202002 implementing crowdfunding (1) · have learned from startups’ crowdfunding successes •...

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Implementing CrowdfundingPresented By: Ed Shanahan, Certified Mentor, DC ScoreFebruary 2020

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With SCORE, You Are Not Alone on Your Journey

For over 50 years, SCORE has served as America’s premier source of free business mentoring and education.

As a resource partner of the U.S. Small Business Administration (SBA), SCORE has helped more than 11 million entrepreneurs through mentoring, workshops and educational resources since 1964.

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SCORE Can Help You Find the Way Ahead

• Free one-on-one business counseling and mentoring

• Business advisory services

• Low cost local workshops

• Free templates and recorded webinars

To meet with a mentor or learn more about SCORE’s resources, visit washingtondc.score.org

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About Crowdfunding

Source: http://crowdsunite.com/what-is-crowdfunding/

Traditional Fundraising• Customers deposit funds in banks• Entrepreneurs apply for loans• Banks determine which

entrepreneurs receive loans based on credit scores and track record of profitability

• Banks share profits from loans with bank customers in the form of interest.

An institution, not the people with the money, decide who receives funds

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About Crowdfunding

Source: http://crowdsunite.com/what-is-crowdfunding/

Crowdfunding• Eliminates the middle man (the

bank,) and allows people to directly invest in the projects they choose.

• Investors can choose how they invest their money and how they are rewarded.

• Many small projects & startups that would go unfunded have the chance to receive the funding

People with the money decide who receives their funds

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Crowdfunding: Global Market Size circa 2015• $34B(e) in Crowdfunding in 2015 (more current estimates align with this and w

rapid YoY Growth)

• 74% via Loans (i.e. Lending Club, LendingTree)

• Donation (GoFundMe, IndieGoGo), Reward (KickStarter, IndieGoGo) and Equity (AngelList, CrowdCube) each made up appx 7% of the market

Source: http://crowdexpert.com/crowdfunding-industry-statistics/

Up through 2016 (for 2015 data) global market size reports were available from many analysts and were free

Today market size data costs $2,500+ per report

What does this tell you?

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• Fastest growing funding source globally• 2013: $6.1B

• 2014: $16.2B

• 2015(e): $34B

• Analysts forecast CAGR of 26.87% during the period 2016-2020.

• At the same time the number of crowdfunding portals is also exploding

Source: http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/05/06/crowdfunding-a-new-frontier-for-investorshttp://crowdfundbeat.com/2016/02/03/report-global-crowdfunding-market-2016-2020/

In 2020 a relatively small number of portals control most funding

Crowdfunding: Global Market Size circa 2015

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Crowdfunding Today

Source: Statista. Only includes Rewards based funding. Excludes loans, equity, royalty based. etc.

Robust Growth Continues• Most Forecast Reports do

not look at the industry as a whole focus

• Most focus on specific types of crowdfunding or specific geographic regions

• To get the full picture you need to buy multiple reports

• This forecast is for Rewards based only

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Crowdfunding Today

Source: technavio

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Social Media as a Key Driver of Growth

• Well funded profitable businesses have learned from startups’ crowdfunding successes

• Companies are aggressively pre-selling their products using crowdfunding & social media to generate demand

• Well thought through social media campaigns create viral buzz for the new offerings

• Magmod, pre-sold and was paid for1000s of units six months before this product was available

Graphic Source: Kickstarter

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Kickstarter: All or Nothing

Source Kickstarter: Updated Feb 7, 2020

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Kickstarter: All or Nothing

Source Kickstarter: Updated Feb 7, 2020

Successfully Funded• Most raise less than

$10,000, but a growing number have reached six, seven, and even eight figures.

• Currently funding projects that have reached their goals are not included in this chart — only projects whose funding is complete.

Distribution of amount raised for successful projects for top 6 categories

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Kickstarter: All or Nothing

Source Kickstarter: Updated Feb 7, 2020

Unsuccessfully Funded• Funding on Kickstarter is

all-or-nothing in more ways than one.

