Crowdsourcing Definition

“the act of an institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.” – Jeff Howe

Crowdfunding Definition

“the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via theInternet.” – Forbes

How does it work?

Crowdfunding Platforms

Crowdfunding LegislationU.S.A.

O April 2012, Obama passed the JOBS Act

O Eased federal laws to encourage small business and startup funding

O Businesses can accept small contributions from citizens without making IPO

CANADAO Investment (equity)

model not legal inO No national securities

regulator (implemented at provincial level) then coordinated through CSA

O Gov’t wants to take a “wait-and-see” approach

Crowdfunding ModelsO Start-up equity crowdfunding. O Debt-based crowdfunding. O Good-cause crowdfunding. O Pre-order crowdfunding. O Rewards-based crowdfunding.

Start-Up Equity Crowdfunding

O This new model allows large numbers of “regular” people to invest small amounts online to fund early start-ups.

Debt-Based Crowdfunding

O Sometimes called micro-financing or peer-to-peer (P2P) lending:

O start-ups borrow money from a number of people online and pay them back after the project is finished.

O This model of funding not available in Canada.

Good-Cause Crowdfunding

O People invest (donate) money to a project that has good moral/ethical value. O Most companies using this model are not-for-profits.

Pre-Order Crowdfunding

O Investors make online pledges to pre-buy the product for later delivery (if it is ever built). O No financial return should be expected other than the product.

Rewards-Based Crowdfunding

O Investors get the satisfaction of helping, and immediately get a pre-determined reward or perk of value, such as a t-shirt, or other recognition.O This is a variation on the two previous ones, but there is no equity or finished product.

ACTIVITY TIME!

Live It!

“When you’re an entrepreneur, you don’t have a job--at least not in the conventional sense of that word. You have a calling. And unlike a job, a calling defines you as a person. It’s who you are.” – Arlene Dickinson

O Convey your idea clearly and quicklyO Quality is much more important than lengthO Match style to type of project

Campaign LengthO 30-60 days

Target AmountO Covers expensesO In line with expectations

Live Fundraising/PitchingO Meet & Greet / Demos

Rewards

Keys to RememberO Build your network before the campaignO Be flexible and responsiveO Know your media targetsO Integration