Crowdfunding - The Power of Friends, Family & Fools

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Crowdfunding fills the gap where Angel Investors and Venture Capitalist hesitate to invest. It is one of the fastest growing industries in the world and different forms of crowdfunding exist. You have to choose one which fits you and your business model the best. To be a successful Crowdfunder you need to be very disciplined in your marketing & social media strategy. Every day and again. But when successful, it can have more side effects then just capital, like sales boost, brand awareness, lots of ambassadors.

Author: Eva Hukshorn

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Crowdfunding - The Power of Friends, Family & Fools

  1. 1. Crowdfunding  The  power  of  friends,  family  &  fools  Author:  Eva  Hukshorn     1  
  2. 2.      1.  EFactor  is  a  Smart  Network  that  matches  entrepreneurs  with  the  very  people  who  can  help   them  grow  2.  Finding  Business  Partners:  from  partners  to  investors,  from  coaches  to  customers  3.  Largest  Entrepreneurial  Network  in  the  World  with  1mio  members  in  185  countries  4.  An  online  community  Offering  you  a  network,  knowledge,  events,  and  every    business   resources  you  need  to  succeed  @  discount!  5.  GO  Online,  fix  your  personal  profile  &  company  profile  and  get  MATCHED!   It’s  not  about  connecQons  -­‐  it’s  about  the  right  ones…   2  
  3. 3. Eva  Hukshorn:  An  introducHon  •  Work  Experience   -  Current:    Partner  EFactor        Board  of  Advisory:  TreFoil  Energy  /  CleanDrinks  /          Global  Thinkers  /  ShowLinq            Coach  Startup:  Bootcamp  Amsterdam  /  New  Venture  McKinsey   -  2009  –  2010:  Dutch  BouHque  –  Marktlink  Mergers  &  AcquisiHons,  Amsterdam   -  2007  –  2009:    Royal  Bank  of  Scotland  –  Corporate  Finance,  Amsterdam   -  2004  –  2009:    ABN  AMRO  –  Corporate  Finance  New  York,  Amsterdam   -  2003  –  2004:    Accenture  –  ConsulHng  London,  Amsterdam  •  EducaQon   -  1997  –  2002:  MSc  Economics,  Finance  –  University  of  Groningen,  the  Netherlands   -  2003:      InternaHonal  &  Asian  Studies  –  NaHonal  Sun  Yat-­‐Sen  University,  Taiwan   -  2009  –  2011:    CerHfied  Management  AccounHng  (CMA)  –  InsHtute  of  Management  Accountants            (IMA),  United  States   -  2009  –  2011:    Colloquium  General  &  Modern  Art  –  Academy  for  History  of  Art,  the  Netherlands   -  2012:    InternaHonal  Financial  Report  Standards  (DipIFR)  –  AssociaHon  of  Chartered  CerHfied          Accountants  (ACCA),  United  Kingdom   3      
  4. 4. FUNDING  TUESDAY,  EVERY  TUESDAY  So  what  can  you  expect  from  us  each  Funding  Tuesday?  1.  Webinars  on  EFactor  on  Finance  &  Funding  related  topics  in  the  EVENT   SecHon  2.  Blogs  &  interviews  with  informal  investors  and  funded  entrepreneurs   with  Hps  &  tricks  in  the  BLOGS  secHon  under  NOW  3.  Finance  &  Funding  related  arHcles  on  NOW  feed  4.  In  the  Finance  &  Funding  GROUP  on  our  website  you  will  find  Q&As  of  the  webinars  under   NETWORK  5.  In  the  KNOWLEDGE  base  you  will  find  more  and  more  presentaHons  on  Finance  &  Funding   related  topics,  including  the  webinar  presentaHons  6.  And  if  you  become  a  VIP  MEMBER  you  will  personally  be  supported  on  your  Finance  &  Funding   related  quesHons   4  
