Calendar
The Kickoff Personal email to
friends/family
Have them donate
right away
After 15-20% in
then blast to crowd
Spread the Word
Update your email signature
Send out a newsletter
Facebook/Twitter
Tap existing networks
Mainstream media
What to Share
Quotes from funders
Behind the scenes
pics/videos
Endorsements
Specific perks/rewards
Media coverage received
Facebook once a day
Ask questions
Ask for shares/likes
Include photo
Always include a call to action
Tweet all the time
Ask for retweets (RTs)
Thank RTs
Use popular #hashtags
Seek influencers
Always include call to action
Platform Updates
1-2 times per week
Be personal
Include them in the story
Ask for continual help
Extras
Add perks half way through campaign
Find more partners to cross-promote
Continue reaching out to
blogs/mags/newspapers
Release more short videos
Homestretch
Final week create a sense of urgency
Campaigns that reach 50% of their goal are 95% likely to
succeed
On Indiegogo over 90% of successful campaigns have
repeat contributors
Lastly
Collect the Money
Fulfill the Rewards
Don’t Forget Your
Funders
Key Statistics
Per Indiegogo statistical study:
30-39 Day campaigns work best
Keep updating the campaign page – makes a difference
Start strong, finish strong – 42% of funds 1st and last 3 days
Add new perks after launch – successful campaigns add 12 more
after launch
Work with a team – team approach raises 3x more
Include a pitch video – raises 4x more
https://go.indiegogo.com/blog/2015/10/crowdfunding-statistics-trends-infographic.html
Thank You!
Questions?