1

CROWDFUNDING FOR BUSINESSES

Launch, Expand or Revitalize

Presented By – Dennis Carpenter

• Director of Marketing Services, Stamats Communications

• Download: https://www.thrivewhere.com/crowdfunding-business/• @thrivewhere dennis@thrivewhere.com

2

Disclaimer

• The presenter or the organization hosting this event implies no warranty, express or implied, including warranties of merchantability and fitness for a particular purpose, or assume any legal liability for the accuracy, completeness, or usefulness of any information from this presentation

3

Getting Started - Two Basic Premises

1. Crowdfunding Is revolutionizing the way businesses grow.

2. Crowdfunding draws on all of the newer forms of marketing into a new inbound paradigm.

4

What you will learn• Definition of Crowdfunding• The problem that is being solved• Benefits of Crowdfunding• Types of Crowdfunding• A brief history and main players• Examples of success and failure• How Crowdfunding can help your business• Essential steps in launching a Crowdfunding campaign• What are the risk?• What is the ROI of Crowdfunding?

5

Defining the terms used in Crowdfunding

• Crowd·fund·ing• “The practice of funding a project or venture by raising

many small amounts of money from a large number of people, typically via the Internet.”

• Project – a cause, a business or a project that has a defined goal. Projects have -• Creators – the owner of a crowdfunding project• Backers – a person who supports a project by

contributing financial support in exchange for a reward

6

The Problems Getting Solved?• Many projects don’t qualify for traditional sources of funding

• Crowdfunding can overcome the “trust problem” that keeps capital out of the economy.• Project progress can be monitored • Backers can see which of their peers have participated

• An idea can be tested for acceptance long before money is spent

• A creator can live anywhere and still get noticed• Success is no longer just for the chosen few living in the large cities

7

Types of Crowdfunding1. Reward Based: Investors receive a tangible item or

service in return for their funds. (You invest in Pebble, and get a first edition watch. Pebble raised $10.3 M)

2. Donation Based: Contributions go towards a charitable cause. (You paid for 50 children in Africa to receive watches)

3. Lending Based: Investors are repaid for their investment over a period of time. (You invest in Pebble, and get your money paid back over time)

4. Equity Based: Investors receive a stake in the company. (If Pebble goes big, you get a percentage of the prize)

8

Benefits of Reward Based Crowdfunding

1. Access to capital – without giving up equity

2. Hedges risk - an entrepreneur can gain market validation before taking a product concept to market

3. Is a marketing tool – using social sharing tools and a way to introduce your brand to new backers

4. Provides proof of concept – if there are no backers then the idea has no support.

5. Allows crowdsourcing of brainstorming – via feedback6. Anyone can qualify – no long bank forms7. Free PR – you benefit from the buzz8. Opportunity of pre-selling – a good way to gauge user reaction and

analyze the market in order to decide whether to pursue or pivot on a given concept

9. No or low upfront cost – most platforms get paid by retaining a percentage of the funds raised

9

Shortlist of main players• Kickstarter - creative products, like an art installation, to a

cool watch, to pre-selling a music album. It’s not for businesses, causes, charities, or personal financing needs.

• Indiegogo - approves donation-based fundraising campaigns for most anything

• GoFundMe - mostly around personal projects (medical bills, travel costs, etc) and altruistic donations to other people

• Fundable - works on both reward-based and equity-based platforms

• RocketHub - The majority of the projects on RocketHub are not entrepreneurial or startup related, although some exist

10

Examples of success

Revitalize

• Changing Hands Book Store.• Campaign name – Frank 'N Moby Build a Bookstore• https://

www.indiegogo.com/projects/frank-n-moby-build-a-bookstore

• $91,030 USD RAISED OF $80,000 GOAL = 114%

11

Examples of success

Launch

• Filmscene• Campaign name – Build a Downtown Iowa City Cinema• https://

www.indiegogo.com/projects/filmscene-make-a-scene-build-a-downtown-iowa-city-cinema#home

