Downloaded 20 times
Uploaded byPropel Arizona
Propel Arizona - Practical Crowdfunding Workshop
Crowdfunding allows entrepreneurs to solicit small amounts of money from a large number of people through the internet. It helps fill the gap between an entrepreneur's initial concept and product and the later stages of growth where larger funding is available. Successful crowdfunding campaigns focus on telling a compelling story that will motivate and connect with potential backers. They emphasize visuals, rewards, regular updates and engagement over just asking for money. Proper preparation, including crafting an appealing description and perks, is key to running an effective crowdfunding campaign.
More Related Content
Similar to Propel Arizona - Practical Crowdfunding Workshop
Propel Arizona - Practical Crowdfunding Workshop
- 1. Crowdfunding WYNTK * (what youneed to know) Hands-on For Entrepreneurs 48-West , 16 February 2013 CJ Cornell – Propel Arizona
- 2. 10+ companies $250M Funding4 Exits (great !) $3B Revenues 4 Failures (awful !) Lots of lessons. Chaos, Pain and Joy. ‘Serial/Parallel Entrepreneur” EIR, Venture Partner Angel Investor 5 Companies 9 Boards 3,000 Tylenol Caplets. Ego and Brain Atrophy. Investor/Venture Capitalist Professor of Digital Media & Entrepreneurship Arizona State University, SJSU, Stanford (Lecturer) New York Institute of Technology Knight Center for Digital Media Entrepreneurship Research in digital media, behavior, entrepreneurship University Professor Advisor/Mentor, Author etc. ASU – Skysong, Venture Catalyst, RSS etc Arizona Commerce Authority / Venture ready Arizona Innovation Challenge Book: Age of Metapreneurship. Blog/Articles CJ Cornell @cjcornell cj@cjcornell.com
- 3. Crowdfunding Workshop Agenda 1. Crowdfunding overview 2.Crafting the Idea and Campaign 3. Preparing the Visuals 4. Perks and rewards 5. Running the campaign 6. Success factors www.propelarizona.com
- 4. What is Crowdfunding? … andwhy should you care?
- 5.
- 6. Concept to Productto Growth
- 7. Concept to Productto Growth $ $ $ $
- 8. Concept to Productto Growth $ Entrepreneur IPO
- 9. Concept to Productto Growth $ Entrepreneur IPO $ Entrepreneur IPO $ Venture Capital
- 10. The Kauffman Indexof Entrepreneurial Activity is a leading indicator of new business creation in the United States. In 2012 - The state with the HIGHEST level of Entrepreneurial Growth was … Arizona.
- 11. # 1 inEntrepreneurial Growth # 46th in Venture Capital $
- 12. Concept to Productto Growth $ Entrepreneur IPO $ Entrepreneur IPO $ Venture Capital $ Entrepreneur IPO $ Venture Capital $ Angels, accel & incub
- 13.
- 14. The Series-A Crunch Source:Pitchbook
- 15.
- 16.
- 21.
- 22. Concept to Productto Growth $ Entrepreneur IPO $ Venture Capital $ Angels, accel & incub Crowdfunding $ $
- 23. Concept to Productto Growth $ Entrepreneur IPO $ Venture Capital $ Angels, accel & incub Crowdfunding $ $ Crowdfunding $
- 24. Concept to Productto Growth $ Entrepreneur IPO $ Venture Capital $ Angels, accel & incub Crowdfunding $ $ Crowdfunding $ Crowdfunding $
- 25. Concept to Productto Growth $ Entrepreneur IPO $ Venture Capital $ Angels, accel & incub Crowdfunding $ $ Crowdfunding $ Crowdfunding $ Crowdfunding $
- 26. Crowdfunding Soliciting & Collectingrelatively small amounts of money (“funding”) from a large number of people (“crowd”) WYNTK (what you need to know)
- 27. http://blog.intuit.com/trends/crowd-power-what-is-crowdfunding-infographic “ Crowdfunding is aterm used to describe individuals coming together to support – and directly fund projects by other individual and organizations. “
- 28. • Source –http;//crowdfunder.com
- 29. • Source –http;//crowdfunder.com
- 30.
