Crowdfunding 2014 Overview for MBAs

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Crowdfunding 2014 Overview for MBA Classes and Business Students

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Crowdfunding 2014 Overview for MBAs

  1. 1. CROWDFUNDING Beyond the Headlines & Hype CJ Cornell @cjcornell
  2. 2. CJ Cornell is ...
  3. 3. # 1 AZ Entrepreneurship
  4. 4. top 10 Places to do business …
  5. 5. th 46 in the U.S.A. venture capital, equity investing
  6. 6. $28 Billion that’s with a “B”
  7. 7. 3,900 VC deals in 2013
  8. 8. 1,900 # seed/early stage deals
  9. 9. 1,900 # lottery millionares in US each year
  10. 10. VC Deals and $$ 2013 Amount Invested 2013 Stage of Development Qtr 1 Seed Qtr 2 Qtr 3 Qtr 4 2013 Total $208,749,800 $224,891,100 $189,545,100 $319,766,900 $942,952,900 Early Stage $1,525,082,100 $2,532,942,200 $2,805,559,400 $2,895,229,600 $9,758,813,300 Expansion $2,059,163,900 $2,195,220,100 $2,587,292,100 $2,996,782,200 $9,838,458,300 Later Stage $2,207,377,900 $2,120,733,500 $2,339,208,100 $2,157,414,100 $8,824,733,600 Grand Total $6,000,373,700 $7,073,786,900 $7,921,604,700 $8,369,192,800 $29,364,958,100 Number of Deals 2013 Stage of Development Qtr 1 Seed Qtr 2 Qtr 3 Qtr 4 2013 Total 53 46 52 67 218 Early Stage 416 506 551 530 2,003 Expansion 237 231 241 275 984 Later Stage 203 194 188 205 790 Grand Total 909 977 1,032 1,077 3,995
  11. 11. Why does a startup need funding? ** yes, it needs to be asked ….
  12. 12. Funding Gap(s) concept->product->market->profit IPO (market share, revenues etc ) Entrepreneurial Growth $ Venture Capital $ Angels concept (accelerators/incubators) $ $ Product (Risk, growth)
  13. 13. Starting a company is easier than ever … … but growing a company is harder & riskier than ever …
  14. 14. $520k (the average Angel deal) ** the HALO report
  15. 15. $22.9 Billion in 67,030 Deals (Angels) 2012 numbers – Center for Venture Research
  16. 16. The Series-A Crunch
  17. 17. Entrepreneurial Growth concept->product->market->profit IPO (market share, revenues etc ) Crowdfunding Crowdfunding $ Venture Capital Crowdfunding $ Angels concept (accelerators/incubators) Crowdfunding $ $ Product (Risk, growth)
  18. 18. What is Crowdfunding ?
  19. 19. Crowdfunding The wisdom of the crowds The passion of crowds The safety of crowds
  20. 20. Source: http://theyec.org/making-sense-of-the-jobs-act-and-crowdfunding-infographic/
  21. 21. • Source – http;//crowdfunder.com
  22. 22. • Source – http;//crowdfunder.com
  23. 23. Crowdfunding has more than tripled in the past 3 years
  24. 24. What about Equity Crowdfunding?
  25. 25. 2015 Equity crowdfunding practical in US
  26. 26. FRAUD Equity (investment) crowdfunding in US
  27. 27. 0 cases FRAUD
  28. 28. Rewards-based, Donation Crowdfunding: “THE KICKSTARTER MODEL”
  29. 29. ALL OR NOTHING
  30. 30. Perks & Rewards
  31. 31. Updates (and Blogging)
  32. 32. Updates (and Blogging)
  33. 33. Comments & Engagement
  34. 34. Equity Crowdfunding ... is here
  35. 35. WHY … Do people Crowdfund?
