Introduction to Crowdfunding

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Workshop presentation with a brief introduction to crowdfunding.

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Introduction to Crowdfunding

  1. 1. Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Introduction to Crowdfunding Luca Merolla
  2. 2. SPEAKER Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Luca Merolla Management, Business & Technology consultant ■ PG Business Certificate in International Business ■ Master in Business Administration (MBA) ■ Diploma in Managerial Economics ■ Diploma in Management of Technological Innovation ■ Diploma in Management of Information Systems ■ B.Sc. Information Technology Engineering linkedin.com/in/lucamerolla @lucamerolla facebook.com/luca.merolla lucamerolla lucamerolla.wordpress.com luca.merolla@gmail.com luca@merollaconsulting.com
  3. 3. INTRODUCTION TO CROWDFUNDING Merolla Consulting • Luca Merolla • luca@merollaconsulting.com PART I
  4. 4. TOPICS Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Overview PART I ■ What is crowdfunding? ■ How does it work? PART II ■ Who can benefit from crowdfunding? ■ Advantages and disadvantages
  5. 5. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com A possible definition of crowdfunding "use of online communities to collect capital from groups of people with common interests in order to fund a project or an initiative"
  6. 6. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com History and evolution ○ "Self-made" (Wikipedia - crowdsourcing and crowdfunding) ○ Crowdfunding platforms (CFPs) ■ Kiva - (2005) - Micro-lending ■ Kickstarter, Indiegogo - 2008 - Reward based ■ GrowVC (2010), Symbid (2011) - Equity based
  7. 7. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Innovations introduced compared to a "self-made" solution ○ integration with social media and social networks ○ more viable and less expensive ○ simplified bureaucracy ○ experience and know-how of CFPs
  8. 8. CF and its evolution from the web ■ crowd, people get together in groups, associations, cooperative, etc... ■ proliferation of social media and social network ■ knowledge sharing (ideas, projects, etc...) ■ Make usage of: ○ virtual environments ○ transparency ○ "viral effect" WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com
  9. 9. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com The importance of the social media ○ transparent communication ○ easy to obtain information on the activity of the company ○ can reach a high number of contacts at a relatively "lower cost" ○ maximize the "viral effect" ○ keep the "fans" updated
  10. 10. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Different types of CFPs, based on: ■ Business Model ■ Nature of exchange and relations between investors and entrepreneurs ■ Localization ■ Target (Niche sectors, Generalist, etc...)
  11. 11. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com The 3 CF models ■ Donation/Reward based ■ Equity based ■ Lending based (micro lending)
  12. 12. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Donation/Reward and Equity based are often divided into 2 sub-categories ■ All or nothing - Pledged money is collected only if the goal is met. ■ Keep it all - The funds are collected regardless if the goal is met or not.
  13. 13. WHAT IS CROWDFUNDING? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Despite the model, CFPs are identified by the nature of the accepted projects ■ Specialized - for a specific sector (i.e. SellABand for music) ■ Activity-specific - for different sectors and industries but focalized on certain kind of projects (Kickstarter only for creative projects) ■ Generic - they have no specific restrictions (start-up, artists, no-profit, etc...)
  14. 14. HOW DOES IT WORK? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com CFPs user roles ■ Entrepreneurs - publish the CF projects and all the relative information ■ Investors - invest/donate money to the CF projects in order to obtain a monetary or non-monetary reward
  15. 15. HOW DOES IT WORK? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Common characteristics of CFPs ■ online procedure (almost entirely) ■ time frame limit for the CF campaign ■ limits of national legislation (especially for equity) ■ rewards (monetary or non-monetary) ■ commissions based business model
  16. 16. HOW DOES IT WORK? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com Main advantages of using crowdfunding platforms ■ community ■ social media integration ■ typically big number of investors/donators ■ reduced costs and bureaucracy ■ useful for pre-sale, test marketing and eventually pricing strategy ■ feedback and interaction with potential future customers
  17. 17. HOW DOES IT WORK? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com The process for Publishing Projects ■ chose the CFP ■ define the details/aims of the projects ■ set a realistic funding goal ■ set the time limit of the CF campaign ■ define the rewards ■ keep investors/donators informed on the activities. Provide constant updates to engage with them ■ loyalty
  18. 18. The investment process for an equity project 1. user sign up (also with social media profile) 2. chose the project/idea where to invest 3. transfer funds on an electronic wallet (not always necessary) 4. if the campaign does not reach the funding goal within the time limit, funds are not transferred to the entrepreneurs. HOW DOES IT WORK? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com
  19. 19. HOW DOES IT WORK? Merolla Consulting • Luca Merolla • luca@merollaconsulting.com The investment process for an equity project 5. if the project reach 100% of the funding goal the funds are transferred to the company 6. the investors obtain equity shares of the new company 7. entrepreneur and investors can cooperate and communicate through the CFP
  20. 20. INTRODUCTION TO CROWDFUNDING Merolla Consulting • Luca Merolla • luca@merollaconsulting.com End of PART I

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