This presentation has been presented on September 19th 2016 in Stockholm: Key elements: Types of crowdfunding, Investor behavior, the difference between Reward, Equity, P2P Lending, Crowdinvestment, Lending in Crowdfunding, How to choose a platform, Fintech, Kickstarter, FundedByMe, Unicorn, StartUp, Funding, Entrepreneurship.

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Entrepreneurial Finance, September 19th 2016
Crowdfunding – still a niche financial product?
Stockholm School of Economics
Center for Competitiveness and Strategy
Michal Gromek
Researcher on Crowdfunding

2. Strictly Confidential
V. Get your message accross
IV. Practical aspect of a campaign (Does and Don‘t)
III Be successful in Crowdfunding
2
Let’s do this J
I. Personal Background
II. How do you benefit from Crowdfunding?
VI. Bonus

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EDUCATION JOURNALISM PUBLIC SERVICE PROJECT
MANAGMENT
OUTLOOK
3
Michał Gromek – Researcher at HHS
michal@phdstudent.hhs.se
6+ years experience
Founding member of
the EYP
Head of int. affairs
German Youth Press
Trainer, Photograph
3+ years experience
Invest in Poland
Ministry of Foreign
Affairs
InvestGDA
Invest in Pomerania
5+ years experience
Euro2012
Rocket Internet
FundedByMe
> Bayer & WNS, Scania
To be continued
PhD student in Fintech
& Crowdfunding
Funded
Two Postgraduate
studies
in project mgt.
Bachelor of European
Economics
Master of Science,
Int. Management

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Recent publications / projects
co founder
FinTechPartner.net
“It is high time for public authorities
in Sweden to define Crowdfunding
by law, create a national discussion
forum and lead us out of this
medieval dungeon of shady
legislation.”
Current State of Crowdfunding in
Europe – Sweden
Link to the report
Link to the report

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“I am collecting money
for a car”
I have a brilliant idea, but …
“I can’t because”
“I can’t …”
“Almi, said NO”
“I have to get a good job
first”
“nobody will give me
funding anyway ”
“I have to save
funding first”
Those who - really want, search for a way.
Those, who don’t look for a reason
- Miłosz Brzeziński

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CROWFUNDING IS:
accumulation of small investments in individual projects by
large number of individuals (“the “crowd”) with the help of
internet or social networks (De Buyer et al, 2012)
+2009 > Credit crunch increased
the need for sharing economy

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CROWFUNDING IS:
144% - GROWTH RATE OF ALTERNATIVE FINANCE 2013>2014
449% - CAGR GROWTH EQUITY CROWDFUNDING – NORDICS
122 706 EUR – AVERAGE MONEY RAISED IN SE (ECF)
46 – AVERAGE AMOUNT OF NEW INVESTORS PER CAMPAIGN
551 EURO – MEDIAN INVESTMENT
5935 EURO – AVERAGE INVESTMENT
Source:
Understanding Alternative Finance, University of Cambridge 2014
Successful Equity Crowdfunding Campaigns – A Nordic Review, FundedByMe, 2015

8. Strictly Confidential
V. Get your message accross
IV. Practical aspect of a campaign (Does and Don‘t)
III Be successful in Crowdfunding
8
Let’s do this J
I. Personal Background
II. How do you benefit from Crowdfunding?
VI. Bonus

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Crowdfunding left it’s niche and it is a real tool
VC
Bussiness
Angels
F&F
Public Funds

10. Strictly Confidential 10Source: Zeit Online, Bank de Espana, Financial Times Online, The Guardian
Online, Liberum
Crowdfunding
Corporate Social
Responsibility
Crowdfunding – you back
ideas from companies to give
something to the “society” (plus
their PR J)
Real Estate Crowdfunding
The Crowd collects funding for
construction of a Real Estate
and shares profit from sales.
B2C Crowdlending -
Companies receive a cheaper
loan and knowledge from
investors and investors solid
ROR. Legal entity vs. natural
persons.
Peer-to-peer loan based
crowdfunding for
consumers (C2C) People
lend money directly to the
other people. Both are natural
persons.
Reward based
crowdfunding.
People back up projects and
expect a reward in return.
Equity based crowdfunding.
Entrepreneurs are willing to
split the shares of the
company in order to get know-
how or financial support from
investors.
– FT.com
Donation based crowdfunding.
You back up project and expect
nothing in return.
Lending and equity-based crowdfunding are
disruptive technologies for the banking
industry with the potential to displace banks
as primary source of funding.
– Bank de Espana
Crowdfunding is more than one product & one customer