  36. 36. Lessons from Ethan Mollick’s “The Dynamics of Crowdfunding: Determinants of Success and Failure”
  37. 37. 3 Why’s: three main reasons why people unconnected to a project or business would support it: 1. They connect to the greater purpose of the campaign 2. They connect to a physical aspect of the campaign like the rewards 3. They connect to the creative display of the campaign’s presentation What Is Crowdfunding And How Does It Benefit The Economy - Forbes http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy
  38. 38. • Passion The Real (Crowdfunding) Why’s – – – – For the technology For the industry For the cause For the product • Affinity – For the Entrepreneur – For the region, industry etc • Connection • Every reason BUT R.O.I. …
  39. 39. WYNTK (what you need to know) Crowdfunding is about … emotional ROI. Not financial ROI
  40. 40. WYNTK (when crowdfunding …) (what you need to know) “its not what you do, but why you do it,”
  41. 41. http://www.kickstarter.com/projects/1104350651/tiktok-lunatikmulti-touch-watch-kits
  42. 42. “Consumers who want products before they are developed” Pre-orders Early adopters Supporters http://trendwatching.com/trends/infographics/presumers/
  43. 43. The Kickstart Model.. UH OH …
  44. 44. WYNTK (what you need to know) 1. Crowdfunding = New “1st Money” for ventures ($10k - $50k average– but wild exceptions) 2. Equity Crowdfunding is Still Far away 3. Rewards based Model IS Crowdfunding today 4. All or Nothing Crowdfunding – Standard 5. Perks and Rewards: Pre-order Crowdfunding 6. Social Media & Content Intensive www.propelarizona.com
  45. 45. What does success look like?
  46. 46. • The iPhone-friendly Pebble watch earned $7.6 million more than its $100,000 goal. • And the Galileo iPhone platform closed its Kickstarter campaign at $702,000, far surpassing its $100,000 goal.
  47. 47. • Ouya raised $2 million in one day for a new Android gaming console (it’s raised more than $5 million to date), • the Nifty MiniDrive, external memory for Apple MacBooks. The tiny storage company is more than 2,000% above its $11,000 goal with 15 days left in the campaign.
  48. 48. What do successful campaigns have in common?
  49. 49. http://www.kickstarter.com/projects/hop/ele vation-dock-the-best-dock-for-iphone
  50. 50. Projectio http://www.kickstarter.com/projects/1209578799/projecteo-the-tiny-instagram-projector
  51. 51. http://www.kickstarter.com/projects/mikebond/ti2-sentinel-titanium-cache?ref=home_popular
  52. 52. http://www.kickstarter.com/projects/poots/kingdom-deathmonster?ref=home_popular
  53. 53. http://www.kickstarter.com/projects/smartthings/smartthings-make-yourworld-smarter?ref=category
  54. 54. http://www.kickstarter.com/projects/thejumpshot/jumpshot-a-new-weapon-tobattle-pc-frustration?ref=category
  55. 55. http://trendwatching.com/trends/infographics/presumers/
  56. 56. Successful campaigns took an average 11 days preparing for their launch. http://blog.indiegogo.com/2013/01/12-insights-for-2012.html
  57. 57. Campaigns ran an average 49 days in 2012, as opposed to 60 in 2011. Successful campaigns fundraised for 39 days.
  58. 58. Crowdfunding Myths & Mistakes • • • • • • • • Myth #1: If You Build It, They Will Come Myth #2: Cash is Free Making it about you Unrealistic Expectations Lack of clarity No call to action Expecting to be found: (No Marketing) Ignoring Small Donations/Donors http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-them http://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804
  59. 59. Successful Crowdfunding Campaigns Focus on The new 4 P’s … WYNTK (what you need to know) the the 2. 1. 3. the the 4. www.propelarizona.com
  60. 60. The new 4 P’s of Crowdfunding .. the 2. WHO are they? What motivates them? Interests, Values … the 1. focus on “them” – not your company the 3. the 4. You are pitching to “them” $$ Value is a negative driver ! It’s a daily/hourly effort … TELL A STORY !! UNIQUE SOCIAL MEDIA WHY is more important than $$ It’s about THEM It’s a conversation … VIDEO(s) & VISUAL(s) EXCLUSIVE UPDATES, BLOGS, NEWS Tell the story in small ‘chapters’ And what is important to “Them” Provide Value, and Talking Points VIDEO(s) & VISUAL(s) FIRST RE-POST, TWEETable And even smaller “sound bites” Make sure it is … It’s about … for their network Give them a Story they can tell to others. BUZZWORTHY VALIDATION & EVIDENCE www.propelarizona.com
  61. 61. Crafting a Successful Crowdfunding Campaign
  62. 62. Some initial rules ….
