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Crowdfunding, Sharing Economy, P2PFinance,


This presentation has been presented on September 19th 2016 in Stockholm: Key elements:
Types of crowdfunding, Investor behavior, the difference between Reward, Equity, P2P Lending, Crowdinvestment, Lending in Crowdfunding, How to choose a platform, Fintech, Kickstarter, FundedByMe, Unicorn, StartUp, Funding, Entrepreneurship.

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Crowdfunding, Sharing Economy, P2PFinance,

  1. 1. Strictly Confidential 1 Entrepreneurial Finance, September 19th 2016 Crowdfunding – still a niche financial product? Stockholm School of Economics Center for Competitiveness and Strategy Michal Gromek Researcher on Crowdfunding
  2. 2. Strictly Confidential V. Get your message accross IV. Practical aspect of a campaign (Does and Don‘t) III Be successful in Crowdfunding 2 Let’s do this J I. Personal Background II. How do you benefit from Crowdfunding? VI. Bonus
  3. 3. Strictly Confidential EDUCATION JOURNALISM PUBLIC SERVICE PROJECT MANAGMENT OUTLOOK 3 Michał Gromek – Researcher at HHS michal@phdstudent.hhs.se 6+ years experience Founding member of the EYP Head of int. affairs German Youth Press Trainer, Photograph 3+ years experience Invest in Poland Ministry of Foreign Affairs InvestGDA Invest in Pomerania 5+ years experience Euro2012 Rocket Internet FundedByMe > Bayer & WNS, Scania To be continued PhD student in Fintech & Crowdfunding Funded Two Postgraduate studies in project mgt. Bachelor of European Economics Master of Science, Int. Management
  4. 4. Strictly Confidential 4 Recent publications / projects co founder FinTechPartner.net “It is high time for public authorities in Sweden to define Crowdfunding by law, create a national discussion forum and lead us out of this medieval dungeon of shady legislation.” Current State of Crowdfunding in Europe – Sweden Link to the report Link to the report
  5. 5. Strictly Confidential 5 “I am collecting money for a car” I have a brilliant idea, but … “I can’t because” “I can’t …” “Almi, said NO” “I have to get a good job first” “nobody will give me funding anyway ” “I have to save funding first” Those who - really want, search for a way. Those, who don’t look for a reason - Miłosz Brzeziński
  6. 6. Strictly Confidential 6 CROWFUNDING IS: accumulation of small investments in individual projects by large number of individuals (“the “crowd”) with the help of internet or social networks (De Buyer et al, 2012) +2009 > Credit crunch increased the need for sharing economy
  7. 7. Strictly Confidential 7 CROWFUNDING IS: 144% - GROWTH RATE OF ALTERNATIVE FINANCE 2013>2014 449% - CAGR GROWTH EQUITY CROWDFUNDING – NORDICS 122 706 EUR – AVERAGE MONEY RAISED IN SE (ECF) 46 – AVERAGE AMOUNT OF NEW INVESTORS PER CAMPAIGN 551 EURO – MEDIAN INVESTMENT 5935 EURO – AVERAGE INVESTMENT Source: Understanding Alternative Finance, University of Cambridge 2014 Successful Equity Crowdfunding Campaigns – A Nordic Review, FundedByMe, 2015
  8. 8. Strictly Confidential V. Get your message accross IV. Practical aspect of a campaign (Does and Don‘t) III Be successful in Crowdfunding 8 Let’s do this J I. Personal Background II. How do you benefit from Crowdfunding? VI. Bonus
  9. 9. Strictly Confidential 9 Crowdfunding left it’s niche and it is a real tool VC Bussiness Angels F&F Public Funds
  10. 10. Strictly Confidential 10Source: Zeit Online, Bank de Espana, Financial Times Online, The Guardian Online, Liberum Crowdfunding Corporate Social Responsibility Crowdfunding – you back ideas from companies to give something to the “society” (plus their PR J) Real Estate Crowdfunding The Crowd collects funding for construction of a Real Estate and shares profit from sales. B2C Crowdlending - Companies receive a cheaper loan and knowledge from investors and investors solid ROR. Legal entity vs. natural persons. Peer-to-peer loan based crowdfunding for consumers (C2C) People lend money directly to the other people. Both are natural persons. Reward based crowdfunding. People back up projects and expect a reward in return. Equity based crowdfunding. Entrepreneurs are willing to split the shares of the company in order to get know- how or financial support from investors. – FT.com Donation based crowdfunding. You back up project and expect nothing in return. Lending and equity-based crowdfunding are disruptive technologies for the banking industry with the potential to displace banks as primary source of funding. – Bank de Espana Crowdfunding is more than one product & one customer
