Crowdfunding	
  101:	
  

Understanding	
  the	
  Many	
  Forms	
  of	
  
Fundraising	
  from	
  the	
  Masses	
  
Elizabe...
www.financeforfood.com	
  
Peer-­‐to-­‐Peer	
  Lending	
  
Small	
  dollars	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
...
Peer-­‐to-­‐Peer	
  Lending	
  Plaorms	
  

www.financeforfood.com	
  
Peer-­‐to-­‐peer	
  lending	
  

www.financeforfood.com	
  
Kiva	
  Zip	
  Trustees	
  in	
  PA	
  

www.financeforfood.com	
  
Online	
  Fundraising	
  Plaorms	
  
	
  

	
  

www.financeforfood.com	
  
Online	
  Crowdfunding	
  
Small	
  dollars	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
 ...
Helpful	
  to	
  Have…
	
  
• 
• 
• 
• 
• 
• 

A	
  retail	
  business	
  	
  
Lots	
  of	
  customers	
  that	
  know	
  ...
Crowdfunding:	
  3	
  Different	
  Types!	
  
1.	
  SoliciAng	
  gigs	
  
	
  
2.	
  Pre-­‐selling	
  /	
  	
  
Community	
...
2	
  Crowdfunding	
  Models
	
  
1.  All-­‐or-­‐Nothing	
  (eg,	
  Kickstarter)	
  
– 
– 
– 

“Risk”	
  
Less	
  expensive...
Crowdfunding:	
  3	
  Different	
  Types!	
  
1.	
  SoliciAng	
  gigs	
  
	
  
2.	
  Pre-­‐selling	
  /	
  	
  
Community	
...
Design	
  your	
  reward	
  scheme
	
  

www.financeforfood.com	
  
EnAce	
  Backers	
  with	
  Rewards
	
  
Primal	
  Pastures	
  Farm’s	
  reward	
  scheme:	
  
•  $5+	
  à	
  “Thank	
  Y...
Get	
  CreaAve!
	
  
More	
  Primal	
  Pastures	
  Farm	
  rewards:	
  
•  $350+	
  à	
  Doodads	
  +	
  farm	
  tour	
  ...
Gig	
  Raising	
  –	
  CauAons
	
  
•  Easier	
  for	
  nonprofits	
  or	
  groups	
  of	
  farmers	
  
working	
  together...
Community	
  Supported	
  Models	
  

www.financeforfood.com	
  
Crowdfunding:	
  3	
  Different	
  Types!	
  
1.	
  SoliciAng	
  gigs	
  
	
  
2.	
  Pre-­‐selling	
  /	
  	
  
Community	
...
www.financeforfood.com	
  
www.financeforfood.com	
  
Pre-­‐Selling	
  Online	
  –Rewards	
  
	
  
•  Single	
  products	
  
•  Product	
  packs	
  
•  Product	
  line	
  subsc...
Pre-­‐Selling	
  Online	
  –	
  Reward	
  Tips	
  
	
  
•  Offer	
  discounts	
  to	
  early	
  backers	
  
•  Consider	
  ...
Pre-­‐Selling	
  Online	
  –	
  CauAons
	
  
•  Note	
  your	
  state’s	
  laws	
  around	
  gig	
  
cerAficates	
  
•  Cas...
How	
  Much	
  Can	
  You	
  Raise?
	
  

www.financeforfood.com	
  
How	
  Much	
  Can	
  You	
  Raise?
	
  

www.financeforfood.com	
  
Asking	
  the	
  Public	
  for	
  Loans	
  

www.financeforfood.com	
  
Crowdfunding:	
  3	
  Different	
  Types!	
  
1.	
  SoliciAng	
  gigs	
  
	
  
2.	
  Pre-­‐selling	
  /	
  	
  
Community	
...
Direct	
  Public	
  Offerings	
  
Small	
  dollars	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	...
Direct	
  Public	
  Offerings	
  (DPOs)	
  
•  Not	
  a	
  form	
  of	
  security;	
  it’s	
  a	
  way	
  for	
  a	
  
comp...
Equity	
  Financing	
  
Small	
  dollars	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
...
Equity	
  Financing	
  
•  You	
  sell	
  stock	
  in	
  your	
  company.	
  Investors	
  
become	
  shareholders,	
  and	...
Equity	
  InnovaAons	
  
•  Non-­‐voAng	
  preferred	
  
stock	
  
•  Stock	
  doesn’t	
  appreciate	
  
in	
  value	
  as...
Pop	
  Quiz!	
  
