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Crowdsourcing Definition“the act of an institution taking a functiononce performed by employees andoutsourcing it to an undefined (andgenerally large) network ofpeople in the form ofan open call.”– Jeff Howe

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Crowdfunding Definition“the practice of funding a project or venture byraising many small amounts of money from alarge number of people,typically via theInternet.”– Forbes

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How does it work?

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Crowdfunding Platforms

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Crowdfunding Legislation U.S.A. CANADAO April 2012, Obama passed the JOBS Act O Investment (equity)O Eased federal laws to model not legal in encourage small O No national securities business and startup regulator (implemented funding at provincial level) thenO Businesses can accept small contributions from coordinated through CSA citizens without making O Gov’t wants to take a IPO “wait-and-see” approach

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Crowdfunding ModelsO Start-up equity crowdfunding.O Debt-based crowdfunding.O Good-cause crowdfunding.O Pre-order crowdfunding.O Rewards-based crowdfunding.

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Start-Up Equity CrowdfundingO This new model allows large numbers of“regular” people to invest small amounts onlineto fund early start-ups.

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Debt-Based CrowdfundingO Sometimes called micro-financing or peer-to-peer (P2P) lending: O start-ups borrow money from a number of people online and pay them back after the project is finished.O This model of fundingnot available in Canada.

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Good-Cause CrowdfundingO People invest (donate) money to a projectthat has good moral/ethical value.O Most companies using this model are not-for-profits.

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Pre-Order CrowdfundingO Investors make online pledges to pre-buy theproduct for later delivery (if it is ever built).O No financial return should be expected otherthan the product.

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Rewards-Based Crowdfunding O Investors get the satisfaction of helping, and immediately get a pre-determined reward or perk of value, such as a t-shirt, or other recognition. O This is a variation on the two previous ones, but there is no equity or finished product.

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ACTIVITY TIME!

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Live It!“When you’re an entrepreneur, you don’t havea job--at least not in the conventional sense ofthat word. You have a calling. And unlike a job,a calling defines you as a person. It’s who youare.”– Arlene Dickinson

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O Convey your idea clearly and quicklyO Quality is much more important than lengthO Match style to type of project

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Campaign Length O 30-60 daysTarget Amount O Covers expenses O In line with expectationsLive Fundraising/Pitching O Meet & Greet / Demos

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Rewards

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Keys to RememberO Build your network before the campaignO Be flexible and responsiveO Know your media targetsO Integration