- 33. 5 APRIL, 2012(AND … AUGUST 2012, DECEMBER 2012 …) Jumpstart Our Business Startup ACT, Title III (JOBS Act).
- 34. Equity Crowdfunding -JOBS • Eliminates ban on general solicitation and general advertising in connection with private offerings to accredited investors under Regulation D (Rule 506) and to qualified institutional buyers under Rule 144A. • Exemption from Securities Act registration “crowdfunding” transactions (involving access to small amounts of capital through the internet). • Exemption to allow issuance of up to $50 million of securities in any 12-month period, up from the current $5 million threshold • An increase in the number of shareholders a company may have before being required to register its common stock with the SEC and become a public reporting company from 500 to 2,000 total shareholders (including up to 500 “unaccredited” shareholders) • Amount each person may invest in offerings of this type, tiered by the person's net worth or yearly income.
- 35.
- 36. www.propelarizona.com WYNTK (what you needto know) BEFORE - (SEC “Reg D” Rule 504, 505, 506, 144a) … Since 1933 – 35 Unaccredited Investors (max), Unlimited Accredited – 500 Shareholders (max) – $1M max per 12 months, or $5M+ w/Reporting & restrictions – No “General Solicitations” AFTER - (JOBS Act) … 2012/2013, maybe – General Solicitations – to accredited investors – 35 Unaccredited Investors (max), Unlimited Accredited – 500 Shareholders (max) – $1M max per 12 months, or $5M+ w/Reporting & restrictions – No “General Solicitations”
- 37. But, if you thinkthe JOBS act moves the SEC into the 21st century …
- 38. SAN FRANCISCO, Dec6 (Reuters) - Netflix Inc said on Thursday securities regulators warned they may bring civil action against the company and its chief executive for violating public disclosure rules with a Facebook post …
- 39. Fraud, Deceit, ScammingWidows, Retirees and Helpless Babies.
- 40. Fraud? • Case One:Australia – Equity Crowdfunding • The Australian Small Scale Offerings Board (www.ASSOB.com.au), founded in 2007, is the largest investment crowdfunding platform in Australia and one of the largest in the world. It is an equity crowdfunding platform that has successfully served both accredited and non-accredited investors since its inception over 5 years ago, raising $130,409,669 since 2007. 132 companies have been funded to date and not a single case of fraud has been reported. ASSOB operates within the current securities structure in Austral • Case Two: UK – Equity Crowdfunding • Crowdcube (www.crowdcube.com) is the largest equity-based crowdfunding platform in the UK has been operating since February 15, 2011 with no reported fraud. Crowdcube operates within the current securities framework within the UK and allows issuers to raise equity capital using an online portal. • 29 pitches have been funded with £4.25M. Average raise is £146,552. Average equity given up is 16%. Average numbers of investors is 63. Average days to fund are 51. Average age of entrepreneur is 40 and total number of registered investors is 24,023. No fraud has been reported. • UK based, Funding Circle (www.fundingcircle.com) was founded in 2010. It is an online marketplace enabling savers and investors to sidestep banks and directly lend to small businesses. Funding Circle differs from other lending platforms in that it facilitates loans to businesses, rather than consumers while also proving easy access to investors’ money at any time. It provides low cost finance for small, UK firms frustrated by the loan terms offered by the http://www.crowdfundcapitaladvisors.com/resources/26-resources/120-crowd-detects-fraud.html
