crowdfunding: how to raise $1m
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Crowdfunding: how to raise $1M
George Mikaberidze Co-Founder and Managing Director
API Moscow,
August 13
Fun Facts about Crowdfunding
• Creative works were funded this way for centuries
– Mozart, Beethoven, Whitman, Twain, and other artists funded works in similar
ways – not just large partrons, but by soliciting money from smaller partrons, often
called subscribers. In return for their support, these subscribers might have
received an early copy or special edition of the work. Kickstarter and Indiegogo
are extensions of this model, turbocharged by the web.
• Social Media is Critical
– If you have 10 Facebook friends you have a 9% chance of succeeding with 1000
friends you have a 40% chance of success
• Mega Money is Available
– Last year the amount of money raised worldwide on crowdfunding sites more than
doubled to $6B
• >$1,000,000 Campaigns
– Kickstarter has 76 Campaigns
– Indiegogo has 17 Campaigns
2
Benefits of Crowdfunding
• Provides access to capital without giving up
equity
• Hedges risk by gaining market validation and
proof of concept
– Provides direct feedback from potential customers on
feature sets, price points, messaging
• Free PR that will generate significant new traffic
to your website and social media pages - viral
benefits as word spreads
• Opportunity to pre-sell product
• A successful campaign can attract major
investors
• A successful campaign can attract major retailers
and distributors
3
Key Crowdfunding Sites
• Over 700 platforms around the world; new ones every day
• Kickstarter is the most well-known (founded 2009)
– Companies or individuals starting projects must be based in the
U.S. Canada, UK, Australia and New Zealand (contributions can
come from anywhere in the world with a major credit card)
– All or nothing funding; 5% fee if project is successfully funded
• IndieGoGo is a global platform (founded 2008)
– Option of flexible or fixed funding
– Flexible has a 4% fee if goal is met, 9% if goal is not met
– Fixed funding has a 4% fee if goal is met
• 73% of funds raised are from people contributing $11-$100
4
Company Product Raised Platform
Ubunta Edge Smart Phone/PC Device $12M + Indiegogo
Pebble E-paper Watch $10M + Kickstarter
OUYA Video Game Console $8M + Kickstarter
Vengo P-O-P Digital Media Kiosk $2M + SeedInvest
Canary Smart Home Security $1.9M Indiegogo
Zuli Smartplugs Bluetooth Outlet Plugs $1.5M Fundable
Pirate3D 3D Printer $1.4M Kickstarter
HealBe 100% Automatic Body Manager $1M + Indiegogo
Crowdfunding Successes Examples
5
Examples
Record-Breaking Crowdfunding Success
In April 2014, Healbe™ launched a campaign on the well-known crowdfunding platform Indiegogo in order to introduce GoBe to the market.
supported the project on Indiegogo
>4500 funders
raised in the first two weeks
total funds raised during
the campaign, making it
one of the top campaigns
of all time
$700,000 $1,080,000
Getting Started
• Pick your platform
• Develop the pitch
– Concise story about product and why you’re raising
money
– Use photos and make it visual
– Include the project team - make it personal
– Video is important - so is keeping it to three minutes
in length
– Call out the spirit of collaboration; invite people to be
part of something special
• Set goal and deadline for campaign
• Establish perks –incentives for contributions
8
Tips for Success
• Raise awareness pre-event
– Start 2-3 months before campaign
launches
– Use social media, networking, and
PR to create the buzz
– Create a blog and follow other
bloggers
– 20-30% of funds should be raised
before the start from friends and
family. Leverage partners and their
contacts
• The “herd effect” drives
crowdfunding success and others
will contribute to what looks
successful
9
Tips for Success
• Longer campaigns do not mean more money
– 30-40-day campaigns are most successful
• Use your website to direct people to the campaign and vice
versa
• Campaigns that are working will get premier placement on
most sites and through the platform’s social media outreach
and press
• Communicate frequently with your backers during and after
campaign
• Plan to sell product directly from your website after the
campaign to benefit those who are late to the party.
10
Expect Unexpected
• Mass of questions from
consumers and competitors
• Bad media is also media
• Money blocked: Russia is not
well perceived global wise
• Delays are always happened
August 13, 2014 | 11
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