• Several PR efforts.• $91,000 USD RAISED OF $75,000 GOAL= 121%

12

Examples of hidden success

Revitalize

• Ashtanga Yoga of Toronto

• https://www.indiegogo.com/projects/ashtanga-yoga-centre-of-toronto#home

• $37,145 CAD RAISED OF $60,000 GOAL = 62%

• Social network: Twitter 0, Facebook 1,776

13

Examples of failuresExpand – add products

• Buff Bakery – A bakery for the fitNewport Beach, CA

• https://www.kickstarter.com/projects/buffbake/buff-bake-a-bakery-for-the-fit

• $1,300 US RAISED OF $15,000 GOAL = 8%

• Social : Twitter 0, Facebook 134, Instagram 4,834

14

Examples of failures

Launch New Product

• Player in My Day

• https://www.kickstarter.com/projects/449139291/player-in-my-daytm-a-sporting-gear-apparel-brand

• $4,015 US RAISED OF $25,000 GOAL = 16%

• Social : Twitter 50, Facebook 22

15

Interview Of Kent Mihlbauer • Set goal to high• Didn’t build enough trust• Didn’t allow enough time to build social media• Hard time building enthusiasm• His product wasn’t different, no fashion uniqueness• He possibly priced to high• Essential to have a quick start 30-50% in first 48 hours• Planning and campaign will take 3-4 months• Make the campaign your full time job for 2 months• He wanted to go big or go home• Lower expectations

16

How Crowdfunding can help a business

• Avoid debt• It hedges risk• It serves as a marketing focus

• Activate a fan base of your best supporters or customers that has been cultivated over a long period of time• Create an email list and then an email outreach• Create and engage your social media channels

• Forces you to engage your network and detail your plans for growth

• Proof of concept can be verified before going to market• It provides the opportunity of pre-selling• It’s free PR

17

Tips in launching a campaign• Regardless of your crowdfunding platform, the funding

goal should be one that you’re confident you can reach and exceed.

• People love to back a winner.  Aim to surpass your funding goal by 100 percent in the early days of your campaign. This will help attract additional backers.

• The most effective crowdfunding campaigns are those that solve a real problem

18

Essential steps in launching a campaign

1. Set a Realistic Goal - don’t confuse how much money you’d like to raise with how much you need

2. Set the Right Goal Deadline – Min 30 days3. Chose the Right Crowdfunding Type4. Write a Compelling Crowdfunding Pitch - Your pitch is

your first chance to win – or lose a supporter5. Produce a Killer Pitch Video6. Offer Cool Perks That People Want7. Organize Your Team8. Have Your Core Supporters on Standby to Contribute9. Prepare a plan for delivering the rewards offered

19

Which major platform?• Indiegogo takes 4 percent of your earnings if you reach

your goal and 9 percent if you don’t. • Kickstarter is all or nothing. If you don’t reach your goal,

no money is exchanged, but if you do reach your goal, you get the full amount minus 5 percent.

• Personally, I don’t like to see clients "almost there" and lose it all on Kickstarter. Unless you have a committed “gap funder” in place, in case you don’t reach your funding goal, I recommend keep what you raise, but the choice is yours.

20

What are the risk? • The negative perception of your brand if your campaign

fails.• If its campaign is successful, will you have enough cash to

meet its stated rewards?

21

What is the ROI of Crowdfunding?• Does Crowdfunding produce sales? (Forbes study)

Yes. Tremendously. 24% across all methods (rewards, debt and equity)

• Does Crowdfunding create jobs? 39% of respondents hired an average of 2.2 new people

• Deter follow-on investment? According to the report, it does not. 43% were in talks with institutional investors.

• Every hour invested in a crowdfund campaign returned $813

*Forbes, 1/21/2014

22

Trends• CROWDFUNDING IS BECOMING SPECIALIZED

• It is an opportunity to isolate and reach a very specific audience

• CROWDFUNDING IS BECOMING LOCAL• Why? Because local circumstances really matter

• CROWDFUNDING IS BECOMING INSTITUTIONA• Foundations, corporations and governments have a lot of

experience of and need for fundraising, and now they’re starting to engage with crowdfunding.

23

In conclusion - Two things to remember

1. Crowdfunding is revolutionizing the way businesses grow.

2. Crowdfunding combines all of the newer forms of marketing into a new inbound paradigm.

24

CROWDFUNDING FOR BUSINESSES

Launch, Expand or Revitalize

Dennis Carpenter

• Director of Marketing Services, Stamats Communications• Head Thriver at Thrive Where!• @thrivewhere• dennis@thrivewhere.com