  5. 5. Webinar  Program  Overview  2012  June  19:    Business  Plan  WriHng  -­‐  A  Roadmap  to  Success  July  3:      Pitching  &  PresentaHon  -­‐  3  Minutes,  1  Impression  July  17:    Strategy  -­‐  A  Vision  for  the  Future,  A  Strategy  for  Gehng  There  July  31:    BudgeHng  &  ForecasHng  -­‐  PredicHng  the  Outcome  Aug  14:    Working  Capital  -­‐  An  Unknown  Key  to  Success  Aug.  28:    Capital  Management  -­‐  Playing  with  Risk  Sept  11.:    Funding  &  Investments  -­‐  Some  Sources  are  More  Equal  then  Others  Sept.  25:    ValuaHon  -­‐  Art  or  Science  Oct  9:      Exit  Strategy  -­‐  Nice  to  Have  or  Need  to  Have?  Oct.  23:    Bootstrapping  -­‐  An  AlternaHve  Answer  to  Funding  Nov  6:    Crowdfunding  -­‐  The  Power  of  Friends,  Family  and  Fools  Nov.  20:    Networking  -­‐  Nice  You  have  3000  Friends,  I  have  30  Relevant  ConnecHons  Dec.  4:    MarkeHng  &  (Social)  Media  -­‐  Noise  or  Value?  Dec.  11:    No  Sales,  No  Glory  Dec.  18:    Most  Common  Mistakes  of  Entrepreneurs   5  
  6. 6. Typical  life  cycle  of  a  High  Content  Growth  Startup   IDEA   PROTO  TYPE   LAUNCH   GROWTH  HIGH  RISK   PRE-­‐SEED       SEED           EARLY  &  LATER-­‐STAGE  /  GROWTH    LOW  RISK   IPO/EXIT   CAPITAL  DEFINITIONS   6  
  7. 7. An  overview  of  Funding  Providers  acHve  in  each  of  the  stages  PRE-­‐SEED  &  SEED  CAPITAL   EARLY  &  LATER  STAGE  / IPO/EXIT   GROWTH  CAPITAL   USD  0  –  1mio   USD  1  –  25mio   USD  25mio  +  •  Friend  Family  &  Fools   •  (Syndicate  of)  Angel   •  Venture  Capital  •  Grant  Funding   Investors   •  Private  Equity  •  University  Funds   •  Venture  Capital   •  Commercial  Banks  •  Angel  Investors   •  Private  Equity   •  Hedge  Funds  •  Crowdfunding   •  Commercial  Bank   •  Public  Market  /  Stock  •  Bootstrapping   Exchange  •  CompeHHons  •  Incubators  HIGH  RISK                                                    LOW  RISK   7  
  8. 8. What  kind  of  funding  do  these  Funding  Providers  give?   1.  Debt/Loan   2.  Equity   3.  Bootstrapping  Funding  external  parQes   Funding  external  parQes   Funding  through  own  without  ownership  +  fee:   with  ownership:   resources:   -  Personal  Loan   -  Common   -  Income   -  Bank  loan     -  Preferred   -  Savings   -  ConverHble  debt   -  Mezzanine   -  Revenue   -  Mortgages     -  Et  cetera       8  
  9. 9. Which  Funding  Provider  gives  which  form  of  Funding?   1.  Debt/Loan   2.  Equity   3.  Bootstrapping  Funding  external  parHes   Funding  external  parHes   Funding  through  own  without  ownership  +  fee   with  ownership   resources    •  Friends,  Family  &     Friends,  Family  &   •    Income  &  savings   •  Fools   Fools   •  Revenue  •  Angel  Investors   •  Incubators   •  Friends,  Family  &  •  Peer-­‐2-­‐Peer   •  Equity  Based   Fools   Crowdfunding   Crowdfunding   •  DonaQon  Based  •  Commercial  Banks   •  Angel  Investors   Crowdfunding,     •  Venture  Capital   •  Grant  Funding   •  Private  Equity   •  University  Funds   •  CompeQQons   9  
  10. 10. But  the  world  has  changed:  Before  USD  25+mio   USD  25mio   USD  2mio   USD  1mio  USD  50.000   Friends,   (Syndicate  of)   Venture   Private   IPO         Family  &   Angel   Capitalist     Equity   Fools   Investors                         10  
  11. 11. But  the  world  has  changed:  Now  USD  25+mio   USD  25mio   USD  2mio   USD  1mio  USD  50.000   Friends,   (Syndicate  of)   Venture   Private   IPO         Family  &   Angel   Capitalist     Equity   Fools   Investors                         11  