- 41. Fraud? • Case Four:US - Fraud Derailed • An example of fraud that was derailed on a portal is a campaign on Kickstarter called Mythic. FromTechdirt.com: • “A recent video game project on Kickstarter that turned out to be fake. As BetaBeat reports, the crowdsourcing scam was exposed by a crowdsourced investigation: • ... a campaign for an action video game, MYTHIC: The Story Of Gods and Men, has just been busted by forum users at Reddit, SomethingAwful and Rock, Paper, Shotgun. The creators claimed to be an independent studio, “Little Monster Productions,” of 12 industry veterans in Hollywood. “Our team has done a significant amount of work on the World of Warcraft series as well as Diablo 2 and the original Starcraft,” says the project page. Bull____, said the Internet. Turns out the art was cribbed, the text for backer rewards was copied and pasted from another Kickstarter project, and even the office photos were from another game studio, Burton Design Group. • When people brought their accusations to the Kickstarter comments, the developers made a few weak attempts at deflection then quietly shut down having raised just under $5,000 (far short of their goal, so that money won't actually be released). With Kickstarter gaining more attention every day, we're sure to see more attempts at scams—and maybe even some successes—but with a savvy community that polices itself like this, the scammers face an uphill battle.” http://www.crowdfundcapitaladvisors.com/resources/26-resources/120-crowd-detects-fraud.html
- 43. Bull____, said theInternet. Turns out the art was cribbed, the text for backer rewards was copied and pasted from another Kickstarter project, and even the office photos were from another game studio, Burton Design Group. http://www.crowdfundcapitaladvisors.com/resources/26-resources/120-crowd-detects-fraud.html
- 45. • Equity Crowdfunding- not in the USA (yet) • JOBS act (April 2012) technically enables CF – but has not yet been approved by SEC. • No documented fraud in USA or other areas. • Equity CF is for “high growth companies” seeking significant funding from experienced investors • Will dramatically change in 3-5 years (CJ prediction) www.propelarizona.com WYNTK (what you need to know)
- 46. Real Crowdfunding – thatworks. Today
- 47. “THE KICKSTARTER MODEL” Rewards-based,Donation Crowdfunding:
- 51.
- 52.
- 53.
- 54.
- 55.
- 56. Kickstarter (2012) 2.2 millionpeople pledged a total of $319,786,629 (up 221% from 2011) Backers pledged $606.76 per minute People in 177 countries backed a project in 2012 (That's 90% of the countriesin the world)
- 57.
- 58. WHY … Do peopleCrowdfund?
- 60. Lessons from EthanMollick’s “The Dynamics of Crowdfunding: Determinants of Success and Failure”
- 61. 3 Why’s: 1.They connect to the greater purpose of the campaign 2. They connect to a physical aspect of the campaign like the rewards 3. They connect to the creative display of the campaign’s presentation three main reasons why people unconnected to a project or business would support it: What Is Crowdfunding And How Does It Benefit The Economy - Forbes http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy
- 62. The Real (Crowdfunding) Why’s • Passion –For the technology – For the industry – For the cause – For the product • Affinity – For the Entrepreneur – For the region, industry etc • Connection • Every reason BUT R.O.I. …
- 63. emotional ROI. Not financialROI WYNTK (what you need to know) Crowdfunding is about …
- 64. (when crowdfunding …) “itsnot what you do, but why you do it,” WYNTK (what you need to know)
- 65.
- 67. http://trendwatching.com/trends/infographics/presumers/ “Consumers who wantproducts before they are developed” Pre-orders Early adopters Supporters
- 68. UH OH … TheKickstart Model..
- 71. 1. Crowdfunding =New “1st Money” for ventures ($10k - $50k average– but wild exceptions) 2. Equity Crowdfunding is Still Far away 3. Rewards based Model IS Crowdfunding today 4. All or Nothing Crowdfunding – Standard 5. Perks and Rewards: Pre-order Crowdfunding 6. Social Media & Content Intensive www.propelarizona.com WYNTK (what you need to know)
- 72.
- 73. • The iPhone-friendlyPebble watch earned $7.6 million more than its $100,000 goal. • And the Galileo iPhone platform closed its Kickstarter campaign at $702,000, far surpassing its $100,000 goal.
- 74. • Ouya raised$2 million in one day for a new Android gaming console (it’s raised more than $5 million to date), • the Nifty MiniDrive, external memory for Apple MacBooks. The tiny storage company is more than 2,000% above its $11,000 goal with 15 days left in the campaign.
