Crowdfunding allows entrepreneurs to solicit small amounts of money from a large number of people through the internet. Currently, most crowdfunding takes the form of rewards-based or donation crowdfunding on sites like Kickstarter. Equity crowdfunding, which allows investors to receive equity in exchange for funding, has been enabled by law in the US but has not yet been implemented pending SEC rulemaking. Successful crowdfunding campaigns tell compelling stories, offer unique rewards to funders, and engage in ongoing social media updates and conversations to build communities of support. Crowdfunding has the potential to help spur entrepreneurship, but local ecosystems of incubators, mentors and a supportive community may

1. Crowdfunding
WYNTK* (what you need to know)
Hands-on
For Entrepreneurs
CJ Cornell – Propel Arizona

2. 10+ companies
$250M Funding 4 Exits (great !)
$3B Revenues 4 Failures (awful !)
Lots of lessons. Chaos, Pain and Joy.
„Serial/Parallel Entrepreneur”
EIR, Venture Partner
Angel Investor
5 Companies 9 Boards
3,000 Tylenol Caplets. Ego and Brain Atrophy.
Investor/Venture Capitalist
Professor of Digital Media & Entrepreneurship
Arizona State University, SJSU, Stanford (Lecturer)
New York Institute of Technology
Knight Center for Digital Media Entrepreneurship
Research in digital media, behavior, entrepreneurship
University Professor
Advisor/Mentor, Author etc.
ASU – Skysong, Venture Catalyst, RSS etc
Arizona Commerce Authority / Venture ready
Arizona Innovation Challenge
Book: Age of Metapreneurship. Blog/Articles
CJ Cornell
@cjcornell
cj@cjcornell.com

3. The Funding Gap

4. Concept to Product to Growth

5. Concept to Product to Growth
$ $ $$

6. Concept to Product to Growth
$
Entrepreneur IPO

7. Concept to Product to Growth
$
Entrepreneur IPO
$
Entrepreneur IPO
$
Venture
Capital

8. Concept to Product to Growth
$
Entrepreneur IPO
$
Entrepreneur IPO
$
Venture
Capital
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub

9. The Kauffman Index of Entrepreneurial
Activity is a leading indicator of new
business creation in the United States.
In 2012 - The state with the HIGHEST level of
Entrepreneurial Growth was …
Arizona.

10. # 1 in Entrepreneurial Growth
# 46th in Venture Capital $

11. The Series-A Crunch

12. The Series-A Crunch

17. Source: http://theyec.org/making-sense-of-the-jobs-act-and-crowdfunding-infographic/

18. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$

19. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$ Crowdfunding
$

20. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$ Crowdfunding
$ Crowdfunding
$

21. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$ Crowdfunding
$ Crowdfunding
$ Crowdfunding
$

22. Crowdfunding
Soliciting & Collecting relatively small amounts
of money (“funding”) from a large number of
people (“crowd”)
WYNTK(what you need to know)

23. http://blog.intuit.com/trends/crowd-power-what-is-crowdfunding-infographic
“
Crowdfunding is a term used to describe individuals
coming together to support – and directly fund
projects by other individual and organizations.
“

24. • Source – http;//crowdfunder.com

25. • Source – http;//crowdfunder.com

26. Equity Crowdfunding
(aka Investment)

29. 5 APRIL, 2012 (AND … AUGUST 2012, DECEMBER 2012 …)
Jumpstart Our Business Startup
ACT, Title III (JOBS Act).

30. Equity Crowdfunding - JOBS
• Eliminates ban on general solicitation and general advertising in connection
with private offerings to accredited investors under Regulation D (Rule 506) and to
qualified institutional buyers under Rule 144A.
• Exemption from Securities Act registration “crowdfunding” transactions
(involving access to small amounts of capital through the internet).
• Exemption to allow issuance of up to $50 million of securities in any 12-month
period, up from the current $5 million threshold
• An increase in the number of shareholders a company may have before being
required to register its common stock with the SEC and become a public reporting
company from 500 to 2,000 total shareholders (including up to 500
“unaccredited” shareholders)
• Amount each person may invest in offerings of this type, tiered by the person's net
worth or yearly income.

31. http://www.pepperlaw.com

32. SAN FRANCISCO, Dec 6 (Reuters) - Netflix Inc said on Thursday
securities regulators warned they may bring civil action against the
company and its chief executive for violating public disclosure rules with
a Facebook post …

33. • Equity Crowdfunding - not in the USA (yet)
• JOBS act (April 2012) technically enables CF – but has
not yet been approved by SEC.
• No documented fraud in USA or other areas.
• Equity CF is for “high growth companies” seeking
significant funding from experienced investors
• Will dramatically change in 3-5 years (CJ prediction)
www.propelarizona.com
WYNTK(what you need to know)

34. “THE KICKSTARTER MODEL”
Rewards-based, Donation Crowdfunding:

38. ALL OR NOTHING

39. Perks &
Rewards

40. Updates (and Blogging)

41. Updates (and Blogging)

42. Comments & Engagement

43. Kickstarter (2012)
2.2 million people pledged a total of
$319,786,629
(up 221% from 2011)
Backers pledged $606.76 per minute
People in 177 countries backed a project in 2012
(That's 90% of the countriesin the world)

44. Source: http://KickstartersHQ.com

45. WHY …
Do people Crowdfund?

47. Lessons from Ethan Mollick‟s “The Dynamics of Crowdfunding: Determinants of Success and Failure”

48. 3 Why’s: 1. They connect to the greater
purpose of the campaign
2. They connect to a physical
aspect of the campaign like the
rewards
3. They connect to the creative
display of the campaign’s
presentation
three main reasons why
people unconnected to a
project or business would
support it:
What Is Crowdfunding And How Does It Benefit The Economy - Forbes
http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy

