4. Crowdfunding in context
• Source of capital
• Engagement Platform
– Prototyping
– Consumer feedback
– Relationship Management
– Distribution Platform
5. Crowdfunding in context
“Availability of money is indispensable for the
functioning of an enterprise”
Rossi, Matteo, 2014. The New Ways to Raise Capital: An
Exploratory Study of Crowdfunding.
7. Crowdfunding
“Since 2007 the number of SME companies,
who have applied for and obtained funding from
banks, has dropped from 91% to 64% in 2014”
8.
9. Crowdfunding
• In 2014, the global market for video games had an
estimated value of >600 million dkk.
• Incl. Interactive products, the entire market is estimated
at >1700 million dkk and is one of the fastest growing
markets.
• Companies with digital products have access to global
market the size of Finland’s entire economy.
The sector is estimated to grow 50% over the next 5
years
10. Crowdfunding
Despite this...
Games (and interactive products) receive less support,
capital and grants than the movie industry
- The Danish movie industry receives 764 mill. dkk.
(during the next 5 years)
- The Danish interactive industry receive only receives
40 mill. Dkk. (5%)
Link
11. Crowdfunding
Primary factors:
- Unfavorable taxation models
- Traditional funding methods are too expensive
- It is difficult for outsiders to “evaluate the market
potential and entrepreneurs’ ability to execute”
15. Crowdfunding
• In 2012, 9,522 backers
pledged $2,437,429 to
help bring the Oculus rift
reach its goal.
• Acquired by Facebook for
$2 billion dollars in 2014
16. Crowdfunding
• In 2012, 68,929 backers
pledged $10,266,845
funded the Peeble e-
watch
• Goal reached in only 37
days
19. The Long Tail
• From ”hits” to ”misses”
• A departure from lumping consumers into
one-size-fits-all
• When consumers are offered infinite choice,
the true shape of demand is revealed
22. Donation/Reward-based CF
• Professionally executed
• Cultivate the crowd
(Online + Offline)
• Make it personal:
“People fund people, not ideas”
• Videotape the passion:
“romance the crowd”
28. Communicative Strategy
Narrative driven communication matters:
- Story telling (Underdog)
- Pathos
- Provide updates (Provide an on-going experience)
- Nurture a community
- Make it shareable
31. References:
Gregersen, Thomas, 2014. Making People Pay: An in-depth qualitative study of
investor motivations in crowdfunding ventures.
Master of Arts in Corp. Comm Aarhus University.
Munkøe, Mikkel Malthe & Schou Madsen, Sigurd, 2015. Crowdfunding i Danmark
2015. København: Dansk Erhverv.
Jan Neiiendam, Spilbranchen behøver risikovillig kapital. [Webpage].
Available from: http://www.business.dk/debat/spilbranchen-behoever-risikovillig-
kapital
[accessed Tuesday 10 November 15]
Rossi, Matteo, 2014. The New Ways to Raise Capital: An Exploratory Study of
Crowdfunding. International Journal of Financial Research, 5 (2), p. 1-18.
Many small brooks make a strong river. Little strokes fell great oaks
Think NGOs, non-profit organizations, humanitarian orgs.
the process of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, and especially from an online community, rather than from traditional employees or suppliers
Crowd+Outsourcing = crowdsourcing
Wikipedia, threadless t-shirts
Some start-up companies can succeed solely on the basis of “founders' personal savings” (Bhidé, p. 110) while most other start-ups require significantly more money
Investorerne har problemer med at forstå sig på computerspillene.
»Der er en enkel forklaring på det: Et videospil passer ikke ind i de regneark, som en investor typisk har.
Paradoksalt nok har spilbranchen vist sig bedre til at skabe arbejdspladser end filmbranchen - faktisk så beskæftiger spilfirmaerne 62 pct. flere personer end filmstudierne, der kun har 446 fuldtidsansatte.
An important premise in bank loans is that banks often attempt to reduce their risk of their lending by holding lenders responsible through collateral. This is however in most instances based on tangible assets as such will allow banks to recoup their debt should lenders go bankrupt and become unable to pay their debt. This emphasis on tangible assets can however be a possible problem for many start-up companies in new industries and mean that they either are entirely unable to obtain loans or are forced to do so under unfavorable terms that can hamper growth.
The term long tail has gained popularity in recent times as describing the retailing strategy of selling a large number of unique items with relatively small quantities sold of each—usually in addition to selling fewer popular items in large quantities
They found that a large proportion of Amazon.com's book sales come from obscure books that were not available in brick-and-mortar stores. 36.7% of Amazon's sales while the consumer surplus generated by niche books has increased at least fivefold from 2000 to 2008
This strategy allow companies to realize significant profit out of selling small volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items
Television on demand, pay-per-view and even premium cable subscription services such as HBO and Showtime open up the opportunity for niche content to reach the right audiences, in an otherwise mass medium
Traditional IR:
Traditional IR:
Shared experiences – value becomes embedded through interactions – co-collaboration/post-modern consumption. Value is whatever consumers consider of value. Help/guide them towards the “intended value”
“entrepreneurs spend less time on unimportant or irrelevant aspects and instead can direct their attention towards the campaign aspects proven to be of value to the backers, rather than what entrepreneurs assume would be of value to backers.”
(rewards) a simple recognition is in many instances significant – current reward schemes are based on faulty assumptions
Shared experiences – value becomes embedded through interactions – co-collaboration/post-modern consumption. Value is whatever consumers consider of value. Help/guide them towards the “intended value”
“entrepreneurs spend less time on unimportant or irrelevant aspects and instead can direct their attention towards the campaign aspects proven to be of value to the backers, rather than what entrepreneurs assume would be of value to backers.”
(rewards) a simple recognition is in many instances significant – current reward schemes are based on faulty assumptions
Shared experiences – value becomes embedded through interactions – co-collaboration/post-modern consumption. Value is whatever consumers consider of value. Help/guide them towards the “intended value”
“entrepreneurs spend less time on unimportant or irrelevant aspects and instead can direct their attention towards the campaign aspects proven to be of value to the backers, rather than what entrepreneurs assume would be of value to backers.”
(rewards) a simple recognition is in many instances significant – current reward schemes are based on faulty assumptions
A person referring someone to your project/campaign is free – does not cost anything. WOM referrals are better than any other form of marketing. (90% of us trust peer recommendations while only 14% trust advertisement, Qualman, p. 16)
Happy “customers” = referrals. Make sure that your backers are happy. Use communication/interaction that gives them satisfaction. As touched upon in my discussion there is significant value, for both project creators and backers, if campaigns are open for input and accommodate backers suggestions (p. 68) – value both in regards to products (improved through input) and the narrative experience (co-creation).
Track and reward referrals
Wrap up:
Successful crowdfunding campaigns appear to be based on two stages:
1st stage: Planned communication prior to launch, that seeks to reach opinion leaders, blogs, websites etc. This communication should probably have a more formal tone (corporate communication)
+ showcase professionalism (logos)(investor relations)
2nd stage: My research (logos+pathos)(stakeholder management)(The working consumer)
If you somehow also can make backers engage in word of mouth “3rd link” (from opinion leaders/blogs/popular section to primary backers to friends and family) it could make a difference and be the decision factor between a successful crowdfunding campaign and a stalled campaign unable to reach its goal