An Introduction to the Practice of Crowdfunding

Tim WrightTim Wright

An Introduction to the An Introduction to the Practice of CrowdfundingPractice of CrowdfundingUniversity of Glasgow 20th November 2014

AgendaAgenda

• What is crowdfunding?

• Benefits and Risks

• How to do it – the TAMP Process

ConsultancyConsultancy

•CrowdsourcingCrowdsourcing•CrowdfundingCrowdfunding•InnovationInnovation•Knowledge ManagementKnowledge Management

Crowdfunding is a method of raising Crowdfunding is a method of raising money from a distributed group of money from a distributed group of funders (the crowd) who provide a funders (the crowd) who provide a large number of small sums forming a large number of small sums forming a significant total when aggregated significant total when aggregated together.together.

$5 Billion 2013$2.7 Billion 2012

UK is a world leader

Individual projects raised up to $50 Million

Constant innovation in sector

Government engagement

Empowering

Grown up with Social Media

Founded in the “Long Tail” distribution model

Platforms are the facilitators

It is hard work

Why is it growing?Why is it growing?

TechnologicalSocial and Collaborative tools, Platforms

SocietalEmpowerment, ecommerce, “grown up digital” generationEmpowerment, ecommerce, “grown up digital” generation

EconomicCapital Constraint, investment opportunity Capital Constraint, investment opportunity

Four Models of Crowdfunding

GIFTGIFT PERKPERK LOANLOAN EQUITYEQUITY

Funds collected are gifts or donations with no tangible return to the provider.



Platforms – DonationPlatforms – Donation

Just Givinghttps://www.kickstarter.com/

Yimbyhttps://www.indiegogo.com/

Razzoo

http://www.razoo.com

“Rewards” or “perks” of different value are offered to investors to purchase.



Platforms – Perk or RewardPlatforms – Perk or Reward

Kickstarterhttps://www.kickstarter.com/

Indiegogohttps://www.indiegogo.com/

Crowdfunderhttp://www.crowdfunder.co.uk/

BloomVChttp://bloomvc.com/

A loan is constructed from many small loans collected from the crowd. Many are interest bearing.



Platforms - LendingPlatforms - Lending

Funding Circlehttps://www.fundingcircle.com/

Rebuilding Societyhttps://www.rebuildingsociety.com/

Lending Crowdhttps://www.lendingcrowd.com/

Shares are sold in small parcels to a large group of investors.



Platforms - EquityPlatforms - Equity

Crowdcubehttp://www.crowdcube.com/

Seedrshttps://www.seedrs.com/

Squareknothttps://www.squareknot.co.uk/

ShareInhttp://www.sharein.com

Additional VariationsAdditional Variations

Keep it allYou get to keep whatever you raise

All or nothingYou get to keep anything only if you reach your target

DIYYou run your campaign “of platform”

Hybrid modelsA mix of funding

•Set targets•Select platform•Prepare

•Outreach•Updating•Promotion

•Crowd invests•Contact their crowd

•Target met•Rewards paid•Money collected

Idea to crowdfund

Crowdfunding working in all sectors

ValidationInward investment

Asset Development

Expertise

Advocacy

Average Success Rates

30% 75%with with

coachingcoaching

Better OutcomesBetter Outcomes

How Does Crowdfunding Impact Job Creation, Company Revenue and Professional Investor Interest? CCA 2014


Understanding Alternative Finance - Nesta, University Cambridge 2014

Non Financial Support – Equity CF

Understanding Alternative Finance - Nesta, University Cambridge 2014

Better OutcomesBetter OutcomesNon Financial Support – Reward CF


24%Quarterly increase revenue post crowdfunding


351%Increased revenue of equity crowdfunded companies

Value of every hour invested in a successful campaign

$813

Within three months of a crowdfunding campaign…….



28%

43%

of companies had closed an angel investor or venture capital round.

were in discussions with institutional investors.

Enduring AssetEnduring Asset

Crowdassets are the new source of innovation and economic growth.Open for Business — Moving from ‘Knowing’ to ‘Doing’! - Wright & Marom - EC Open Innovation Handbook 2014

Crowdfunding provides a perfect entry to the crowd empowered world!

Open for Business — Moving from ‘Knowing’ to ‘Doing’! - Wright & Marom - EC Open Innovation Handbook 2014

Crowdasset FrameworkCrowdasset Framework

Crowdsourcing

Viral Marketing

Collaborative Economy

Maker Community

Turking

Deep Skills

Wiki Building

Open Source

How to Do It?How to Do It?

Introducing the TAMP ProcessIntroducing the TAMP Process

The Purpose of TAMP is to:

Establish if crowdfunding is right for your project.

Show how ready you are to crowdfund. Analyse which form of crowdfunding is best

for you.Build a plan that will help you to run a

successful crowdfunding campaign around.

The TAMP ProcessThe TAMP Process

TT Targets

AA Audit

MM Method

PP Plan/Prepare

TargetsTargets

What

When

Why

Who

What do you need?What do you need?

How much do you want and need to raise?

? How did you arrive at the numbers

? Is it enough

? Is this a single funding round

? Do you want stretch targets

? Is it a costed amount in a business case

? Are you using sensible valuation schemes

When do you need it?When do you need it?

? How hard are the timings

? Are they fixed, moveable, long or short term

Why do you need it?Why do you need it?

Think strategically

Saying you want to fund a film is simply not enough!

? How does this fit with the wider plans for you or your organization

? Are you looking to take a product to market, expand, or even radically change your business model

Who are you going to target?Who are you going to target?

Followers and Fans

Influencers

Communicators

AuditAudit

Assets

Skills

Resources

Tools

AssetsAssets

Items, artefacts, objects and components that you or your organisation holds.

Social and Relationship capitalIPPicturesMail listsVideoNewsletters

SkillsSkills

Technical skillsWeb builder, reward maker, fabrication.

Communication skillsCopy writer, designer, video editor.

ResourcesResources

TimeMoneyPeopleFacilities

ToolsTools

CRMA serverMail list toolAnalytical toolsManufacturing tools

MethodMethod

Reward

Equity

Lending

Donation

All or nothing

Keep it all

Duration

Crowdcube

Kickstarter

Crowdfunder

Funding Circle

DIY

?? ?? ??

Prepare & PlanPrepare & Plan

ResourcesWhat do you need?

Publishing PlanChannels, Content, Timing, Monitoring, Responding

ResponsibilitiesWho will do what?Crowd

Fans, Influencers, Communicators

ScheduleWhen will things happen?

3 Planning Phases3 Planning Phases

Before

After

During

Followers

Communicators

Influencers

Finding your crowdFinding your crowd

Components of a Good CampaignComponents of a Good Campaign

Run Your Own CampaignPreparation, Preparation, PreparationGet the Messaging RightGet off to a Good StartMonitor, Respond, UpdateShorter is Generally BetterVideo, Video, Video

Tim WrightTim Wright

[email protected] 814 595@twintangibles

Questions?Questions?