Crowdfunding: what, why, how!


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Understand what is crowdfunding, what are the best practices, what to take under consideration when developing a crowdfunding campaign and why is this important!

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  • "Your backers become your built-in marketing team and crew of brand evangelists, helping to promote your project to all their friends and contacts."
  • "Your backers become your built-in marketing team and crew of brand evangelists, helping to promote your project to all their friends and contacts."
  • Crowdfunding: what, why, how!

    1. 1. Kristina Kapanova 2012
    2. 2. CROWDFUNDING is specific type ofcrowdsourcing where creators raise funds throughcrowdfunding platforms.The objective is “the financing of a project of aventure by a group of individual instead ofprofessional parties” (Larralde,B., Schwienbacher, A.2010).Crowdfunding occurs without any intermediary:artists/entrepreneurs approach the crowd to raisemoney directly from individuals“The audience, now more than ever, can directly puttheir money where their preferences lie, instead ofrelying on an institution to make decisions for them.”
    3. 3. JOACHIM HEMER in his paper "A snapshot onCrowdfunding“ identifies several types ofcrowdfunding:1. Crowd donation – altruistic donation, where the donor expects nothing in return.2. Crowd Sponsoring – the entrepreneur and the donator agree on a predetermined reward the former one is to give the sponsor after completion of the project.3. Crowd preselling – through crowdfunding something is to be produced – book, movie, music, product or software, etc. The rewards is early delivery of the produced product.4. Crowd Lending – the investor lends money to the Hemer, Joachim, (2011), A snapshot on entrepreneur and expects to receive his lending crowdfunding, No R2/2011, Working money and any possible interest . Papers "Firms and Region", Fraunhofer5. Crowd Equity – crowdfunder invest in shares in a Institute for Systems and Innovation venture, receiving dividends, voting rights, etc. Research (ISI)
    4. 4. 1. Raise funding bypassing the 8. Direct access to audience traditional channels. 9. New aspects of the relationship2. Involving people during the early between artist and audience stages of development – engages 10. Through Crowdfunding you can test, supporters. promote and market the product.3. Raise awareness for the 11. Your funders become your most work/product. active advertisers.4. Retain full creative control5. Keep 100% copyright.6. Choice and flexibility7. Gain better understanding of consumers’ tastes.
    5. 5. Kikstarter IndieGoGo RockethubThe biggest crowdfunding For funding projects in the creative For funding projects in theplatform. fields – from photography, film, creative fields – fromFor funding projects in the creative publishing to technology. photography, film, publishing tofields – from photography, film, You can choose between Fixed or technology.publishing to technology. Flexible funding. With fixed, you After the project deadline hasYour campaign needs to be receive the funding only if the passed, you can keep all thesuccessful in order to keep the campaign was successful, while raised funds.funds. with flexible, you keep whatever Rockethub has also crowdfunding have been raised. section for science projects.
    6. 6. Music Non-Profit Equity PlatformsCrowdfunding Platforms, allowing Crowdfunding platforms that try to help Equity crowdfunding will allowmusicians to raise money to social entrepreneurs change the world. entrepreneurs to sell sharesproduce, record ,distribute their Kiva - people make charitable, interest- directly to, make concerts, etc. free loans to entrepreneurs from After the passing of JOBS act,SelllABand – complete flexibility in developing countries many equity crowdfundingfunding plans, no right holding 33needs: for social enterprises platforms are expected to launchArtistShare – have to be approved, Advert Activist-U.K.-based platform that in the near future.not clear funding model helps fund advertising campaigns forPledgeMusic – All or Nothing funding social causes.
    7. 7. 1. How much money do you want to raise?2. How many days do you need and when do you want to run your campaign?3. What platform do you want to run your campaign on?4. What is the fee of the crowdfunding platform, if you use one5. What is the transaction fee from you financial institution6. What is the cost of your perks including production and shipping
    8. 8. When choosing a crowdfunding platform –be aware of its strengths and weaknesses.Benchmark your project against similarcampaigns in your chosen category.Take advantage from advice from othercrowdfunders – their insight is invaluable.Build clear and strong call to action. Create asense of urgency around your campaign.Establish early on what makes your productunique and compelling enough that peoplewould want to put their money into it!
    9. 9. Understand your target audience How often are you posting updates?Generally your pitch will consists of: Video and Can backers easy and successfully share your projectWritten Introduction. to their social networks?Decide on the type of approach you will take to Do you have clear and exciting reward tier? Are theyintroduce your message - humorous, serious, quirky, various tier levels backers to choose from?imaginative, straightforward, etc. Would you develop a website/blog for the projectTest how easy it is to read your proposal and whether where you can post updates, relevant information,all the key details and features are described. etc.Is the pitch confusing or easy to grasp even if thebacker is skimming your message?Decide on the advertising and marketing activities topromote your project. What are the most suitablesocial media channels to be utilized? Reference: Steinberg,S.DeMaria,R. Kimmich,J. Migicovsky,E. (2012)The Crowdfunding Bible: How to Raise Money for Any Startup, Video Game or Project. READ.ME
    10. 10. Twitter@k_kapanovaGoogle+Kristina