Investing in the Crowd


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This is a presentation i gave to a group of not for profit organisations wanting to get engaged in the discussion around how to construct a strategy around crowd funding. It is worth the investment in time going through it and watch out of the release of my next book when it comes to crowd funding out in 2014.

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Investing in the Crowd

  1. 1. Investing in the crowd How can not-for-profits and civil society organisations take advantage of the rise in crowd funding? Matthew Tukaki, CEO and Chief Social Investor of the Sustain Group Twitter: @tukakimatt I I
  2. 2. What’s my return on investment for being here listening to this?  Revenue lines are already under pressure because of pressure on Government funding – the age of austerity  Increase in competition across the civil society and not-for-profit sectors when it comes to the “available” “pot”  Confusion from the consumer end about who to support – who to invest in  The rise of tier 3 and 4 not-for-profits  No likely consolidation in the number of organisations “springing” up who ultimately seek Government funding within the first 12-18 months of operation  Traditional methods work – but as we move more into the online world we need to take advantage of the very social media platforms we ourselves populate with messages I I
  3. 3. “I need to diversify my revenue base if I am going to fund the projects we need investment for” I I
  4. 4. About me I am the CEO and Chief Social Investor of Sustain Group: I am considered to be a global expert when it comes to sustainable development. He has been active in the field for many years and has also led project teams dealing specifically with the evaluation and assessment of social impact across a number of developing countries. From 2010 until 2013 I was Australia’s Representative to the United Nations Global Compact and in May of 2013 the Secretary General appointed him to the Global Board of the UNGC. I have been responsible for leading the reform agendas of a number of not for profit organisation with a view to building organisational capability, capacity and resilience. That includes seeking new and creative ways to fund projects, diverse income away from traditional sources and seeking out new “investors” to help us deliver to various work programs. I am a businessman who through entrepreneurship and a sense of innovation is out to make a social difference with firm realisation that in order to do it we need the money and partnerships to pay for it. I I
  5. 5. A quick check of the facts around crowd funding No point in diving into something unless you know the value of the deep dive! I I
  6. 6. Well – the facts will amaze you…  The global crowd funding market grew 80% to a total of $2.67 billion of funds raised.  Reward based platforms accounted for $1.4 billion or 52% of total funds raised.  The US crowd funding market was $1.6 billion (60%), Europe was $945 million (35%) while the rest of the world accounted for $125 million (5%).  The number of crowd funding platforms (CFP’s) worldwide grew 17% from 452 to around 530. This growth is slowing as the market matures and will start going negative once the industry enters a consolidation phase. Once the industry leaders are established M&A activity starts to increase.  Indiegogo is the No.2 CFP with 0.8% of the total crowd fund market (or 1.3% of rewards based market).  30% of crowd funding platforms are generalized or broadly focused in terms of the types of projects hosted.  70% of crowd funding platforms are specialized or tightly focused on specific industries or niche projects. I I
  7. 7. Still quite amazed….  Kickstarter received over $319 million of pledges from over 2 million backers for over 40,000 projects.  Over 18,000 Kickstarter projects were successfully funded (44%) raising over $270 million in capital  Only 8% of projects with targets of $100,000 or more were successful (large projects are very hard)  Pebble Inc who make a wearable computing product raised a new Kickstarter record of over $10,000,000  Only 17 projects raised $1+ million – that is 0.04% of all projects and 0.09% of all successful projects (most of these were either in Games, Technology or Design)  Games is the most successful Kickstarter category with $83 million in pledges (Technology is 2nd)  Music is the most popular category with over 5000 projects (Art, Publishing, Film all had over 1000 projects)  - See more at: I I
  8. 8. Now … if I asked you for money? Its one thing to jump into the crowd … but, why would people believe me and want to invest? I I
  9. 9. If I asked you for money would you give it to me?  Very rarely will someone part with their hard earned income unless they have to. People part with money based on:  The additional generation of wealth  The fact they have to because the court “said so”  Emotional attachment – to an issue or a challenge facing a family member or friend  Inherent religious belief  So – if I told you that my dog needed an operation would you help me pay for it?  If I told you my sick child needed an operation would you help me pay for it?  If I told you I wanted to go out on Friday night and needed to fund said adventure would you help me out (oh, can I have cab fare as well?) I I
  10. 10. Things I know!  People are willing to invest if there is an attachment to your story  If there is proof in your existence – and therefore credibility  If there is an obvious endgame and that will produce something for a benefit -a social benefit primarily  Many people don’t have hundreds of dollars – those willing to invest more than $100 per project will be rare – therefore the majority will be likely under $100 I I
  11. 11. Stepping through on activating your campaign Lets look at some of the key considerations I I
  12. 12. Step one: develop the product or initiative you want to have funded – treat the process as if you were developing a business plan or business case for something completely new… I I
  13. 13. Step two: “always underestimate what you need instead of overestimating – remember, a lot of money raised through Crowd Funding will only cover a period in time – remain vigilant around diversification.” I I
  14. 14. Step three: “understand the demographic and target market you want to raise the most from e.g. test the case of why they would invest?” I I
  15. 15. Step four: “what current networks and assets do you have access to in order to promote this? Do you have a current social media strategy in place and if so is there a formula for how to monetise it?” I I
  16. 16. The basics Its not rocket science I I
  17. 17. “you need to ensure there is a market of willing people wanting to invest, you cannot assume the market is there” I I
  18. 18. “You can’t just throw something onto a crowd funding site and hope they will come to you – you need to have a strategic engagement plan ready to go” I I
  19. 19. “That plan must include those you have never interacted with before, but are indirectly connected to you through social and professional media” I I
  20. 20. “That plan must include those you have never interacted with before, but are indirectly connected to you through social and professional media” I I
  21. 21. “Always make sure that the outcomes are clear and the timelines involved – there has to be confidence that through my social investment the project will be successful” I I
  22. 22. Monetising social media  Using Facebook “likes” and “followers” to share your pasts – thereby creating an additional and indirect market for your crowd funding project  Using Linkedin in the same way – but more targeted to postings in groups  Using Twitter: make sure you have a #tag ready to go – own that #tag! E.g. getting people to invest into a water project in africa #waterforafrica – own the tag, get to a point of trending and use the twitterverse as a way of retweeting thereby creating another market or sector  Make sure the campaign is sustained and not just once off I I
  23. 23. Imagery  Always use imagery that will support your cause as well as stories and narratives that enable your intended investor audience to buy into it – make sure it is credible -always use real images and not those sourced from stock or through a random Google search  A picture will always beat a thousand words I I
  24. 24. I I Lets look at the use of imagery and why two campaigns that appear the same end up raising different amounts of money
  25. 25. Incentivise your investors  Don’t over complicate recognition of an investors contribution – KISS – keep it simple sam  It could be an honour roll on your website showing recognition  It could be a certificate of thanks – I am a big advocate of provider a social shareholder certificate in the same way you provide a share certificate when investing into a company  Incentivise your investors to the point that the cost is minimal allowing maximum investment into the project outcome itself I I
  26. 26. But wait there is more! In order to go through the full workshop get in touch with and arrange our Chief Social Investor to call on your organisation! I I
  27. 27. Get in touch …  or log onto I I