What	
  are	
  the	
  3	
  Different	
  Types	
  	
  
of	
  Crowdfunding?	
  

www.financeforfood.com	
  
Pop	
  Quiz!	
  
What	
  are	
  the	
  3	
  Different	
  Types	
  	
  
of	
  Crowdfunding?	
  
1.  SoliciAng	
  gigs	
  
2....
What	
  Worked	
  /	
  
Didn’t	
  Work	
  for	
  
You?	
  
	
  
QuesAons?	
  
	
  
elizabeth@	
  
financeforfood.com	
  
41...
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Crowdfunding 101 for Farms & Food-Based Businesses

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What is crowdfunding, anyway? This umbrella term refers to a number of innovative fundraising techniques – online and otherwise – in which you raise small amounts of money from a large number of people, and many of these models can be helpful for farms and farm-based businesses. In this session we’ll cover the many forms of crowdfunding – including online fundraising platforms (such as Kickstarter and IndieGoGo), peer-to-peer lending, community supported pre-sales models (such as CSAs, subscription offerings and gift certificates), direct public offerings (DPOs), and more. Come away with a basic understanding of how the different forms of crowdfunding work, the laws that apply in each case, which crowdfunding opportunities might be a good fit for your own unique situation, and tips for success.

Presented by Elizabeth Ü at PASA's 23rd Annual Farming for the Future Conference: Letting Nature Lead. State College, PA. February 7, 2014

Published in: Economy & Finance
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Crowdfunding 101 for Farms & Food-Based Businesses

