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What is Crowd funding S Collective effort of individuals who network and pool their money to support efforts initiated by other people or organizations S Used to support various activities like, disaster relief, citizen journalism, support of artists by fans, start-up company funding, scientific research etc S Can be viewed as an alternative method to raising finance for a business, project or idea
Crowd funding platformsS More than 450 crowd funding platforms like kickstarter, IndieGoGo, Mobcaster, crowdtilt etc.S The platforms create organizational systems and conditions for resource integration among all the playersS Most platforms don’t charge for publishing a pitchS Some might take a 5% commission if you reach your target investment. If you don’t reach your target, you don’t need to pay a penny!
Classification of platforms Classification of platforms based on the type of return people get
Platforms in briefS Reward based platform: People make donations to projects with the expectation of a reward, both material (product pre-order) or intangible (mention on the website) 2/3rd of all platforms are of this type.S Equity based platform: Project initiators and partner platforms define a time period and target amount. The target is then divided and offered via the platform as equity shares at fixed prices After the target is reached investment phase begins.S Microfinance:Micro lending is provision of financial services to low-income clients, who lack access to bankingand related services. Money gathered is managed by a local intermediary. Kiva follows thispopular model.Peer-to-peer lending and borrowing occurs directly between individuals. No intermediation of anyfinancial institution. Example: Zopa, LendingClub etc.
QUICK GLANCE - KICKSTARTERKICKSTARTER STATISTICS70,000 projects created$373,000,000 raised in funding$333,000,000 raised for successful campaigns$40,000,000 returned back to donors44% of all projects successfully funded
How it works? 1. Artist/activist lists 4. Project owner sets the idea on Kickstarter. rewards for various levels of contributions2. Project has a definedgoal and fits into one of the15 categories 3. Once Kickstarter approves the project, the owner must set a funding target and time-line
5. Showcase yourproject to donors by 6. Enter the crowdcreating a video or funding communityslide-show 7. Update your funders on a regular basis about your progress 8. Funds will be released when target is met.
KivaAn online platform which allows people to lend money via the Internet to people in developing countries through its partner microfinance institutions View person profile on Microfinance Social Investor Kiva.org and Institution MFI lends money lendKiva allows MFI partners to raise capital at 0% from individual investors across the globe. An astounding 99% repayment rate
Kiva moves money • Lenders choose a person to lend to based on his profile • An MFI gets the money from Kiva at 0% • The MFI lends the money to borrower at 30% • The borrower repays the MFI • The MFI repays Kiva • Kiva repays the lenders
Who are Kiva Lenders?Kiva is connecting everyday individuals to the microfinance industry Kiva Lenders • 500,000 lenders majorly from US. Average amount loaned: $120 • 100+ countries across the world •50% of Kiva lenders are above 40 • Only 9% of Kiva Lenders consider themselves as being “very knowledgeable” about microfinance. Hence it is easy to lend
What is Kiva? Kiva is a significant new source of loan capital for MFI partners Total Loan Capital Raised on Kiva to Date100,000,000 Key Stats • Size: Provided MFIs with over $95M+ in new loan capital since launch. 90,000,000 • Growth: $1M loans / 5K new lenders every week. 80,000,000 • User satisfaction: <10% of repaid loans withdrawn. • Brand awareness: > 40K visit per day/ +100M brand impressions/ 70,000,000 lenders from over 150 countries. 60,000,000 50,000,000 Kiva allows MFI partners to raise 0% 40,000,000 capital from individual lenders 30,000,000 across the globe. 20,000,000 10,000,000 - Aug… Sep… Nov… Dec… Aug… Sep… Nov… Dec… Aug… Sep… Nov… Dec… Aug… Sep… May… Jun/… Jan/… Mar… May… Jun/… Jan/… Mar… May… Jun/… Jan/… Mar… May… Jun/… Feb… Feb… Feb… Jul/05 Oct/05 Jul/06 Oct/06 Jul/07 Oct/07 Jul/08 Apr/05 Apr/06 Apr/07 Apr/08
What makes Kiva work? Need exists everywhere Millions of small business in the world cannot access funding Small businesses create growth in economy and provide livelihood for many people Kiva’s mission is to be a truly global company: people from any part of the world can participate Can have a larger impact than just providing capital for MFIs: Increase awareness about microfinance & need Source of referral for MFIs for potential clients Growth of industry thanks to low cost capital
Rang DeRang De is a pioneering, web-based social VISIONinitiative with a mission to provide cost effective To Make Povertymicrocredit to low income households in India. History in IndiaThrough an online micro lending platform called MISSIONRangDe.Org, Rang De enables individuals to .participate in microcredit by lending as little as To enable individuals in India and the world to connectRs. 100. with low income households by participating in microcredit in a holistic andRang De is a registered non-profit trust and is sustainable manner throughhead quartered at Chennai. The organization is an online platform that is transparent andfunded and supported by the CSO Partners and accountable.ICICI Foundation.