  63. 63. WYNTK (what you need to know) 1. 2. 3. 4. 5. Crowdfunding takes work, new skills. It takes a strategy, and preparation. The rules are different. You can’t just post and run … It’s a public success or failure – that “stays on your resume” www.propelarizona.com
  64. 64. Components of a Crowdfunding Campaign
  65. 65.  Title & Short Description • (repeatable & compelling)  Long Description (“The Pitch”) • Make it a story … about “them”      Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN • Repeatable Messages • Daily “routine” • Traditional marketing too
  66. 66. Crafting the “Pitch”
  67. 67. First: Who What Why When … • The 3 Who’s: – Who are the donors? (affinity & passion) – Who is benefits? (the market) – Who are you? • The 3 Why’s – Why would your donors care? – Why does the market care? – Why are you the right team to do it?
  68. 68. First: Who What Why When … • What is your project & goal? – Understandable & Simple – Compelling & Intriguing – Repeatable & Memorable • How and When – How will you achieve your goal? Realistic? – When, after funding? When will I get my perks?
  69. 69. Other Tips • • • • • • Tell a story Make it about them The History of the idea is intriguing What is the Impact? – why is this important? Try a FAQ Call to action – get them involved!
  70. 70. Exercise – Craft the Pitch
  71. 71. Crafting your Pitch Title & Short Description •(repeatable & compelling) Long Description (“The Pitch”) •Make it a story … about “them” Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN •Repeatable Messages •Daily “routine” •Traditional marketing too The 3 Who’s: Who are the donors? (affinity & passion) Who is benefits? (the market) Who are you? The 3 Why’s Why would your donors care? Why does the market care? Why are you the right team to do it? What is your project & goal? Tell a story Make it about them The History of the idea is intriguing What is the Impact? Why is this important? Try a FAQ Call to action – get them involved! Understandable & Simple Compelling & Intriguing Repeatable & Memorable How and When How will you achieve your goal? Realistic? When, after funding? When will I get my perks?
  72. 72. Pitch Notes - 1 • • Who (donors, market) “Why” – the story • • Impact (on the market) Impact (on the donors)
  73. 73. Pitch Notes - 2 • • Story, and History … FAQ • • Perk Ideas (what’s important to donors) Calls to Action
  74. 74. Visuals
  75. 75. The Importance of Visual Media • 64% of successful campaigns in had pitch videos. • Campaigns with videos under 5 minutes were 25% more likely to reach their goal than those with videos that were longer. • Average campaign video length for campaigns was 3 min, 27 seconds. Campaigns that reach their goal are 16 seconds shorter. • On average, successful campaigns uploaded 6 media to their gallery. • http://blog.indiegogo.com/2013/01/12-insights-for-2012.html
  76. 76. Perks & Rewards
  77. 77. American Grandmaster a Patrick Million FILM Directed by Patrick Million Executive Producer CJ Cornell
  78. 78. Rewards Crowdfunding • Incentives & perks • Pre-Orders • Pre-Sumers • Market Validation
  79. 79. Rewards don’t have to worth $$
  80. 80. • $25 perk is the single most claimed perk, representing nearly 25% of all perks that are selected. • While the $25 dollar perk is only responsible for raising 11% of total funds.