  1. 1. Crowdfunding  101:   Understanding  the  Many  Forms  of   Fundraising  from  the  Masses   Elizabeth  Ü   Founder  &  ExecuAve  Director,  Finance  for  Food     Author,  Raising  Dough:  the  Complete  Guide  to  Financing  a   Socially  Responsible  Food  Business     PASA’s  Farming  for  the  Future  Conference    February  7,  2014  in  State  College,  PA  
  2. 2. www.financeforfood.com  
  3. 3. Peer-­‐to-­‐Peer  Lending   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   LiRle  paperwork                                                                  Lots  of  paperwork   Do  it  yourself                              Requires  professional  help   Easy  to  manage                                          Care  and  feeding  over  Ame   Good  for  introverts                          Takes  community  organizing   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  
  4. 4. Peer-­‐to-­‐Peer  Lending  Plaorms   www.financeforfood.com  
  5. 5. Peer-­‐to-­‐peer  lending   www.financeforfood.com  
  6. 6. Kiva  Zip  Trustees  in  PA   www.financeforfood.com  
  7. 7. Online  Fundraising  Plaorms       www.financeforfood.com  
  8. 8. Online  Crowdfunding   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   LiRle  paperwork                                                                  Lots  of  paperwork   Do  it  yourself                              Requires  professional  help   Easy  to  manage                                          Care  and  feeding  over  Ame   Good  for  introverts                          Takes  community  organizing   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  
  9. 9. Helpful  to  Have…   •  •  •  •  •  •  A  retail  business     Lots  of  customers  that  know  and  love  you   A  mailing  list  /  e-­‐newsleRer   ConnecAons  to  tradiAonal  media   Social  media  savvy  +  lots  of  followers  &  “likes”   Someone  who  can  focus  on  campaign  full  Ame   www.financeforfood.com  
  10. 10. Crowdfunding:  3  Different  Types!   1.  SoliciAng  gigs     2.  Pre-­‐selling  /     Community  Supported   models     3.  Selling  securi'es  to  a  large  number  of   investors  who  expect  a  financial  return     www.financeforfood.com  
  11. 11. 2  Crowdfunding  Models   1.  All-­‐or-­‐Nothing  (eg,  Kickstarter)   –  –  –  “Risk”   Less  expensive   More  moAvaAng   2.  Keep  What  You  Raise   –  –  –  Less  risky   PotenAal  laziness   Graveyard  of  sorry  projects?   www.financeforfood.com  
  12. 12. Crowdfunding:  3  Different  Types!   1.  SoliciAng  gigs     2.  Pre-­‐selling  /     Community  Supported   models     3.  Selling  securi'es  to  a  large  number  of   investors  who  expect  a  financial  return     www.financeforfood.com  
  13. 13. Design  your  reward  scheme   www.financeforfood.com  
  14. 14. EnAce  Backers  with  Rewards   Primal  Pastures  Farm’s  reward  scheme:   •  $5+  à  “Thank  You”   •  $15-­‐50+  à  Name  on  Founder’s  Wall,  doodads   •  $75+  à  “Local  Pack”  (doodads  +  meat  &   eggs…  or  just  the  non-­‐perishables)   •  $110+  à  Apron   •  $250+  à  Year’s  supply  of  chicken   www.financeforfood.com  
  15. 15. Get  CreaAve!   More  Primal  Pastures  Farm  rewards:   •  $350+  à  Doodads  +  farm  tour   •  $500+  à  Doodads  +  Mentor  Day   •  $1200+  à  Breakfast  on  the  Farm   •  $5000+  à  Golden  Egg:  Own  flock  of  chickens   Limited  ediAon  or  first-­‐come-­‐first-­‐save  rewards   www.financeforfood.com  
  16. 16. Gig  Raising  –  CauAons   •  Easier  for  nonprofits  or  groups  of  farmers   working  together   •  Beware  “crowdfunding  faAgue”   •  Gig  Taxes:  $14k  max  per  person  per  year   before  giver  owes  taxes   •  Make  sure  you  will  make  money!   www.financeforfood.com  
  17. 17. Community  Supported  Models   www.financeforfood.com  
  18. 18. Crowdfunding:  3  Different  Types!   1.  SoliciAng  gigs     2.  Pre-­‐selling  /     Community  Supported   models     3.  Selling  securi'es  to  a  large  number  of   investors  who  expect  a  financial  return     www.financeforfood.com  
  19. 19. www.financeforfood.com  
  20. 20. www.financeforfood.com  
  21. 21. Pre-­‐Selling  Online  –Rewards     •  Single  products   •  Product  packs   •  Product  line  subscripAons   •  CSA  memberships   www.financeforfood.com  
  22. 22. Pre-­‐Selling  Online  –  Reward  Tips     •  Offer  discounts  to  early  backers   •  Consider  rewards  relevant  to  your   wholesale  customers   •  Set  appropriate  pricing   •  Take  delivery  costs  into  consideraAon   www.financeforfood.com  
  23. 23. Pre-­‐Selling  Online  –  CauAons   •  Note  your  state’s  laws  around  gig   cerAficates   •  Cash  flow  consideraAons   – Stagger  start  dates   – Offer  discount  on  total  purchase  instead  of   straight  gig  cerAficates   •  Make  sure  you  will  make  money!   www.financeforfood.com  
  24. 24. How  Much  Can  You  Raise?   www.financeforfood.com  
  25. 25. How  Much  Can  You  Raise?   www.financeforfood.com  
  26. 26. Asking  the  Public  for  Loans   www.financeforfood.com  
  27. 27. Crowdfunding:  3  Different  Types!   1.  SoliciAng  gigs     2.  Pre-­‐selling  /     Community  Supported   models     3.  Selling  securi'es  to  a  large  number  of   investors  who  expect  a  financial  return     www.financeforfood.com  
  28. 28. Direct  Public  Offerings   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   LiRle  paperwork                                                                  Lots  of  paperwork   Do  it  yourself                              Requires  professional  help   Easy  to  manage                                          Care  and  feeding  over  Ame   Good  for  introverts                          Takes  community  organizing   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  
  29. 29. Direct  Public  Offerings  (DPOs)   •  Not  a  form  of  security;  it’s  a  way  for  a   company  to  offer  a  security   www.financeforfood.com  
  30. 30. Equity  Financing   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   LiRle  paperwork                                                                  Lots  of  paperwork   Do  it  yourself                              Requires  professional  help   Easy  to  manage                                          Care  and  feeding  over  Ame   Good  for  introverts                          Takes  community  organizing   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  
  31. 31. Equity  Financing   •  You  sell  stock  in  your  company.  Investors   become  shareholders,  and  they  want  their   money  back  at  some  point.   •  …they  usually  also  want  some  control  over   how  you  run  the  company  in  the  meanAme.   www.financeforfood.com  
  32. 32. Equity  InnovaAons   •  Non-­‐voAng  preferred   stock   •  Stock  doesn’t  appreciate   in  value  as  company  grows   •  Investors  receive  fixed   dividend   www.financeforfood.com  
  33. 33. Pop  Quiz!   What  are  the  3  Different  Types     of  Crowdfunding?   www.financeforfood.com  
  34. 34. Pop  Quiz!   What  are  the  3  Different  Types     of  Crowdfunding?   1.  SoliciAng  gigs   2.  Pre-­‐selling   3.  Selling  securiAes   www.financeforfood.com  
  35. 35. What  Worked  /   Didn’t  Work  for   You?     QuesAons?     elizabeth@   financeforfood.com   415.891.9194   @foodfinance  

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