- 75. What do successful campaignshave in common?
- 76.
- 77.
- 78.
- 79.
- 80.
- 81.
- 82.
- 83. Successful campaigns tookan average 11 days preparing for their launch. http://blog.indiegogo.com/2013/01/12-insights-for-2012.html
- 84. Campaigns ran anaverage 49 days in 2012, as opposed to 60 in 2011. Successful campaigns fundraised for 39 days.
- 85. Crowdfunding Myths &Mistakes • Myth #1: If You Build It, They Will Come • Myth #2: Cash is Free • Making it about you • Unrealistic Expectations • Lack of clarity • No call to action • Expecting to be found: (No Marketing) • Ignoring Small Donations/Donors http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-them http://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804
- 86. www.propelarizona.com WYNTK (what you needto know) Successful Crowdfunding Campaigns Focus on The new 4 P’s … the 1. the 2. the 4. the 3.
- 87. focus on “them”– not your company WHO are they? What motivates them? Interests, Values … the 1. The new 4 P’s of Crowdfunding .. www.propelarizona.com the 2. You are pitching to “them” TELL A STORY !! WHY is more important than $$ VIDEO(s) & VISUAL(s) Tell the story in small ‘chapters’ VIDEO(s) & VISUAL(s) And even smaller “sound bites” Give them a Story they can tell to others. the 3. $$ Value is a negative driver ! UNIQUE It’s about THEM EXCLUSIVE And what is important to “Them” FIRST Make sure it is … BUZZWORTHY the 4. It’s a daily/hourly effort … SOCIAL MEDIA It’s a conversation … UPDATES, BLOGS, NEWS Provide Value, and Talking Points RE-POST, TWEETable It’s about … for their network VALIDATION & EVIDENCE
- 88.
- 89.
- 90. 1. Crowdfunding takeswork, new skills. 2. It takes a strategy, and preparation. 3. The rules are different. 4. You can’t just post and run … 5. It’s a public success or failure – that “stays on your resume” www.propelarizona.com WYNTK (what you need to know)
- 91.
- 92. Title &Short Description • (repeatable & compelling) Long Description (“The Pitch”) • Make it a story … about “them” Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN • Repeatable Messages • Daily “routine” • Traditional marketing too
- 93.
- 94. First: Who WhatWhy When … • The 3 Who’s: – Who are the donors? (affinity & passion) – Who is benefits? (the market) – Who are you? • The 3 Why’s – Why would your donors care? – Why does the market care? – Why are you the right team to do it?
- 95. First: Who WhatWhy When … • What is your project & goal? – Understandable & Simple – Compelling & Intriguing – Repeatable & Memorable • How and When – How will you achieve your goal? Realistic? – When, after funding? When will I get my perks?
- 96. Other Tips • Tella story • Make it about them • The History of the idea is intriguing • What is the Impact? – why is this important? • Try a FAQ • Call to action – get them involved!
- 97. Exercise – Craft thePitch
- 98. Crafting your Pitch Title& Short Description •(repeatable & compelling) Long Description (“The Pitch”) •Make it a story … about “them” Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN •Repeatable Messages •Daily “routine” •Traditional marketing too Tell a story Make it about them The History of the idea is intriguing What is the Impact? Why is this important? Try a FAQ Call to action – get them involved! The 3 Who’s: Who are the donors? (affinity & passion) Who is benefits? (the market) Who are you? The 3 Why’s Why would your donors care? Why does the market care? Why are you the right team to do it? What is your project & goal? Understandable & Simple Compelling & Intriguing Repeatable & Memorable How and When How will you achieve your goal? Realistic? When, after funding? When will I get my perks?
- 100. Pitch Notes -1 • Who (donors, market) • “Why” – the story • Impact (on the market) • Impact (on the donors)
- 101. Pitch Notes -2 • Story, and History … • FAQ • Perk Ideas (what’s important to donors) • Calls to Action
- 102.
