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Crowdfunding 
ROBIN TEIGLAND & CLAIRE INGRAM 
STOCKHOLM SCHOOL OF ECONOMICS 
SEPTEMBER 2014 
ROBIN.TEIGLAND@HHS.SE 
CLAIRE...
Today’s presentation 
What is crowdfunding? 
Why crowdfund? 
Crowdfunding challenges? 
Q&A
What is crowdfunding? 
Accumulation of small investments in individual 
projects by large number of individuals (the 
“cro...
Four forms of crowdfunding 
Form Benefits for funders 
Donation-based 
Donation Intangible benefits. 
Reward-based 
Donati...
Market size 
Global crowdfunding almost doubled 2012 to 
2013 to USD 5.1 bln 
March 2014 Kickstarter passes USD 1 bln in...
Some Swedish platforms
Local Stockholm success story: 
Flippin’ Burgers 
Money raised: 
SEK 36,502 / 
€4,000 
Number of 
investors: 186 
Date fun...
Enabling local, small-scale solutions 
http://travel.cnn.com/best-americana-restaurants-europe-023346
Crowd equity taking off
P2P lending in the US and UK… 
•>USD 3.8 bln in personal 
loans since 2007 
• USD 750 mln growth each 
quarter 
•Now offer...
P2P lending in Sweden
P2B lending in Sweden
Ingram &Teigland, 2013 
Why crowdfund? 
Test market or establish user base 
Marketing & publicity for your product or se...
Investment Role and Type Investment Value 2012 
Angel 
Investors 
Invest large amounts, make few 
investments, take equity...
“It’s not just about the money.” 
685 people talking 
about product on 
social media 
Australia’s “Major Disaster Departme...
Measuring demand in advance
One step in the financing chain
Nesta
Democratizing innovation 
through access to capital 
Kickstarter 
• Women 13% more likely to to meet 
crowdfunding goals t...
Toborrow.se
For all ages - including teenagers 
http://www.indiegogo.com/projects/afripreneurs-and-the-leapfrog-effect
“Made in Africa” 3D printer (Togo) 
Winner of International 
Space Apps Challenge 
http://www.engineering.com/3DPrinting/3...
Crowdfunding challenges? 
Skills: How to ensure knowledge/awareness and necessary skills 
for crowdfunding? 
Lack of sup...
http://www.slideshare.net/eteigland/crowdfunding-in-sweden
Thank you! 
Questions? 
Image via NewYorker.com
If you love knowledge, 
set it free… 
Robin Teigland 
robin.teigland@hhs.se 
www.knowledgenetworking.org 
www.slideshare.n...
Appendix
Crowdfunding 2012 
Massolution 2013 
Est. 5.5 mln 
(Oct 2013) 
Worldwide 
$2.7 bln 
470k projects 
800+ platforms
Most popular crowdfunding activities 
Massolution 2013
Sold 400,000 watches already
Who are the funders? 
Educated experts(?) 
University degree 
Knowledge and previous experience in same field 
“In-cro...
Who are the funders? 
Educated experts(?) 
85% respondents have university degree (vs 16% 
women/22% men in general popu...
Crowd equity raising its head… 
• Politicians generally 
positive -> entrepreneurs 
+ job creation 
• But regulation is la...
Equity crowdfunding 
EU/EEA 
No country can require a prospectus to be prepared 
for rounds of <EUR 100 000 
For rounds...
http://www.fundable.com/blog/crowdfunding-infographic---the-jobs-act-explained
How to succeed? 
Choose right platform– and crowdfunding form 
Going global or local? 
What do you give in return (than...
Lots to think about.... 
Going global? Going local? 
Reward-based? l Niche product or 
service? 
l Global appeal? 
l What ...
Trends in crowdfunding 
Peer to peer lending 
Niche 
Community 
Hybrid platforms 
Enterprise sponsored 
Internal cor...
Crowdfunding for research
Strategic partnership 
+
Celebrities entering the scene 
Executive Producer Robert Redford 
Narrated by Jodie Foster 
Donald Trump’s crowdfunding s...
Internal corporate crowdfunding 
iFundIT 
More than 300 participants 
Entry-level workers to VPs 
Given $2,000 to inves...