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Crowdfunding is more than one product & one customer
Source: Zeit Online, Bank de Espana, Financial Times Online, The Guardian
Online, Liberum
Corporate Social
Responsibility
Crowdfunding – you back
ideas from companies to give
something to the “society” (plus
their PR J)
Real Estate Crowdfunding
The Crowd collects funding for
construction of a Real Estate
and shares profit from sales
B2C Crowdlending -
Companies receive a cheaper
loan and knowledge from
investors and investors solid
ROR. Legal entity vs. natural
persons.
Peer-to-peer lending for
individual crowd. People
lend money directly to the
other people. Both are natural
persons.
Reward based
crowdfunding.
People back up projects and
expect a reward in return.
Equity based crowdfunding.
Entrepreneurs are willing to
split the shares of the
company in order to get know-
how or financial support from
investors.
Donation based crowdfunding.
You back up project and expect
nothing in return.
Lending and equity-based crowdfunding are
disruptive technologies for the banking
industry with the potential to displace banks
as primary source of funding.

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Example of FundedByMe’s development
Example: FundedByMe Crowdfunding time-line in Sweden:
2Q 2013 20152Q2Q2012 2014 2Q 4Q2011
Reward based
Product
Equity based
product
Singapore investment
18th of February 2015 – Crowdlending SE
Crowdlending project in DE
FBM supported 423 projects since Q4 2011, with 58 440 investors from 171 countries

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Types of Crowdfunding
Rewardbased crowdfunding
Reward based crowdfunding = average backing 50 Euro
Reward-based = the review of the proof of concept
•19-25 years
•mostly no entrepreneur
•no real business experience
•some networks
•usually not profitable
– report 05.2016

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Crowdfunding left it’s niche and it is a real tool
Strong cause
and extensive
social
network
Blank Spot Projects (reward-based crowdfunding)

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Types of crowdfunding
Equitybased crowfunding
Equity-crowdfunding = average investment 5935 Euro
Equity based Crowdfunding – registered companies before growth phase
•25- 33 years
•Entrepreneurs
•Struggle to understand the
process
•How much is my company worth?
•Usually still not profitable
– research 10.2015
Equity

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Crowdfunding left it’s niche and it is a real tool
Company
has been
incorporated
in December
2015
Foover (equity-based crowdfunding overfunded now)

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Types of crowdfunding
in case you have a data base of your clients start with data mining
Loan based crowdfunding – average lending 557 Euro
Peer-to-peer lending
•82% - male
•33-44+ years
•already entrepreneur since at least
1,5 years
•Predictable behaviour vs. scoring
•Turnover over not less than 120.000
SEK
– research 12.2016
Equity
Loans

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Crowdfunding left it’s niche and it is a real tool
Proof of
concept
+
Profitability
AddMovement AB (loan based crowdfunding)

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Example: Payments curve of Rewardbased projects
§Entrepreneurs are
getting very engaged
in the first five days.
§
§Plan your marketing
tasks for 45 days
§Marketing is not only
social media. And
social media is not
only Facebook.
Payment curve - Nordic Projects
This is a natural payment curve of Rewardbased projects
1 45Time in days
$-AmountoffundingprocessedviatheFBM$$$

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Example: Alternative payment curve = activities
§This project planned
four activities.
§What would happen
in case they would
plan 15 activities.
§Try to reach as many
“target groups” as
possible with different
communication.
Payment curve - Nordic Projects
The user is responsible to drive his/her campaign, and they do J
1 45Time in days
$-AmountoffundingprocessedviatheFBM$$$
Newsletter
Interview DI
Offline
presentation
at school
Investors Pitch

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Example: Alternative payment curve = gender
§Female treat campaigns
more like elections
§Male user tend to treat
campaigns more like a
“Master thesis”
Gender differences of entrepreneurs You need to this this:
There are gender differences between entrepreneurs
– new report 20.10.2015 (in cooperation with Ali M, KTH)
1 45Time in days
$-AmountoffundingprocessedviatheFBM$$$
Investors Pitch

