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An Introduction to the Practice of Crowdfunding

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A set of slides used at the University of Glasgow setting out the fundamentals of crowdfunding, and the process of constructing a successful campaign using the TAMP process

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An Introduction to the Practice of Crowdfunding

  1. 1. AAnn IInnttrroodduuccttiioonn ttoo tthhee PPrraaccttiiccee ooff CCrroowwddffuunnddiinngg University of Glasgow 20th November 2014 TTiimm WWrriigghhtt
  2. 2. • What is crowdfunding? • Benefits and Risks • How to do it – the TAMP Process AAggeennddaa
  3. 3. CCoonnssuullttaannccyy •CCrroowwddssoouurrcciinngg •CCrroowwddffuunnddiinngg •IInnnnoovvaattiioonn •KKnnoowwlleeddggee MMaannaaggeemmeenntt
  4. 4. CCrroowwddffuunnddiinngg iiss aa mmeetthhoodd ooff rraaiissiinngg mmoonneeyy ffrroomm aa ddiissttrriibbuutteedd ggrroouupp ooff ffuunnddeerrss ((tthhee ccrroowwdd)) wwhhoo pprroovviiddee aa llaarrggee nnuummbbeerr ooff ssmmaallll ssuummss ffoorrmmiinngg aa ssiiggnniiffiiccaanntt ttoottaall wwhheenn aaggggrreeggaatteedd ttooggeetthheerr..
  5. 5. $5 Billion 2013 $2.7 Billion 2012 UK is a world leader Constant innovation in sector Individual projects raised up to $50 Million
  6. 6. Empowering It is hard work Grown up with Social Media Platforms are the facilitators Founded in the “Long Tail” distribution model Government engagement
  7. 7. Technological Social and Collaborative tools, Platforms Societal EEmmppoowweerrmmeenntt,, eeccoommmmeerrccee,, ““ggrroowwnn uupp ddiiggiittaall”” ggeenneerraattiioonn Economic CCaappiittaall CCoonnssttrraaiinntt,, iinnvveessttmmeenntt ooppppoorrttuunniittyy WWhhyy iiss iitt ggrroowwiinngg??
  8. 8. GGIIFFTT PPEERRKK LLOOAANN EEQQUUIITTYY Four Models of Crowdfunding
  9. 9. Funds collected are gifts or donations with no tangible return to the provider. Four Models of Crowdfunding GGIIFFTT PPEERRKK LLOOAANN EEQQUUIITTYY
  10. 10. Just Giving https://www.kickstarter.com/ Yimby https://www.indiegogo.com/ Razzoo http://www.razoo.com PPllaattffoorrmmss –– DDoonnaattiioonn
  11. 11. “Rewards” or “perks” of different value are offered to investors to purchase. Four Models of Crowdfunding GGIIFFTT PPEERRKK LLOOAANN EEQQUUIITTYY
  12. 12. Kickstarter https://www.kickstarter.com/ Indiegogo https://www.indiegogo.com/ Crowdfunder http://www.crowdfunder.co.uk/ BloomVC http://bloomvc.com/ PPllaattffoorrmmss –– PPeerrkk oorr RReewwaarrdd
  13. 13. A loan is constructed from many small loans collected from the crowd. Many are interest bearing. Four Models of Crowdfunding GGIIFFTT PPEERRKK LLOOAANN EEQQUUIITTYY
  14. 14. Funding Circle https://www.fundingcircle.com/ Rebuilding Society https://www.rebuildingsociety.com/ Lending Crowd https://www.lendingcrowd.com/ PPllaattffoorrmmss -- LLeennddiinngg
  15. 15. Shares are sold in small parcels to a large group of investors. Four Models of Crowdfunding GGIIFFTT PPEERRKK LLOOAANN EEQQUUIITTYY
  16. 16. Crowdcube http://www.crowdcube.com/ Seedrs https://www.seedrs.com/ Squareknot https://www.squareknot.co.uk/ ShareIn http://www.sharein.com PPllaattffoorrmmss -- EEqquuiittyy
  17. 17. Keep it all You get to keep whatever you raise All or nothing You get to keep anything only if you reach your target DIY You run your campaign “of platform” Hybrid models A mix of funding AAddddiittiioonnaall VVaarriiaattiioonnss
  18. 18. •Set targets •Select platform •Prepare •Outreach •Updating •Promotion •Crowd invests •Contact their crowd •Target met •Rewards paid •Money collected Idea to crowdfund
  19. 19. Crowdfunding working in all sectors
  20. 20. Advocacy Expertise Asset Development Inward investment Validation
  21. 21. Average Success Rates 30% 75wwiitthh% ccooaacchhiinngg
  22. 22. BBeetttteerr OOuuttccoommeess How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014
  23. 23. BBeetttteerr OOuuttccoommeess Non Financial Support – Equity CF Understanding Alternative Finance - Nesta, University Cambridge 2014