Enabling entrepreneurs anywhere 
Ushahidi of Kenya 
Kenya
Venture capitalists are the 
travel agents of yesterday – 
here today, gone tomorrow. 
Venture capitalist 
in Silicon Vall...
What’s next?
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
Crowdfunding overview
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Crowdfunding overview

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Presentation in Sept 2014 in Stockholm Sweden for group of financial managers

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Crowdfunding overview

  1. 1. Crowdfunding ROBIN TEIGLAND & CLAIRE INGRAM STOCKHOLM SCHOOL OF ECONOMICS SEPTEMBER 2014 ROBIN.TEIGLAND@HHS.SE CLAIRE.INGRAM@HHS.SE
  2. 2. Today’s presentation What is crowdfunding? Why crowdfund? Crowdfunding challenges? Q&A
  3. 3. What is crowdfunding? Accumulation of small investments in individual projects by large number of individuals (the “crowd”) via or with help of Internet and social networks (De Buysere et al., 2012) Picture: FundedByMe
  4. 4. Four forms of crowdfunding Form Benefits for funders Donation-based Donation Intangible benefits. Reward-based Donation or pre-purchase Rewards in addition to intangible benefits. Equity-based Investment Return on investment if company does well. Rewards sometimes also offered and intangible benefits may motivate too. Debt-based Loan Repayment of loan with interest. Alternatively intangible benefits if loan given interest-free. Ingram & Teigland 2013
  5. 5. Market size Global crowdfunding almost doubled 2012 to 2013 to USD 5.1 bln March 2014 Kickstarter passes USD 1 bln in total pledges FundedByMe raised USD 10.5 mln to date By 2025, global crowdfunding could reach USD 90 to 96 bln (1.8 times today’s global VC industry) Growth potential greatest in emerging markets? USD 50 bln in China by 2025?
  6. 6. Some Swedish platforms
  7. 7. Local Stockholm success story: Flippin’ Burgers Money raised: SEK 36,502 / €4,000 Number of investors: 186 Date funded: September 2011 Sector: Food
  8. 8. Enabling local, small-scale solutions http://travel.cnn.com/best-americana-restaurants-europe-023346
  9. 9. Crowd equity taking off
  10. 10. P2P lending in the US and UK… •>USD 3.8 bln in personal loans since 2007 • USD 750 mln growth each quarter •Now offering business loans •Strategic alliance with Union Bank
  11. 11. P2P lending in Sweden
  12. 12. P2B lending in Sweden
  13. 13. Ingram &Teigland, 2013 Why crowdfund? Test market or establish user base Marketing & publicity for your product or service Faster time to market Funding (may not be large amount of money though) Screening device for investors Access greater pool of investors: further afield or people without right “connections” Skills, connections, and other resources?
  14. 14. Investment Role and Type Investment Value 2012 Angel Investors Invest large amounts, make few investments, take equity share. 3.3-3.9 billion SEK p.a. (approximation based on 2008 data) Soft Loans State loans at high interest rates that can be written off if enterprise dissolution. 2.4 billion SEK p.a. (ALMI alone) Venture Capitalists Invest large amounts, make few investments, take equity share. 1.8 billion SEK p.a. (2010 data) Crowdfunding Donation, pre-purchase/reward, or equity, depending on platform and entrepreneur’s preferences. Estimated 37 million SEK p.a. Ingram & Teigland 2013
  15. 15. “It’s not just about the money.” 685 people talking about product on social media Australia’s “Major Disaster Department” World’s largest telecom
  16. 16. Measuring demand in advance
  17. 17. One step in the financing chain
  18. 18. Nesta
  19. 19. Democratizing innovation through access to capital Kickstarter • Women 13% more likely to to meet crowdfunding goals than men • 67% of women-led technology ventures reached goals vs 30% of male-led ventures Indiegogo • Women 61% more likely than men to meet goals • Women account for 41% of projects that meet goals http://online.wsj.com/articles/kickstarter-closes-the-funding-gap-for-women-1407949759
  20. 20. Toborrow.se
  21. 21. For all ages - including teenagers http://www.indiegogo.com/projects/afripreneurs-and-the-leapfrog-effect
  22. 22. “Made in Africa” 3D printer (Togo) Winner of International Space Apps Challenge http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
  23. 23. Crowdfunding challenges? Skills: How to ensure knowledge/awareness and necessary skills for crowdfunding? Lack of support and strategic advice for funders/investors, entrepreneurs, public sector? How to deal with many small investors in equity crowdfunding? Regulation: How to protect investors without stifling innovation? Cross border investments? Secondary markets for crowd equity shares? Taxation issues for investors and entrepreneurs? Local market: How to protect/ensure local markets against foreign competition? Local platforms vs global platforms? Significant/sufficient level of funding from local market? How to better leverage “crowd” for resources? Source: Own research, Nesta
  24. 24. http://www.slideshare.net/eteigland/crowdfunding-in-sweden
  25. 25. Thank you! Questions? Image via NewYorker.com
  26. 26. If you love knowledge, set it free… Robin Teigland robin.teigland@hhs.se www.knowledgenetworking.org www.slideshare.net/eteigland @RobinTeigland If you like this presentation and would like to contribute to our research, we accept bitcoins: 14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC. Thank you!!!!!