  81. 81. • $100 perks raise more money than any other perk price and make up nearly 30% of total funds. A $100 perk combined with the next three perk price points: $50, $500, and $1000 makes up about 70% of total money raised by perks
  82. 82. some Rules for Rewards
  83. 83. 1. Make perks unique & exclusive Avoid T-shirts, Mugs & Hugs
  84. 84. 2. Target them
  85. 85. 3. Give them a connection
  86. 86. “The Cocktail Party Effect”
  87. 87. “The Restaurant Effect”
  88. 88. “The Carey School Effect”
  89. 89. The less tangible the perk, the more public (visible) & EXCLUSIVE it needs to be.
  90. 90. The Campaign
  91. 91. How much $$ ? How long?
  92. 92. Discussion • How much should we raise? – Have you raised money before? Return? – Do you/did you work at a highly visible position? – *** Your social network? Large? Followers? – Idea - big market? How unique? – How much (marketing) work will you do?
  93. 93. HOW to Crowdfund? PUSH - Running the campaign • • • • Social Media Comments & Updates Networking Personal Pitches
  94. 94. Your mission: To get them talking about your project
  95. 95. Now that you’ve launched … Continue the story
  96. 96. Social Engagement – Transparency & Trust – Social Proof & Viral FX – Engagement & “The Fundamentals” – Twitter – Facebook – Blogging
  97. 97. most successful projects receive about 25-40% of their revenue from their first, second and third degree of connections. This could include friends, family, work acquaintances, or anyone that the owner is connected to. • http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy/
  98. 98. 1. Create: (of course) - A Facebook Account - A Twitter Account (for your campaign)
  99. 99. 2. Tweet & Post –Frequently –Uniquely –Personally
  100. 100. 3. Post Updates & Blog •About your progress •About the subject •About the industry •About the People
  101. 101. 4. Go 1-1 •Reply to comments •Retweet/Repost Your fans and donors are your most powerful advocates!
  102. 102. 5. Target, Measure & Adjust • Different Messages for different groups • Google, Hootsuite, others • Learn and Adjust focus
  103. 103. Metrics http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady
  104. 104. Metrics http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady
  105. 105. the importance of google analytics to track and improve performance • + perks from fivvr • • http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-andsteady
  106. 106. Campaign Checkist Social Media What to Communicate: Create a schedule 2-5x / week Use an automated tool Eg Hootsuite Post interesting info – Not just pleas for money Not just updates Vary your targets Call to action 1/3-1/2 time 1. 2. 3. 4. 5. Your Progress Successes, Evidence of success Ammunition for your supporters Industry Info, Factoids People Info Use analytics and other metrics Traditional Marketing Pitch Events Press Releases Demos Testamonials Use an automated tool Plan, Schedule & Update Your Social Network is a Force Multiplier – but you have to give them help.
  107. 107. Success Factors
  108. 108. http://online.wsj.com/article/SB100008723963904438558045776010130940 84438.html?mod=googlenews_wsj#articleTabs%3Darticle
  109. 109. http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-moremoney-than-campaigns-that-dont.html
  110. 110. http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-moremoney-than-campaigns-that-dont.html
  111. 111. http://www.indiegogo.com/blog/2012/07/indiegogo-insight-winning-the-middle-game.html
  112. 112. successful campaigns raise, on average, 49% percent of their goals during the first and last 10% of the campaign length.
  113. 113. The most important secret is …
  114. 114. Showing Momentum (the perception of momentum)
  115. 115. The most obvious secret is …
  116. 116. Credibility = trust, competence & follow-through
  117. 117. www.propelarizona.com Crowdfunding Entrepreneurship & Innovation Arizona Economic Growth
  118. 118. www.propelarizona.com Slideshare/PropelArizona @PropelArizona Practical Crowdfunding Workshop
  119. 119. Crowdfunding is measured in … days
  120. 120. Entrepreneurship

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