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4. Anne Strachan - Crowdfunding

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4. Anne Strachan - Crowdfunding

  1. 1. Anne Strachan CrowdfundUK @CrowdfundUK CrowdfundUK.org anne@Crowdfunduk.org
  2. 2. Agenda Introduction to crowdfunding • the three models • the process The crowd What investors, lenders or donors are looking for Key tips for crowdfunding Q&A
  3. 3. Why crowdfunding
  4. 4. Statistics Globally 2012 £1.8 billion 2013 Set for £3.5 billion Kickstarter £22 million pledged for UK projects in one year £17.1m for successful projects Crowdcube 2013 £12.2m invested - 54 businesses, 10 second round Over 43,000 members Raised £1.5 million for its own growth 2013 (partner Crowdfunder raised £648,890)
  5. 5. Crowdfunding models Equity = crowd-investing Works best for larger investment in the whole business model. Must be able to offer share capital (also Community Shares) Loans/debt = crowd-lending Works best for business or enterprise that does not wish to give away equity – but can repay a loan, with interest. Social lending possible. Donations or rewards = crowd-funding Works best for a well connected enterprise/entrepreneur with a clearly defined product and deadline. All-or-nothing or all you raise you can keep
  6. 6. Equity Loans Donations
  7. 7. Plan project Choose Platform The Pitch video written pitch rewards Campaign time! Target reached or not How crowdfunding works
  8. 8. The Pebble $10.26 million (donations) £40,000 (donations) Baker’s Toolkit £175,000 Draw Like a Boss £51,833 donations Successful campaigns £310,800 (equity) Bonk of Pants £56,865 (debt)
  9. 9. Failed projects 40-50% succeed (20% equity) Sending dynaspheres to Europe World’s first Apple Museum Open Source Death Star 11% receive no pledges at all
  10. 10. Why crowdfunding It gives access to capital But - its not just about the money  loyal customers (evangelists)  pre-sales  marketing and PR  different inputs and ideas  Incubation - proof of concept  can be easier than obtaining grants or loans  free – if it fails And what it isn’t ….
  11. 11. Why do people donate or invest? • Personal contact - family and friends, wider personal/organisational networks (they like you or believe in what you are doing) • Closeness values, professional or geographical (what’s in it for them) • Support creators or causes (community of interest) • Seek rewards (they want the product) AND for equity and loans A financial return on their investment
  12. 12. Incentives Tax breaks • Enterprise Investment scheme (EIS) • Seed Enterprise Investment Scheme (SEIS) Managed Funds – first is from Crowdcube Shares – dividends or sale (direct or nominee) Rate of return on a loan (P2P ISAs coming) Rewards – gadget, tech or game
  13. 13. Crowdfunding – equity Strength of the business case Tax relief Quality of the pitch Experience of the team CEO personal investment in the business
  14. 14. Crowdfunding – loans Ability to repay debt in medium term • Strength of the business • Director’s track record
  15. 15. Crowdfunding – donations/rewards Strength of the idea Quality of the pitch Credibility of the project owner Value of the rewards AND MOST IMPORTANT Social capital - wide engaged social networks
  16. 16. Near Desk The oyster card for desks: rent office space by the Hour at various locations around the UK £134,500 for 7.71% equity 139 investors – investments from £10-£51,000 25% of investors had invested in crowdfunding campaigns before EIS eligible
  17. 17. Something Indie Campaign on Seedrs £20,000 raised for 10% equity Handpicked online selection of indie brands 67 investors Clear concise business plan and (understandable) business model Well-defined target market Track record
  18. 18. Some key tips Communicate your business Reasonable value for the business Have a great idea Have an unfair advantage Offer incentives Network like crazy
  19. 19. • Register for free • Post projects • Search for platforms or projects • News and information
  20. 20. Thoughts or questions?

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