49. The Real
(Crowdfunding)
Why’s
• Passion
– For the technology
– For the industry
– For the cause
– For the product
• Affinity
– For the Entrepreneur
– For the region, industry etc
• Connection
• Every reason BUT R.O.I. …

50. emotional ROI.
Not financial ROI
WYNTK(what you need to know)
Crowdfunding is about …

51. (when crowdfunding …)
“its not what you do,
but why you do it,”
WYNTK(what you need to know)

52. http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-
multi-touch-watch-kits

54. http://trendwatching.com/trends/infographics/presumers/
“Consumers who want products before they are
developed”
Pre-orders
Early adopters
Supporters

55. UH OH …
The Kickstart Model..

58. 1. Crowdfunding = New “1st Money” for ventures
($10k - $50k average– but wild exceptions)
2. Equity Crowdfunding is Still Far away
3. Rewards based Model IS Crowdfunding today
4. All or Nothing Crowdfunding – Standard
5. Perks and Rewards: Pre-order Crowdfunding
6. Social Media & Content Intensive
www.propelarizona.com
WYNTK(what you need to know)

59. What does success
look like?

60. • The iPhone-friendly Pebble watch earned $7.6
million more than its $100,000 goal.
• And the Galileo iPhone platform closed its
Kickstarter campaign at $702,000, far
surpassing its $100,000 goal.

61. • Ouya raised $2 million in one day for a new Android gaming
console (it’s raised more than $5 million to date),
• the Nifty MiniDrive, external memory for Apple MacBooks.
The tiny storage company is more than 2,000% above its
$11,000 goal with 15 days left in the campaign.

62. Successful campaigns took an average
11 days preparing for their launch.
http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

63. Campaigns ran an average 49 days in
2012, as opposed to 60 in 2011.
Successful campaigns fundraised for
39 days.

64. Crowdfunding Myths & Mistakes
• Myth #1: If You Build It, They Will Come
• Myth #2: Cash is Free
• Making it about you
• Unrealistic Expectations
• Lack of clarity
• No call to action
• Expecting to be found: (No Marketing)
• Ignoring Small Donations/Donors
http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-them
http://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804

65. focus on “them” –
not your company
WHO are they?
What motivates them?
Interests, Values …
the
1.
The new 4 P‟s of
Crowdfunding ..
www.propelarizona.com
the
2.
You are pitching to “them”
TELL A STORY !!
WHY is more important than $$
VIDEO(s) & VISUAL(s)
Tell the story in small „chapters‟
VIDEO(s) & VISUAL(s)
And even smaller “sound bites”
Give them a Story they
can tell to others.
the
3.
$$ Value is a negative driver !
UNIQUE
It‟s about THEM
EXCLUSIVE
And what is important to “Them”
FIRST
Make sure it is …
BUZZWORTHY
the
4.It‟s a daily/hourly effort …
SOCIAL MEDIA
It‟s a conversation …
UPDATES, BLOGS, NEWS
Provide Value, and Talking Points
RE-POST, TWEETable
It‟s about … for their network
VALIDATION & EVIDENCE

66. First: Who What Why When …
• The 3 Who’s:
– Who are the donors? (affinity & passion)
– Who is benefits? (the market)
– Who are you?
• The 3 Why’s
– Why would your donors care?
– Why does the market care?
– Why are you the right team to do it?

67. First: Who What Why When …
• What is your project & goal?
– Understandable & Simple
– Compelling & Intriguing
– Repeatable & Memorable
• How and When
– How will you achieve your goal? Realistic?
– When, after funding? When will I get my perks?

68. Perks & Rewards

70. Directed by
Patrick Million
Executive Producer
CJ Cornell
a Patrick Million FILM
American Grandmaster

71. Rewards Crowdfunding
• Incentives & perks
• Pre-Orders
• Pre-Sumers
• Market Validation

73. Rewards don’t have to worth $$

75. • $25 perk is the single most claimed perk,
representing nearly 25% of all perks that are
selected.
• While the $25 dollar perk is only responsible
for raising 11% of total funds.

76. • $100 perks raise more money than any other
perk price and make up nearly 30% of total
funds. A $100 perk combined with the next
three perk price points: $50, $500, and $1000
makes up about 70% of total money raised by
perks

78. some
Rules for Rewards

79. 1. Make perks unique &
exclusive
Avoid T-shirts, Mugs & Hugs

80. 2. Target them

81. 3. Give them a
connection

82. “The
Cocktail Party
Effect”

83. “The
Restaurant
Effect”

84. “The
Carey School
Effect”

85. The less tangible the perk,
the more public (visible) &
EXCLUSIVE it needs to be.

86. Crowdfunding Arizona
Can it jumpstart entrepreneurship?

87. 1. Kickstarter “Fails”
Arizona does poorly …

88. 2. Members =/ Supporters
% of supporters is the key ….

89. 3. Entrepreneurship is Different
Products, Companies, Entrepreneurs …

90. 4. The role of “Ecosystem”
Incubators, accelerators, mentors etc ..

91. 5. The power of Community
Shared Goals, Passions, Outcomes …

92. Shared Goals, Passions, Outcomes …

93. Crowdfunding for Entrepreneurship & Economic Growth

95. People as Important as Projects …
Organizations & Affiliations …

96. Entrepreneurs success as much as funding …

97. $15k - $100k *(Average $50k) ….

98. Local Perks
Unique Opportunity for
Arizona Small Businesses

101. www.propelarizona.com
@PropelArizona
cj@propelarizona.com
Slideshare/PropelArizona