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In which segment is your business idea?
§25-33 years (AB public /
private)
§entrepreneurs do struggle
to understand the share
issue process
§How much is my
company worth?
§usually still not profitable
§19-25 years mostly not
entrepreneurs yet.
§no real business experience
some networks usually not
profitable
Reward based
user
Equity based user
Crowdlending user SE
2+ years experience
in business
1-5 experience
in business
§30+ Entrepreneurs Need
funding to develop the
business
§Rather service and not
production
§Have a track record and
positive feedback from
scoring agencies like
Bisnode (Solidited) / UC
§usually still not profitable
§– research 06.2016

23. Strictly Confidential
V. Get your message accross
IV. Practical aspect of a campaign (Does and Don‘t)
III Be successful in Crowdfunding
23
Let’s do this J
I. Personal Background
II. How do you benefit from Crowdfunding?
VI. Bonus

24. Strictly Confidential 24
How to choose a right platform:
International connection? –
From how many countries
investors can invest into your
project?
PR / Offline marketing
activities
Which types of PR and Offline
marketing activities does the
platform offer.
Ofterta Offline
Which offline service is being
offered (additional investors
pitches, offline meetings with
VC etc.)
How many project have been
financed? How many project
are being financed out of 100%
and which types of projects are
they?
Success fee –.
How high the success fee for the
platform for a financed project.
Taxes and support
Which types of support do you
receive in terms of tax and legal
services?
Listing fee
How high is the listing fee for your
project (between 0 Euro and 14.500
Euro)
Available staff
How strongly available is the staff
of the platform, can you visit them?

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6 Stages of Crowdfunding
Funds
pay
out
Decision stage
Delivery
Project is live on
the platform live
45 days
Pitch
Creation
Pitch
Investor
management
stage

26. Strictly Confidential
V. Get your message accross
IV. Practical aspect of a campaign (Does and Don‘t)
III Be successful in Crowdfunding
26
Let’s do this J
I. Personal Background
II. How do you benefit from Crowdfunding?
VI. Bonus

27. Strictly Confidential 27
Example: Rewardbased Crowdfunding examples
Steps to follow:
§Upload a campaign
Present the product Set
the goals for rewards
§Choose the team Do
plenty of offline and online
promotion for 45 days.
§ Don’t give up; a
campaign is more like an
election campaign and not
a Bachelor thesis.
§ It takes you about 12
days to prepare a good
campaign.
§It takes the platform
about 2 x 7 days to give
you feedback.
Campture your Mind - SSE example (change of the name: Nacka)
You can upload a campaign with your idea …. today.

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Example: Rewardbased Crowdfunding examples
§Products, that the
user can identify with
§Convincing
presentation
§Common- sense
rewards for the
product
§Show that you a
passion towards the
product..
§Keep in mind that
users are located in
different types of the
world.
Passionplanner.com - US experience You need this:
It is every time more efficient, in case you can present a prototype
Target: $ 19.000
Final result: $48,030 – the
comission of the platform.
Pay in $25 and receive
you own personal passion
planner

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Example: RAW World (rewardbased kickstarter)
§Make sure, that your title is
understandable
§You main picture should be
convincing
§Your video should be
straight forward, telling what
do you want to achieve and
why.
RAW World You need this:
It is not enough to upload a campaign and wait for a miracle

30. Strictly Confidential
V. Get your message accross
IV. Practical aspect of a campaign (Does and Don‘t)
III Be successful in Crowdfunding
30
Let’s do this J
I. Personal Background
II. How do you benefit from Crowdfunding?
VI. Bonus

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Source:https://www.linkedin.com/pulse/business-startup-failure-reasons-learnings-kevin-vyavahare

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Summary of the key aspects
§Contract key messages.
§Give your best to bring
your messages across.
§The most expensive
solutions are not every
time the best.
§Use your time wisely for
online and offline
communication.
§Choose the right platform
for your project.
§Make sure, to choose the
right time for your project.
Make sure that you met
with former platform
winners / losers.
§Review the research that
exists on your topic.
§Make sure that you can
deliver on time.
§Adjust different types of
crowdfunding to a different
stage of your company.
§Start early and approach
the project with long-term
preparation.
§Think about your possible
investor groups.
KNOW YOUR NEEDS
Work on communication
Make smart choices

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