  11. 11. Strictly Confidential 11 Crowdfunding is more than one product & one customer Source: Zeit Online, Bank de Espana, Financial Times Online, The Guardian Online, Liberum Corporate Social Responsibility Crowdfunding – you back ideas from companies to give something to the “society” (plus their PR J) Real Estate Crowdfunding The Crowd collects funding for construction of a Real Estate and shares profit from sales B2C Crowdlending - Companies receive a cheaper loan and knowledge from investors and investors solid ROR. Legal entity vs. natural persons. Peer-to-peer lending for individual crowd. People lend money directly to the other people. Both are natural persons. Reward based crowdfunding. People back up projects and expect a reward in return. Equity based crowdfunding. Entrepreneurs are willing to split the shares of the company in order to get know- how or financial support from investors. Donation based crowdfunding. You back up project and expect nothing in return. Lending and equity-based crowdfunding are disruptive technologies for the banking industry with the potential to displace banks as primary source of funding.
  12. 12. Strictly Confidential 12 Example of FundedByMe’s development Example: FundedByMe Crowdfunding time-line in Sweden: 2Q 2013 20152Q2Q2012 2014 2Q 4Q2011 Reward based Product Equity based product Singapore investment 18th of February 2015 – Crowdlending SE Crowdlending project in DE FBM supported 423 projects since Q4 2011, with 58 440 investors from 171 countries
  13. 13. Strictly Confidential 13 Types of Crowdfunding Rewardbased crowdfunding Reward based crowdfunding = average backing 50 Euro Reward-based = the review of the proof of concept •19-25 years •mostly no entrepreneur •no real business experience •some networks •usually not profitable – report 05.2016
  14. 14. Strictly Confidential 14 Crowdfunding left it’s niche and it is a real tool Strong cause and extensive social network Blank Spot Projects (reward-based crowdfunding)
  15. 15. Strictly Confidential 15 Types of crowdfunding Equitybased crowfunding Equity-crowdfunding = average investment 5935 Euro Equity based Crowdfunding – registered companies before growth phase •25- 33 years •Entrepreneurs •Struggle to understand the process •How much is my company worth? •Usually still not profitable – research 10.2015 Equity
  16. 16. Strictly Confidential 16 Crowdfunding left it’s niche and it is a real tool Company has been incorporated in December 2015 Foover (equity-based crowdfunding overfunded now)
  17. 17. Strictly Confidential 17 Types of crowdfunding in case you have a data base of your clients start with data mining Loan based crowdfunding – average lending 557 Euro Peer-to-peer lending •82% - male •33-44+ years •already entrepreneur since at least 1,5 years •Predictable behaviour vs. scoring •Turnover over not less than 120.000 SEK – research 12.2016 Equity Loans
  18. 18. Strictly Confidential 18 Crowdfunding left it’s niche and it is a real tool Proof of concept + Profitability AddMovement AB (loan based crowdfunding)
  19. 19. Strictly Confidential 19 Example: Payments curve of Rewardbased projects §Entrepreneurs are getting very engaged in the first five days. § §Plan your marketing tasks for 45 days §Marketing is not only social media. And social media is not only Facebook. Payment curve - Nordic Projects This is a natural payment curve of Rewardbased projects 1 45Time in days $-AmountoffundingprocessedviatheFBM$$$
  20. 20. Strictly Confidential 20 Example: Alternative payment curve = activities §This project planned four activities. §What would happen in case they would plan 15 activities. §Try to reach as many “target groups” as possible with different communication. Payment curve - Nordic Projects The user is responsible to drive his/her campaign, and they do J 1 45Time in days $-AmountoffundingprocessedviatheFBM$$$ Newsletter Interview DI Offline presentation at school Investors Pitch
  21. 21. Strictly Confidential 21 Example: Alternative payment curve = gender §Female treat campaigns more like elections §Male user tend to treat campaigns more like a “Master thesis” Gender differences of entrepreneurs You need to this this: There are gender differences between entrepreneurs – new report 20.10.2015 (in cooperation with Ali M, KTH) 1 45Time in days $-AmountoffundingprocessedviatheFBM$$$ Investors Pitch
