Disruptive Potential of Crowdfunding
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My presentation on crowdfunding at the The Sweden-U.S. Entrepreneurial Forum in Stockholm and Entreprenörskaps Forum in October 2013: http://www.esbri.se/sweden-us.asp.
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Disruptive Potential of Crowdfunding
- 1. The Disruptive Potential of Crowdfunding? ROBIN TEIGLAND & CLAIRE INGRAM STOCKHOLM SCHOOL OF ECONOMICS OCTOBER 2013 10/16/2013 1
- 2. Today’s presentation What is crowdfunding? From crowdfunding to crowd equity Some implications Q&A
- 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. Crowdfunding 2012 Worldwide $2.7bn raised for 470k projects on 800+ platforms Massolution, 2013
- 5. Donation/reward most popular form Form of Funding Donation-based Reward-based Benefits for Funders Donation Donation or prepurchase Intangible benefits. Rewards in addition to intangible benefits. Return on investment if company does well. Rewards sometimes also offered and intangible benefits may motivate too. Repayment of loan with interest. Alternatively intangible benefits if loan given interest-free. Equity-based Investment Debt-based Loan
- 6. Most popular crowdfunding activities to date Massolution, 2013
- 7. Crowdfunding in Sweden As of May 1, 2013 approx $4 mln raised
- 8. Local Stockholm success story: Flippin’ Burgers Money raised: SEK 36,502 / €4,000 Number of Investors: 186 Date Funded: September 2011 Sector: Food Sjölund, FundedByMe
- 9. Local solutions http://travel.cnn.com/best-americana-restaurants-europe-023346 Sjölund, FundedByMe
- 10. Swedish Volumental to USA to raise funds
- 11. Enabling entrepreneurs anywhere Ushahidi of Kenya Kenya
- 12. “Made in Africa” 3D printer (Togo) through Ulele Winner of International Space Apps Challenge http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
- 13. And big names entering the scene Executive Producer Robert Redford Narrated by Jodie Foster Donald Trump’s own crowdfunding site Open to anyone
- 14. Crowdfund on your own website
- 15. Today’s presentation What is crowdfunding? From crowdfunding to crowd equity Some implications Q&A
- 16. From crowdfunding to crowd equity $5.1bln Millions of dollars • Equity < 5% of total crowdfunding • Politicians generally positive -> entrepreneurs + job creation • US, Italy, Denmark changing regulations enabling equity
- 17. Change of strategy Nordics, Spain, Germany
- 18. Initial success with crowd equity
- 19. Today’s presentation What is crowdfunding? From crowdfunding to crowd equity Some implications Q&A
- 20. Implications Easier for new companies to enter the market? ◦ Access to funds no matter where in world ◦ Fewer product/service failures? Changing the “rules of the game”? ◦ Local solutions not interested in scalability ◦ Low price and quality without economies of scale Increased global competition
- 21. Many unanswered questions Some issues Cross border investments? Secondary markets for crowd equity shares? Taxation issues for both investor and entrepreneur? How to better leverage “crowd” for resources?
- 22. 10/16/2013 22
- 23. What’s around the corner? 24x7 global internet collaboration + open source + 3D printing + crowdfunding? $60,000 $150 Available for free download on http://mashable.com/2013/02/13/robohand/ Where is the firm?
- 24. Venture capitalists are the travel agents of yesterday – here today, gone tomorrow. Venture capitalist in Silicon Valley – June 2013
- 25. If you love knowledge, set it free… Robin Teigland robin.teigland@hhs.se www.knowledgenetworking.org www.slideshare.net/eteigland www.nordicworlds.net RobinTeigland Photo: Lindholm, Metro Photo: Nordenskiöld For more information on crowdfunding: •Research Paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263965 •Industry Report: http://blog.fundedbyme.com/robin-teigland/ Photo: Lindqvist
Editor's Notes
- Entrepreneurs need funding – we give them the chance to test, iterate and grow. Fast.Everyone wants to be part of the next big thing in business – without having to spend millions. Ownership is the best form of participation. Millions of ordinary citizens are a massive force.
