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The bright side
https://www.kickstarter.com/projects/olo3d
/olo-the-first-ever-smartphone-3d-
printer/description
The dark side
https://www.kickstarter.com/projects/olo3d
/olo-the-first-ever-smartphone-3d-
printer/description
What crowdfunding is
Crowdfunding is the practice of funding a
project or a venture by raising monetary
contributions from a large number of people,
typically via the internet in order to make the
project (or the venture) succeed
What crowdfunding
is not
• Philantropy 2.0
• A form of revenues
• The solution for the
«funding/equity gap»
• A selling tool
• A trend
is
• A fundraising tool
• A tool to fund a project’s
industrialization
• An option to fill the
«funding/equity gap»
• A market validation tool
• A increasing phenomenon
The pillars of crowdfunding
Peers/Community
Emotion
Trust
Money
... and Web
The aim of a crowdfunding
campaign is to generate a
particular type of reaction from
the target audience
Sto
len
fo
rm ©
Dan
iele
Ferr
ari
Backers invest in equity
shares of innovative start-up.
Backers fund the projects and
receive rewards
Backers donate some money
for the NGO’s activities
Backers borrow an amount of
money and receive some
interests
Crowdfunding Platform
Campaigns focused on
start-up growth potential
Campaigns focused on
the project outcomes
Campaigns focused on
NGO’s activities and
mission
Campaigns focused on
the request for a loan
Demand EQUITY
REWARD
DONATION
LANDING
Offer
Crowdfunding Models
Equity vs. Reward Funding the equity gap of an innovative start-up (high risk)
Funding the organic growth of the start-up (market growth, product portfolio , diversification strategy) Complex financial tool (could include also preferred shares)
Enterprise value estimation is needed (it requires the involvement of lawyers and financial experts)
Corporate governance and accountability become more difficult with an increasing the number of shareholders
Funding a project promoted by firms,
entrepreneurs, teams, individuals
Funding the market validation of a
prototype (idea, event, service, product)
Rewards (products/services) has to be
industrialized and delivered
Communications investment (video,
mailing, external agencies, etc.) is
needed
Legitimation of the campaign, and its
promoter, is based on the ability to
effectively deliver the reward on time
The world of crowdfunding
The scope of crowdfunding
Source: Analisi delle piattaforme di crowdfunding italiane”
December 2015 69 established platforms 12 platform in the launching phase
What about Italy?
2005 2010 2011 2012 2013 2014 2015 2008
Produzioni
dal basso Smartika
BuonaCausa
Iodono
Prestiamoci Rete del
Dono
Cineama
Com-Unity
Letsdonation
Musicraiser
Smartika
Starteed
Eppela
Commoon
DeRev
Fidalo
Ginger
Micro Crédit
Artistique
Proposizione
Terzo Valore
Werealize
Assiteca Crowd
BeCrowdy
Bookabook
Funditaly
Innamorati della cultura
Progetto Civibanca 2.0
School Raising
StarsUp
Universitiamo
Upspringer
Vizibol
WithYouWeDo
Crowdfundme
Cubevent
Giffoni Innovation Hub
Mecenup
Next Equity
SportSupporter
Tip Ventures
Triboom
WOOP food
Source: Analisi delle piattaforme di crowdfunding italiane”
Italian Crowdfunding System 31
13 13
3 8
1 05
101520253035
Model
N. of
projects
received
N. of
projects
published
Successful
projects
(>100%)
Funded
projects
(<100%)
Unsuccess
ful projects
Successful
rate Total value
Reward 23.314 2.327 1.151 575 704 49% 7.104.340
Donation 2.650 2.090 240 1.047 615 12% 1.356.410
Equity 360 21 7 2 9 33% 1.637.631
Lending 67.400 10.100 4.325 0 0 43% 22.824.000
Reward+Donation 7.200 6.843 659 1.097 5.687 10% 3.630.034
Donation+Lending --- --- --- --- --- -- 20.230.324
Total 100.924 21.381 6.382 2.721 7.015 30% 56.782.740
The Equity Crowdfunding Italian System
Consob has approved 19
equity-based platforms:
• 18 (ordinary)
• 1 (special)
12 platforms are effectively working
Unicaseed Starsup
AssitecaCrowd NextEquity
CrowFundMe Investi-re
Tip Ventures
The most famous ‘quasi-equity’ plaform is Siamosoci.com, that is a
sort of club for professional investors (not an equity platform)
Fragmented. Of course
Equity-Based campaigns Overall, 38 equity-based campaigns in Italy (during 28 months).
15 succesfully funded
www.osservatoriocrowdinvesting.it
N. of projects
Equity collected
Equity and Lending in UK
The UK Alternative Finance Industry Report 2014 - Nesta
The weak side of the
Italian context
• Digital Divide (technological and cultural)
• Limited knowledge of English language
• Relatively low use of online payment system
• Limited crowdfunding culture
• Scarce support from public and private (financial)
institutions
Some final remarks
• Crowdfunding is an excellent validation test for the
launching of new products and services
• Crowdfunding is not suitable for every kind of project
• Crowdfunding is not for free
• Crowdfunding campaign cannot be improvised. Money
doesn’t fall from the sky. Promotion and commitment are
essential
• Crowdfunding campaign is really useful for its comments
and feedback also when it doesn’t achieve the funding goal.
• And it’s possible to try again (and again, again, again,
again, again, again, again, …)
Tips for the campaign 1. Economic sustainability of the
overall project
2. Budget definition
3. Target analysis
4. Identification of your
stakeholders
5. Other funding sources
(essential to generate “trust”)
6. Team for the crowdfunding
campaign
7. Length (30-45-60-90 day) and
period of the campaign
8. Existing platform or DIY?
9. Rewards generation
10. Project description
11. Video
12.On-line and off-line promotion
13.Feedback/community
management
Go back home,
choose a crowdfunding platform,
explore the projects,
fund a project you like
or you find it worthy to be implemented
Homeworks
Contacts and more mail
twitter @bbalbon
Papers
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2430463 http://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/al
ternative-finance/downloads/2015-uk-alternative-finance-benchmarking-report.pdf
https://www.nesta.org.uk/sites/default/files/understanding-alternative-finance-2014.pdf