  12. 12. A  soluHon:  Crowdfunding   Crowdfunding (alternately crowd-financing, equity-Crowdfunding, peer2peer-lending or hyper funding) describes the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding is used in support a wide variety of activities, including disaster relief, citizen journalism, support of artists by fans, political campaigns, startup company funding, movie or free software development, inventions development and scientific research. Source:  Wikipedia   12  
  13. 13. Benefits  of  Crowdfunding   1   Scale  your  own  network  of  friends  and  family   2   Connect  with  professional  investors  outside  your  own   network   3   Less  risk  for  investors     4   More  transparency  and  informaHon  available     5   Boost  sales  due  to  extensive  markeHng  &  social  media  campaign     13  
  14. 14. Forms  of  Crowdfunding   1   DonaHon  Based  Crowdfunding   1a   Reward  Based  DonaHon     1b   Revenue  shared  Crowdfunding     2   Investment  Based  Crowdfunding     2a   Peer-­‐2-­‐Peer  Lending  /  Debt-­‐based  Crowdfunding     2b   Equity-­‐based  Crowdfunding   14    
  15. 15. DonaHon  Based  Crowdfunding   15  
  16. 16. DonaHon  Based  Crowdfunding   PROS   CONS  •  High  success  rate  if  executed  well   •  High  promoHon  costs  •  Client  base  before  start   •  Managing  expectaHons  customers  •  Sales-­‐boost   •  Liquidity  •  Increased  brand  awareness   •  Smaller  investment  amounts  &  •  No  interest  payments   incenHves  •  No  loss  of  equity   •  More  interesHng  for  B2C  then  B2B  Ø USA  -­‐  ROCKETHUB:      www.rockethub.com  Ø EUROPE  -­‐  EFUNDING:    efactor.symbid.com   16  
  17. 17. Peer-­‐2-­‐Peer  Lending   17  
  18. 18. Peer-­‐2-­‐Peer  Lending   PROS   CONS  •  High  success  rate   •  Less  involvement  investors  •  No  loss  of  equity   •  Less  advantages  markeHng  &  sales  •  Costs  are  predictable   •  Cost  commitment  •  Companies  with  cash  flows   •  Less  healthy  balance  sheet  •  All  types  of  companies   •  Not  for  startups  Ø PLAYERS:    Prosper,  Lendesk,  GreenNote,  Loanio,  Zopa,  51Give,  Pertuity,            RateSeoer,  GeldVoorElkaar   18  
  19. 19. Equity  Based  Crowdfunding   19  
  20. 20. DonaHon  Based  Crowdfunding   PROS   CONS  •  OpHon  to  Angel  or  VC  investment   •  PromoHon  costs  •  Investment  amounts  bigger   •  Finding  proper  investors  •  More  interesHng  for  FFF   •  No  real  due  diligence  •  More  ambassadors  •  Brand  awareness  Ø EUROPE  -­‐  EFUNDING:    efactor.symbid.com  Ø UK  -­‐  Crowdcube:      www.crowdcube.com   20  
  21. 21. Equity-­‐based  Crowdfunding:  What  if  scenario  1  Source:  Symbid   21  
  22. 22. Equity-­‐based  Crowdfunding:  What  if  scenario  2  Source:  Symbid   22  
  23. 23. Equity-­‐based  Crowdfunding:  What  if  scenario  3  Source:  Symbid   23  
  24. 24. Equity-­‐based  Crowdfunding:  What  if  scenario  4  Source:  Symbid   24  
  25. 25. The  rise  of  Crowdfunding  Source:  Symbid   25  
  26. 26. Europe  and  US  remain  the  biggest  market  for  Crowdfunding  Source:  Symbid   26  
  27. 27. How  to  be  successful  in  Crowdfunding   1   Takes  on  average  2  months  to  reach  your  funding  limits   2   649  posts  on  Facebook  and  143  posts  on  Twioer     3   71%  of  video  pitches  for  campaigns  are  under  3  minutes  long   4   65  unique  investments  to  your  campaign  of  SD  100     5   Weekly  basis:  newsleoers,  interviews  tradiHonal  media,  mini-­‐events,  blogging     Crowdfunding  is  A  LOT  OF  WORK!   27  