How Rang De WorksRangDe.Org partners with MFIs & NGOs to identify borrowers.The partner organization posts the profile of the borrowers on the website.Any investor can access online the profiles of the borrowers for the requiredloan.The investor can pay either a part or the entire loan amount to the borrower.When the entire loan amount is raised, the partner receives the money anddisburses it to the borrower.
Raising CapitalIndividual social InvestmentsAny individual can lend as little as Rs.100by simply registering online and choosinga borrower of his/her choice.Corporate social investmentsA corporate can participate by allocating abudget from their CSR funds. The fundswill be deployed as loans to micro-entrepreneurs.
Rang De PartnersRang De partners are grass root level non-profit organisations (NPOs) and MicrofinanceInstitutions (MFIs), having strong presence inthe community.The partners are taken on board after athorough due diligence process.Due diligence process involves review offinancial and other records followed by a fieldvisit by Rang De staff.Rang De partners act as disbursement andcollection agents and cannot levy chargesother than prescribed by Rang De and agreedas per the agreement.Currently, Rang De has 18 Field Partners withoperations in 10 states.
Rang De LoansLoans for Businesses These loans are facilitated at a rate of 8.5% flat. Partner : 5% Loans are for income generation activities. Social Investor : 2% Around 150 different activities funded so far. Rang De : 1% Contingency Fund : 0.5%Micro Enterprise Loans Contingency Fund : 1% These loans will be facilitated at a rate of 10% flat. Rang De : 2% Loans will be facilitated for small businesses. Partner : 3% Loan size in excess of Rs.25,000 Social Investor : 4%
Rang De LoansLoans for Primary & Secondary Education Loans are facilitated at a rate of 5% flat. Partner : 4% Social Investor : 0% Loans are facilitated to fund school Rang De : 1% fees, stationery, uniform and other expenses. Contingency Fund : 0% Loans are facilitated in the form of Education Vouchers. Schools accept education vouchers in lieu of fees, uniforms and other expenses. Partner : 5%Loans for Job Guaranteed Vocational Education Social Investor : 2% Rang De : 1% Loans are facilitated at a rate of 8.5% flat. Contingency Fund : 0.5% Loans are provided to unemployed youth from rural India. Training and placement is provided by our strategic partner.
Rang De- Latest StatisticsBorrowers Impacted 10,127Social Investors 2,906Corporate Social Investors 9Loans raised Rs. 5,38,67,100Loans repaid Rs. 3,37,88,672 As on 6rh September 2011
Facts and future outlook1997- The idea of crowd funding began in music industry when AmericanFans underwrote an entire US tour of British group Marillion. They raised $60,000through a Donation driven internet campaign.2004- French Film ‘Demain la Veille’ raised $50,000 in 3 weeks through crwodfunding.2006- The term crowdfunding was coined by Michael Sullivan. He states ‘ Many thingsAre important but funding from the crowd is the base of which all else depends onand is built on. Age % of Visitors2012- Compnay’s like Kickstarter averages 1.1Millionvisitors per month majority of which are below the age of 40. 0-17 1% 18-24 8% 25-34 27% 35-44 35% 45-54 16% 55-64 10% 64+ 2%
Help for Small BusinessSmall business in US generate 65% of net jobs, yet they are always in desperate need ofMoney.Without accredited investors, bank loans are the only option but post 2008 there has beena sharp decline in loans being approved.These small business are 99.7% self owned, pay 44% of total US private payroll and hire 43% ofhi-tech workers.Funding- 1% of US population is represented by accredited investors and VC’s which demandhuge fees and reject 95% of the business plans.Angel investors, friends and family do provide help and support but figures are vague.Crowdfunding can thus provide better access to capital for small business and entrepreneurs.It erases the barriers that VC’s and accredited investors impose.Serves as a free marketing tool to expose your idea to thousands of users.Provides support and consulting to promote their project.