Crowdfunding Concepts• Debt Crowdfunding – microloans – P2P lending• Donation Crowdfunding – Charity/Causes – Kickstarter Model – Rewards Based – Pre-Order/Presumer• Equity Crowdfunding – JOBS act
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 persons net worth or yearly income.
There are three main reasons why people unconnected to a project or business would support it:• 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• 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/
WHY Crowdfunding?• 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. …
What you need to know1. Crowdfunding = New “1st Money” for ventures ($10k - $50k average– but wild exceptions)2. Equity Crowdfunding is Still Far away3. Rewards based Model IS Crowdfunding today4. All or Nothing Crowdfunding – Standard5. Perks and Rewards: Pre-order Crowdfunding6. Social Media & Content Intensive
HOW to Crowdfund?1. PRE - Preparing2. PUSH - Running the campaign3. POST – Delivering on your Promise
1. Crowdfunding takes work, new skills.2. It takes a strategy, and preparation.3. The rules are different.4. You can’t just post and run …5. It’s a public success or failure – that “stays on your resume”
• 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.
• 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.
7 habits of highly successful campaigns• They already have fan bases• They build off of something familiar• They are simple• They are (usually) NOT about the founders• They appeal to a specific interest ….
Before you start, remember …• For your target, Its about emotion• It’s about elitness• being part of the cool group• feeling like youre important -• feeling powerful! Influential
Checklist1. Idea-check: (focus on target) – About “them” not you. – Emotional appeal: Passion, exclusivity, emotion.2. Funding Level – Realistic (for you and them) – Use of proceeds3. Timeframe4. Possible perks (not yet)
1. Idea – What’s the story – What’s the emotional appeal, benefits2. Who are the targets – Benefits. Connections3. Describe, tell story.4. What visuals should you provide.5. How much, how long? When done?
• $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.
• . $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
1. What is important to your target?2. What rewards can connect them to you or your project3. What rewards are part of your project4. What unique rewards can you think of (that others are not doing)5. What rewards will get them talking to others!
• most successful projects receive about 25-40% of their revenue from their first, second and third degree of connections.• This could include friends, family, work acquaintances, or anyone that the owner is connected to, including their second and third degree connections.• http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is- crowdfunding-and-how-does-it-benefit-the-economy/