- Snabbutveckling, 600% på 3 årMassolution: Four established types of crowdfunding exist: donation-based, reward-based, equity-based, and lending or debt-based. In May 2013, there were around 800 crowdfunding platforms worldwide, and crowdfunding initiatives raised an estimated 2.6 billion USD in 2012, including about 945 million USD in Europe through 470 000 campaigns. Furthermore, Massolution predicts that in 2013 crowdfunding will reach volumes of 5.1 billion USD worldwide, with about 1.3 billion USD in European markets. To date, business and entrepreneurial activity comprises 16.9% of all crowdfunding activity while Information and Communication Technology projects comprise a mere 4.8% of activity. According to 2010 market data, Sweden’s venture capital firms made the highest value of investments relative to GDP in Europe and had the sixth highest investment value in the world (EVCA, 2012).There are no public statistics for crowdfunding for Sweden as a whole but, as of May 2013, and based on the publicly available numbers, we have estimated the amount raised in Sweden to be around USD 4 million, with 1 million of this through reward-based crowdfunding and 3 million through equity-based crowdfunding. The primary platform that deals with entrepreneurs, FundedByMe, raised around USD 3.8 million of that across 744 successful projects. Excluding FundedByMe itself, 25 of these successes were Technology or Internet related (by the platform’s definition), but only three have been entrepreneurial ICT projects as opposed to the more common social projects. Two raised USD 38 000 through reward-based crowdfunding while the third raised USD 150 000 through equity crowdfunding.
- Go global – swedish market very small.
- http://www.kickstarter.com/projects/benatural/be-natural-the-untold-story-of-alice-guy-blachehttp://www.prweb.com/releases/FundAnything/DonaldTrump/prweb10700690.htmExec producer robertredford, narrated by jodie foster
- From CrowdCubeEquity < 10% of total crowdfunding Politicians generally positive -> entrepreneurs + job creationBut regulation is lagging in most countriesUSA passed JOBS Acts ”Jumpstart Our Business Startup Act”Title II for accredited investors this fallTitle III for non-accredited investors later in fall9 mln accredited investors in USA3% invested USD 23 bln in 2012 in startups and growth companies8.8 times more than total global crowdfunding marketNon-accredited investors even larger group
- http://www.mynewsdesk.com/se/fundedbyme/pressreleases/fundedbyme-raises-sek10-million-to-help-swedish-smsgrupp-expand-to-the-developing-world-862689
- Jon Matonis, Forbes, Rhetorically, I posed the question: “In fifty years, would you rather own 100 euros, 100 Amazon Coins, or 100 bitcoins?” http://www.forbes.com/sites/jonmatonis/2013/05/20/bitcoin-comes-to-swift/
- Liam Dippenaar couldn't catch a ball with both hands. Holding two objects at once was a feat and, though right-handed, the 5-year-old used his left. Born with Ambiotic Band Syndrome, Liam lacks the instrument critical for most tasks: fingers. Thanks to two strangers halfway around the world and the magic of 3D printing, Liam is now able to color and write to his heart's content. Ivan Owen and Richard Van As created Robohand, an open-sourced device built with customized prosthetic fingers. Owen, of Washington state, and Van As, of South Africa, collaborated via the Internet to create the prosthetic. The duo decided to make the design in the public domain to help others who can benefit from the technology.Their journey started in 2011, when Van As came across a video of Owen's costume piece, a robotic hand built for amusement. Van As lost most of the fingers on his right hand in a woodworking accident and cast a net out for those willing to help build a prosthetic. Owen was the only one who agreed. "I had started with the first prototype prior to meeting Ivan. But yes, there were so many obstacles and one of the main ones was contacting people and them just saying, 'No, it can’t be done,'" Van As tells Mashable. Long nights on Skype and a 10-hour time difference took some getting used to, but the two kept the project going through email and file sharing. Owen and Van As initially used a milling machine and spent hours engineering parts until MakerBot donated two Replicator2 Desktop 3D Printers. The donation exponentially cut production time for prototypes. What used to take up to three days to complete can now be done in only 20 minutes. Using OpenSCAD, a free software application, Owen and Van As can exchange files and make changes in minutes. Jenifer Howard, MakerBot's PR director, says the cross-continent collaboration fits perfectly with the company's mission. "We love to see our printers being used for amazing life-changing and life-validating projects like this," Howard says. The two men document their progress on a blog called "Coming up Short Handed." Liam's mother, Yolandi, saw the site and reached out to Van As for help. Liam, who has no fingers on his right hand, received his own Robohand at no cost after several trials and prototypes. "At first it was quite amazing to see the smile on his face when they made the first prototype and he put it on his hand," Yolandi says. "His expression was, 'Oh wow, it’s copying me.'