• While 12% of projects finished having never received a single pledge 78% of projects that raised more than 20% of their goal were successfully funded.

Distribution of amount raised for unsuccessful projects for top 6 categories

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Indiegogo

Now aggressively promoting itself as a “better” alternative to Kickstarter

Get to choose campaign style: “all or nothing”, or “keep what you raise”

Source Indiegogo: Updated Feb 7, 2020

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Indiegogo

Get to choose campaign style: “all or nothing”, or “keep what you raise”

Source Indiegogo: Updated Feb 7, 2020

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Lending Club: Personal Loans

Updated February 8, 2020

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Lending Club: Business Loans Too

Updated February 8, 2020

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – Kiva: All or Nothing

Updated February 8, 2020

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – iFundWomen: A Different Approach

• Crowdfunding ecosystem designed specifically for early-stage, female entrepreneurs.

• The reason why iFundWomenis fundamentally different than anything on the market today is because of our proprietary coaching program, The iFundwomen Method, which brings four core principles together

Updated February 8, 2020Source: iFundWomen

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CrowdfundingTurning Dreams Into an Actuality

Turning Dreams Into an Actuality

Some Key Sites – iFundWomen: A Different Approach

Updated February 8, 2020

Keep what you raise. Can adjust crowdfunding dates & goals

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Crowdfunding: Key Steps

1. Learn the Basics – 1 week

2. Pick a Crowdfunding Platform – 1 to 2 weeks

3. Plan your Campaign – 2 to 6 weeks

4. Execute your Campaign – 4 weeks

5. Post Campaign Capitalization – 4+ weeks

Total Time: 8-13 weeks for steps 1-4

• Timeframes assume a highly motivated applicant• Timeframes are estimates and will vary based on platform and applicant

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1. Learn the Basics – 1 Week

Learn everything you can about Crowdfunding.

You CAN become an “expert” in a short period of time. Key sites include:

• Crowdfunding “clearing site”: http://crowdsunite.com/

• Educational articles (from basics to advanced), news, tools and classes

• Vendors who can help create a campaign

• Real-time tool that can filter among the top 400+ sites for a given need

• User reviews (currently 500+) of the major sites

• Crowdfunding news – these are constantly changing

• The Balance Small Business: Their ratings of the “7 Best Crowdfunding sites of 2020”

• The Independent (UK): UK news

• Wired.com & and Entrepreneur.com: many articles

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1. Learn the Basics – 1 Week

If your goals are large, learn about sites that can help youCrowdfund Marketing Services Firms

Source: crowdfundusa.org

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2. Pick a Platform – 1-2 WeeksIdentify your Options

• Speak with others in your industry who have successfully crowdfunded

• “Google” your type of business and crowdfunding and see what comes up. Be as specific in your search as you can.

• Check out IFundWomen, even if you are a guy. The site has easily readable and well thought through guides.

• Use the CrowdsUnite Tool and the type of funding you are seeking to determine their recommendations. Pay attention to the Alexa score. It is a helpful guide

• Narrow it down to 3-4 potential sites and prioritize them.

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2. Pick a Platform – 1-2 Weeks

Vet the 3-4 potential platforms

• Signup on each site as both an applicant and as an investor. You will likely need to use two email addresses

• Read through the site’s guidance as to what makes an applicant successful and take notes.

• Log on as a potential investor and “rapid scan” from applicant to applicant (what investors do) and see what if anything jumps out at you. Make notes.

Compare notes and select your platform

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3. Plan Your Campaign – 2-6 Weeks

1. Based on Observations in the prior step, determine the content and presentation of your crowdfunding site.

• What will you say in the text to hit on themes that will resonate with “rapid scan” investors?

• Do you need a photograph? If so what story must it present to be compelling?

• Do you need a video? If so, at what level of quality? Does it need to be professional or will an iPhone vide work?

How will you test this before launch?