  28. 28. IntroducHon  to  our  panel  member:  David  Drake   David  Drake,  co-­‐founder  of  the  TSL  Capital  CreaHon  Event   Series  and  founder  and  Chairman  of  LDJ  Capital  in  New  York   City,  has  been  involved  in  technology  media  and  telecom   (TMT),  tradiHonal  and  renewable  energy,  project  finance,  real   estate,  infrastructure  and  equity  and  debt  financing  for  over  20   years.  Mr.  Drake  hosted  the  Harvard  Club  and  Boston   Symphony  performances  at  his  house  and  sat  on  the  advisory   board  of  Best  Buddies  Charity  for  auHsHc  kids.  Mr.  Drake  has   been  behind  raising  $250,000  in  charity  donaHons  through  his   produced  Carnegie  Hall  concert  series.  Mr.  Drake  holds   Bachelor’s  Degrees  in  both  Chemistry  and  MarkeHng  from  the   American  University  in  Washington,  D.C.,  an  MBA  in  Finance   and  an  MA  in  InternaHonal  Law  and  Economics  from  George   Washington  University  where  he  was  awarded  the  Wallenberg   Scholarship  for  academic  merit.   28  
  29. 29. David  Drake  on  Trends  &  Developments  in  Crowdfunding  •  Views  on  DIFFERENT  TYPES  of  Crowdfunding  •  JOBSACT:  Equity  Based  Crowdfunding  in  the  United   States  &  its  influence  on  the  rest  of  the  world  •  What  will  be  the  NEXT  STEP  for  Crowdfunding   www.thesoholoj.com   Twiker:  @TSLCCEvents     29  
  30. 30. Webinar  Program  Overview  2012  June  19:    Business  Plan  WriHng  -­‐  A  Roadmap  to  Success  July  3:      Pitching  &  PresentaHon  -­‐  3  Minutes,  1  Impression  July  17:    Strategy  -­‐  A  Vision  for  the  Future,  A  Strategy  for  Gehng  There  July  31:    BudgeHng  &  ForecasHng  -­‐  PredicHng  the  Outcome  Aug  14:    Working  Capital  -­‐  An  Unknown  Key  to  Success  Aug.  28:    Capital  Management  -­‐  Playing  with  Risk  Sept  11.:    Funding  &  Investments  -­‐  Some  Sources  are  More  Equal  then  Others  Sept.  25:    ValuaHon  -­‐  Art  or  Science  Oct  9:      Exit  Strategy  -­‐  Nice  to  Have  or  Need  to  Have?  Oct.  23:    Bootstrapping  -­‐  An  AlternaHve  Answer  to  Funding  Nov  6:    Crowdfunding  -­‐  The  Power  of  Friends,  Family  and  Fools  Nov.  20:    Networking  -­‐  Nice  You  have  3000  Friends,  I  have  30  Relevant  ConnecQons  Dec.  4:    MarkeHng  &  (Social)  Media  -­‐  Noise  or  Value?  Dec.  11:    No  Sales,  No  Glory  Dec.  18:    Most  Common  Mistakes  of  Entrepreneurs   30    
  31. 31. BECOME  A  VIP  MEMBER  WITHIN  1  WEEK  AND  GET  YOUR  PLAN  CHECKED!  SPECIAL  OFFER,  ONLY  USD  12!  1.  FREE  checking  of  final  draj    business  plan  2.  FREE  discussion  on  next  steps  and  how  &  where  to  find  funding  in  your   region  3.  FREE  to  ask  addiQonal  quesQon  related  to  funding  &  investment  related   topics  4.  FREE  documentaQon  of  all  webinars  so  far,  presentaQons  +  notes!  5.  FREE  downloads  on  relevant  entrepreneurial  topics    6.  EXTRA  discounts  on  all  our  products  on  our  website  7.  Send  me  an  email  on:  www.efactor.com/hukshorn  8.  Follow  me  on:  www.efactor.com/hukshorn         HTTP://WWW.EFACTOR.COM/VIP     31      
  32. 32. Thank  you!    This  document  was  prepared  by  Eva  Hukshorn.  Several  people  and  organizaQons  have  inspired  her  to  write  this  presentaQon,  amongst  which  are,  but  not  limited  to  the  Founders  of  EFactor,  ABN  AMRO/RBS,  University  of  Groningen,  InsQtute  for  Management  Accountants,  David  Drake   –  Founder  of  the  Soho  Loj  

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