  22. 22. Strictly Confidential 22 In which segment is your business idea? §25-33 years (AB public / private) §entrepreneurs do struggle to understand the share issue process §How much is my company worth? §usually still not profitable §19-25 years mostly not entrepreneurs yet. §no real business experience some networks usually not profitable Reward based user Equity based user Crowdlending user SE 2+ years experience in business 1-5 experience in business §30+ Entrepreneurs Need funding to develop the business §Rather service and not production §Have a track record and positive feedback from scoring agencies like Bisnode (Solidited) / UC §usually still not profitable §– research 06.2016
  23. 23. Strictly Confidential V. Get your message accross IV. Practical aspect of a campaign (Does and Don‘t) III Be successful in Crowdfunding 23 Let’s do this J I. Personal Background II. How do you benefit from Crowdfunding? VI. Bonus
  24. 24. Strictly Confidential 24 How to choose a right platform: International connection? – From how many countries investors can invest into your project? PR / Offline marketing activities Which types of PR and Offline marketing activities does the platform offer. Ofterta Offline Which offline service is being offered (additional investors pitches, offline meetings with VC etc.) How many project have been financed? How many project are being financed out of 100% and which types of projects are they? Success fee –. How high the success fee for the platform for a financed project. Taxes and support Which types of support do you receive in terms of tax and legal services? Listing fee How high is the listing fee for your project (between 0 Euro and 14.500 Euro) Available staff How strongly available is the staff of the platform, can you visit them?
  25. 25. Strictly Confidential 25 6 Stages of Crowdfunding Funds pay out Decision stage Delivery Project is live on the platform live 45 days Pitch Creation Pitch Investor management stage
  26. 26. Strictly Confidential V. Get your message accross IV. Practical aspect of a campaign (Does and Don‘t) III Be successful in Crowdfunding 26 Let’s do this J I. Personal Background II. How do you benefit from Crowdfunding? VI. Bonus
  27. 27. Strictly Confidential 27 Example: Rewardbased Crowdfunding examples Steps to follow: §Upload a campaign Present the product Set the goals for rewards §Choose the team Do plenty of offline and online promotion for 45 days. § Don’t give up; a campaign is more like an election campaign and not a Bachelor thesis. § It takes you about 12 days to prepare a good campaign. §It takes the platform about 2 x 7 days to give you feedback. Campture your Mind - SSE example (change of the name: Nacka) You can upload a campaign with your idea …. today.
  28. 28. Strictly Confidential 28 Example: Rewardbased Crowdfunding examples §Products, that the user can identify with §Convincing presentation §Common- sense rewards for the product §Show that you a passion towards the product.. §Keep in mind that users are located in different types of the world. Passionplanner.com - US experience You need this: It is every time more efficient, in case you can present a prototype Target: $ 19.000 Final result: $48,030 – the comission of the platform. Pay in $25 and receive you own personal passion planner
  29. 29. Strictly Confidential 29 Example: RAW World (rewardbased kickstarter) §Make sure, that your title is understandable §You main picture should be convincing §Your video should be straight forward, telling what do you want to achieve and why. RAW World You need this: It is not enough to upload a campaign and wait for a miracle
  30. 30. Strictly Confidential V. Get your message accross IV. Practical aspect of a campaign (Does and Don‘t) III Be successful in Crowdfunding 30 Let’s do this J I. Personal Background II. How do you benefit from Crowdfunding? VI. Bonus
  31. 31. Strictly Confidential 31 Source:https://www.linkedin.com/pulse/business-startup-failure-reasons-learnings-kevin-vyavahare
  32. 32. Strictly Confidential 32 Summary of the key aspects §Contract key messages. §Give your best to bring your messages across. §The most expensive solutions are not every time the best. §Use your time wisely for online and offline communication. §Choose the right platform for your project. §Make sure, to choose the right time for your project. Make sure that you met with former platform winners / losers. §Review the research that exists on your topic. §Make sure that you can deliver on time. §Adjust different types of crowdfunding to a different stage of your company. §Start early and approach the project with long-term preparation. §Think about your possible investor groups. KNOW YOUR NEEDS Work on communication Make smart choices
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