  27. 27. Appendix
  28. 28. Crowdfunding 2012 Massolution 2013 Est. 5.5 mln (Oct 2013) Worldwide $2.7 bln 470k projects 800+ platforms
  29. 29. Most popular crowdfunding activities Massolution 2013
  30. 30. Sold 400,000 watches already
  31. 31. Who are the funders? Educated experts(?) University degree Knowledge and previous experience in same field “In-crowd” “Entrepreneurs” Risk lovers Skoglund & Stiernblad 2013
  32. 32. Who are the funders? Educated experts(?) 85% respondents have university degree (vs 16% women/22% men in general population, 2013) 42% had knowledge in same field as project they funded 49% reported to have been better at judging project quality due to previous experience “In-crowd” 47% of “the crowd” classified themselves as entrepreneurs – compared to only 7% of Swedish population (2012) 77% never bought shares in unlisted company before 41% risk lovers Skoglund & Stiernblad 2013
  33. 33. Crowd equity raising its head… • Politicians generally positive -> entrepreneurs + job creation • But regulation is lagging in most countries • US, Italy, Denmark changing regulations enabling equity Massolution 2013 Millions of dollars
  34. 34. Equity crowdfunding EU/EEA No country can require a prospectus to be prepared for rounds of <EUR 100 000 For rounds of >EUR 5 million, EU prospectus always required Sweden For rounds of >EUR 2.5 million, EU prospectus always required <150 ‘non-qualified’ investors without prospectus
  35. 35. http://www.fundable.com/blog/crowdfunding-infographic---the-jobs-act-explained
  36. 36. How to succeed? Choose right platform– and crowdfunding form Going global or local? What do you give in return (thank you, reward, pre-purchase, shares)? Keep in mind platform fees Define the concept Make it easily understood Make it personal? Feed the crowd Ensure initial critical mass (social media, newspapers) Keep followers up to date MAGIC
  37. 37. Lots to think about.... Going global? Going local? Reward-based? l Niche product or service? l Global appeal? l What are rewards? l How do you reach international audience – and stand out? l Community-specific product or service? l Local appeal? l What are rewards? l Does community know about you – can you reach them? l Local benefits Equity-based? l Looking to scale up? l How much equity? l How to value your project? l Looking to establish foothold? l How much equity? l How to value your project? l Local benefits – experience, connections etc?
  38. 38. Trends in crowdfunding Peer to peer lending Niche Community Hybrid platforms Enterprise sponsored Internal corporate crowdfunding LIVE! Economic development Celebrities …
  39. 39. Crowdfunding for research
  40. 40. Strategic partnership +
  41. 41. Celebrities entering the scene Executive Producer Robert Redford Narrated by Jodie Foster Donald Trump’s crowdfunding site Open to anyone
  42. 42. Internal corporate crowdfunding iFundIT More than 300 participants Entry-level workers to VPs Given $2,000 to invest over 8 week period Choose internal projects in which to invest
  43. 43. Enabling entrepreneurs anywhere Ushahidi of Kenya Kenya
  44. 44. Venture capitalists are the travel agents of yesterday – here today, gone tomorrow. Venture capitalist in Silicon Valley – June 2013
  45. 45. What’s next?

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