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3. Plan Your Campaign – 2-6 Weeks

2. Potential Investors will come from two sources:

• “rapid scan” visitors to the site who know nothing about you and will be swayed or not by a quick glance at your content and presentation

• People whom you direct to the site

• Who will you ask to view your crowdfunding site?

• What will you say to them to cause them to take action?

• How will you reach them (i.e. social media posts, email, advertising, etc)?

• How often and when will you reach out to them?

You need a plan that answers these questions

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When Message Channel & target- 3 weeks Here is what we plan to do and why! -Email to select contacts

-Blog post and to social media-Tell everyone you meet

- 1 week Getting ready. We are excited -Same as prior step, except email to all contacts

Launch week We are live! Please support us! -Email to all contacts-Blog post and social mediaTargeted social media advertising

+ 1 & 3 weeks Progress update -Same as prior, minus email

Final Week Progress update and final push -Email to all contacts-Blog post and social media-Targeted social media advertising

Final + 2 weeks Thank you & here are the results -Email to all supporters-Blog post and social media

3. Plan Your Campaign – 2-6 WeeksHypothetical Promotion Plan

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4. Execute Your Campaign – 4 Weeks

• Execute the Plan defined in the prior step, adapting timing and messaging as needed

• Keep up the buzz by staying on top of and responding to comments on your Crowdfunding site

• Drive progress updates through your social media and general business promotion channels. Keep it light and fun!

• Capture contact information from funders and well wishers. These are potential customers.

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5. Post Campaign – 4+ Weeks

• Crowdfunding campaigns generate a lot of information. Key Post-Campaign activities include:

• Assess what worked and what did not. Especially important if you did not “close the deal”.

• Thank your “investors” and advisors.

• Reach out to “investors” on a regular basis to keep them updated on your business. They are potential customers and potential sources for new customers.

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Case Studies

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2. Pick a Platform – 1-2 Weeks

To illustrate these guides, we will use examples of a hypothetical photography company that wants to raise funds for a project TBD

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2. Pick a Platform – 1-2 WeeksGoogle “photography crowdfunding project”

Street Art in Cuba – raised $3.4K out of desired 7K. Did not get the $$ as FotoFund is an “all or nothing” site

Shows a number of projects one of which is for a planned book about surf culture in NY & NJ which has raised $16K so far. With Indiegogo you can keep the funds even if $20K goal is not reached.

No use. References a 2012 Tech project which time has passed by.

Interesting but from 2012

Lesson Learned: You can get funded especially for books and documentaries

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2. Pick a Platform – Hypothetical Pick

Source: http://crowdsunite.com

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• Compare the top 3-4 platforms

• Information is incomplete (but is far more complete than it was a year ago)

• What jumps out are KickStarter’s 3.5MM monthly visitors 8-10% fees for successful campaigns and 65% funding success rate

• Have a bias for Kickstarter as it has a large user base, decent funding success is Rewards based and you don’t have to pay it back.

• Will try Fotofund if going for a book project

2. Pick a Platform – Hypothetical Comparison

Source: http://crowdsunite.com

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• Read reviews on each possible site, both reviews on CrowdsUnite and by “Googling” “XXXX revews”

• Review below is from CrowdsUnite

2. Pick a Platform – Hypothetical Comparison

Source: http://crowdsunite.com

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2. Pick a Platform – 1-2 Weeks

“Successful Campaigns”

Kickstarter(only keep if you reach your goal)

Fotofund and Indiegogo

Book about Olympic Cities – raised $66K of $45K target. Nice rewards

Ice Cream Headaches Book (raised 21K, 109% of target (Indiegogo).

McCloud River Art Book. Raised $29K of $25K target.More limited rewards.

Archive of photos from 1998-2008. Raised $2.5K – goal. (Fotofund)

New York Pizza Project – captures the foods of the city. $25K of $15K target

Collection of fashion images. $3k raised – campaign is open ended (Fotofund)

Book about LGBTQ Student Athletes $55K of $50K target.

Athens Potluck Photobook (raised $38K, 125% of target (Indiegogo)

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