crowdfunding sse alumni seminar teigland & ingram
DESCRIPTION
Presentation from SSE Alumni Seminar in Dec 2013. Video can be viewed here: http://www.livestream.com/sseresearch.TRANSCRIPT
Crowdfunding---
SSE Alumni Seminar
ROBIN TEIGLAND & CLAIRE INGRAM
STOCKHOLM SCHOOL OF ECONOMICS
DECEMBER 2013
Crowdfunding in Sweden
Dr. Robin TeiglandAssociate Professor
Stockholm School of Economics [email protected]
@robinteigland
Claire IngramPhD StudentStockholm School of [email protected] @Claire_EBI
Today’s presentation
What is crowdfunding?From crowdfunding to crowd equityWhy crowdfund?Trends in crowdfunding Q&A
What is Crowdfunding?
Accumulation of small investments in individual projects by large number of individuals (the
“crowd”) via or with help of Internet and social networks (De Buysere et al., 2012)
Picture: FundedByMe
Local Stockholm success story: Flippin’ Burgers
Money raised: SEK 36,502 / €4,000
Number of investors: 186
Date funded: September 2011
Sector: Food
Enabling local, small-scale solutions
Top 5 Best American Restaurants in Europe
http://travel.cnn.com/best-americana-restaurants-europe-023346
Crowdfunding 2012
Massolution 2013
Worldwide $2.7 bln
470k projects 800+ platforms
Est. 5.5 mln (Oct 2013)
Four forms of crowdfunding
Form of funding Benefits for funders
Donation-based Donation Intangible benefits.
Reward-based Donation or pre-purchase
Rewards in addition to intangible benefits.
Equity-based InvestmentReturn on investment if company
does well. Rewards sometimes also offered and intangible benefits
may motivate too.
Debt-based LoanRepayment of loan with interest. Alternatively intangible benefits if
loan given interest-free.
Ingram & Teigland 2013
Investment Role and Type Investment Value 2012
Angel Investors
Invest large amounts, make few investments, take equity share.
3.3-3.9 billion SEK p.a. (approximation based on 2008
data)
Soft LoansState loans at high interest rates
that can be written off if enterprise dissolution.
2.4 billion SEK p.a. (ALMI alone)
Venture Capitalists
Invest large amounts, make few investments, take equity share. 1.8 billion SEK p.a. (2010 data)
CrowdfundingDonation, pre-purchase/reward, or equity, depending on platform and
entrepreneur’s preferences.Estimated 37 million SEK p.a.
Ingram & Teigland 2013
Crowd equity raising its head…
• Politicians generally positive -> entrepreneurs + job creation
• But regulation is lagging in most countries
• US, Italy, Denmark changing regulations enabling equity
Massolution 2013
Millions of dollars
http://www.fundable.com/blog/crowdfunding-infographic---the-jobs-act-explained
Increasing focus on Crowd Equity in Sweden
UK 2010
To Sweden 2013
Equity only
Finland 2011
To Sweden 2013
Equity only
Sweden 2011
Equity: 27,8 mln SEK
Reward: 6,8 mln SEK
Why crowdfund?
Test the market/Proof of concept“Evangelists” / AmbassadorsMarketing & publicity (int’l platforms, mostly)Raise funds fasterFaster time to market Money
“It’s not just about the money.”
685 people talking about product on
social media
Australia’s “Major Disaster Department”World’s largest telecom
International expansion
Requirements to succeed?
What do you give in return (thank you, reward, pre-purchase, shares)?
Choose the right platform for youMake concept easily understoodEnsure initial critical massBring the crowd
And “The crowd needs fuel!”
I have a dream!
But there are potential downsides
Project(s) may not be understood by crowdNot significant amounts of money• More about publicity• But changing with crowd equity
Other skills/resources do not seem to be forthcoming
Trends in Crowdfunding
NicheCommunityHybrid platformsEnterprise sponsoredInternal corporate crowdfundingLIVE!Economic developmentCelebrities
Crowdfunding for research
Strategic partnership
+
Celebrities entering the scene
Executive Producer Robert RedfordNarrated by Jodie Foster
Donald Trump’s crowdfunding siteOpen to anyone
Internal corporate crowdfunding
iFundIT
More than 300 participantsEntry-level workers to VPs
Given $2,000 to invest over 8 week period Choose internal projects in which to invest
Enabling entrepreneurs anywhere
Ushahidi of Kenya
Kenya
“Made in Africa” 3D printer (Togo) through Ulele
Winner of International Space Apps Challenge
http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
But many unanswered questions
Cross border investments?Secondary markets for crowd equity shares?Taxation issues for investor and entrepreneur?Lack of support and strategic advice for both investors and entrepreneurs? How to better leverage “crowd” for resources?
Open source community of wide variety of individuals and organizations developing peer-to-peer digital currency
URL: http://bitcoin.org/en/Our research: http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2263707
Legitimate instrument
with >60,000 daily
transactions and
>USD 12 bln in circulation
in <5 years
Venture capitalists are the travel agents of yesterday – here today, gone tomorrow.
Venture capitalist in Silicon Valley –
June 2013
http://www.slideshare.net/eteigland/crowdfunding-in-sweden
Thank you!
Questions?
Image via NewYorker.com
Robin [email protected]
www.knowledgenetworking.org
www.slideshare.net/eteigland
www.opencrowds.org RobinTeigland
Photo: Lindholm, Metro
Photo: Nordenskiöld
If you love knowledge, set it free…
För mer information:• Research article: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263965• Industry report: http://blog.fundedbyme.com/robin-teigland/