  24. 24. BBeetttteerr OOuuttccoommeess Non Financial Support – Reward CF Understanding Alternative Finance - Nesta, University Cambridge 2014
  25. 25. BBeetttteerr OOuuttccoommeess 24% Quarterly increase revenue post crowdfunding Increased revenue of equity 351% crowdfunded companies Value of every hour invested in a successful campaign $813 How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014
  26. 26. BBeetttteerr OOuuttccoommeess Within three months of a crowdfunding campaign……. 28% of companies had closed an angel investor or venture capital round. 43% were in discussions with institutional investors. How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014
  27. 27. EEnndduurriinngg AAsssseett Crowdassets are the new source of innovation and economic growth. Open for Business — Moving from ‘Knowing’ to ‘Doing’! - Wright & Marom - EC Open Innovation Handbook 2014 Crowdfunding provides a perfect entry to the crowd empowered world!
  28. 28. CCrroowwddaasssseett FFrraammeewwoorrkk Crowdsourcing Viral Marketing Collaborative Economy Maker Community Wiki Building Open Source Turking Deep Skills Open for Business — Moving from ‘Knowing’ to ‘Doing’! - Wright & Marom - EC Open Innovation Handbook 2014
  29. 29. HHooww ttoo DDoo IItt??
  30. 30. The Purpose of TAMP is to: Establish if crowdfunding is right for your project. Show how ready you are to crowdfund. Analyse which form of crowdfunding is best for you. Build a plan that will help you to run a successful crowdfunding campaign around. IInnttrroodduucciinngg tthhee TTAAMMPP PPrroocceessss
  31. 31. TT Targets AA Audit MM Method PP Plan/Prepare TThhee TTAAMMPP PPrroocceessss
  32. 32. What When Why Who TTaarrggeettss
  33. 33. How much do you want and need to raise? ? How did you arrive at the numbers ? Is it enough ? Is this a single funding round ? Do you want stretch targets ? Is it a costed amount in a business case ? Are you using sensible valuation schemes WWhhaatt ddoo yyoouu nneeeedd??
  34. 34. ? How hard are the timings ? Are they fixed, moveable, long or short term WWhheenn ddoo yyoouu nneeeedd iitt??
  35. 35. Think strategically Saying you want to fund a film is simply not enough! ? How does this fit with the wider plans for you or your organization ? Are you looking to take a product to market, expand, or even radically change your business model WWhhyy ddoo yyoouu nneeeedd iitt??
  36. 36. Followers and Fans Influencers Communicators WWhhoo aarree yyoouu ggooiinngg ttoo ttaarrggeett??
  37. 37. Assets Skills Resources Tools AAuuddiitt
  38. 38. Items, artefacts, objects and components that you or your organisation holds. Social and Relationship capital IP Pictures Mail lists Video Newsletters AAsssseettss
  39. 39. Technical skills Web builder, reward maker, fabrication. Communication skills Copy writer, designer, video editor. SSkkiillllss
  40. 40. Time Money People Facilities RReessoouurrcceess
  41. 41. CRM A server Mail list tool Analytical tools Manufacturing tools TToooollss
  42. 42. ?? ?? ?? Reward Equity Lending Donation MMeetthhoodd All or nothing Keep it all Duration Crowdcube Kickstarter Crowdfunder Funding Circle DIY
  43. 43. Resources What do you need? Responsibilities Crowd Who will do what? Fans, Influencers, Communicators Schedule When will things happen? Publishing Plan Channels, Content, Timing, Monitoring, Responding PPrreeppaarree && PPllaann
  44. 44. Before 33 PPllaannnniinngg PPhhaasseess After During
  45. 45. Followers Influencers Communicators FFiinnddiinngg yyoouurr ccrroowwdd
  46. 46. Run Your Own Campaign Preparation, Preparation, Preparation Get the Messaging Right Get off to a Good Start Monitor, Respond, Update Shorter is Generally Better Video, Video, Video Components ooff aa GGoooodd CCaammppaaiiggnn
  47. 47. QQuueessttiioonnss?? TTiimm WWrriigghhtt tim@twintangibles.co.uk 07717 814 595 @twintangibles

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