- 103. The Importance ofVisual Media • 64% of successful campaigns in had pitch videos. • Campaigns with videos under 5 minutes were 25% more likely to reach their goal than those with videos that were longer. • Average campaign video length for campaigns was 3 min, 27 seconds. Campaigns that reach their goal are 16 seconds shorter. • On average, successful campaigns uploaded 6 media to their gallery. • http://blog.indiegogo.com/2013/01/12-insights-for-2012.html
- 104.
- 106. Directed by Patrick Million ExecutiveProducer CJ Cornell a Patrick Million FILM American Grandmaster
- 107. Rewards Crowdfunding • Incentives& perks • Pre-Orders • Pre-Sumers • Market Validation
- 109. Rewards don’t haveto worth $$
- 111. • $25 perkis the single most claimed perk, representing nearly 25% of all perks that are selected. • While the $25 dollar perk is only responsible for raising 11% of total funds.
- 112. • $100 perksraise more money than any other perk price and make up nearly 30% of total funds. A $100 perk combined with the next three perk price points: $50, $500, and $1000 makes up about 70% of total money raised by perks
- 114.
- 115. 1. Make perksunique & exclusive Avoid T-shirts, Mugs & Hugs
- 116.
- 117. 3. Give thema connection
- 118.
- 119.
- 120.
- 121. The less tangiblethe perk, the more public (visible) & EXCLUSIVE it needs to be.
- 124.
- 125. How much $$? How long?
- 126. Discussion • How muchshould we raise? – Have you raised money before? Return? – Do you/did you work at a highly visible position? – *** Your social network? Large? Followers? – Idea - big market? How unique? – How much (marketing) work will you do?
- 127. HOW to Crowdfund? PUSH- Running the campaign • Social Media • Comments & Updates • Networking • Personal Pitches
- 128. Your mission: Toget them talking about your project
- 129. Now that you’velaunched … Continue the story
- 130. Social Engagement – Transparency& Trust – Social Proof & Viral FX – Engagement & “The Fundamentals” – Twitter – Facebook – Blogging
- 131. most successful projectsreceive about 25-40% of their revenue from their first, second and third degree of connections. This could include friends, family, work acquaintances, or anyone that the owner is connected to. • http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy/
- 132. 1. Create: (ofcourse) - A Facebook Account - A Twitter Account (for your campaign)
- 133. 2. Tweet &Post –Frequently –Uniquely –Personally
- 134. 3. Post Updates& Blog •About your progress •About the subject •About the industry •About the People
- 135. 4. Go 1-1 •Replyto comments •Retweet/Repost Your fans and donors are your most powerful advocates!
- 136. 5. Target, Measure& Adjust •Different Messages for different groups •Google, Hootsuite, others •Learn and Adjust focus
- 137.
- 138.
- 139. the importance ofgoogle analytics to track and improve performance • + perks from fivvr • • http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and- steady
- 140. Campaign Checkist Social Media Createa schedule 2-5x / week Use an automated tool Eg Hootsuite Post interesting info – Not just pleas for money Not just updates Vary your targets Call to action 1/3-1/2 time Use analytics and other metrics Traditional Marketing Pitch Events Press Releases Demos Testamonials Use an automated tool What to Communicate: 1. Your Progress 2. Successes, Evidence of success 3. Ammunition for your supporters 4. Industry Info, Factoids 5. People Info Plan, Schedule & Update Your Social Network is a Force Multiplier – but you have to give them help.
- 142.
- 143.
- 144.
- 145.
- 146.
- 147. successful campaigns raise,on average, 49% percent of their goals during the first and last 10% of the campaign length.
- 148.
- 149. Showing Momentum (the perceptionof momentum)
- 150.
- 151. Credibility = trust, competence &follow-through
- 152.
- 153.
Editor's Notes
- #88 People – who, the target(s) niches … why … what is important to them Pitch – cool, intriguiing, MAKES THEM WANT to BE A PART OF YOUR JOURNEY! AND GET OTHERS TO JOIN!