Crowdfunding presentation at ESparkUK

CrowdfundingCrowdfunding

EntrepreneurialSparkEntrepreneurialSpark

88thth March 2012 March 2012

@twintangibles@twintangibles#crowdfundingES#crowdfundingES

AgendaAgenda

• What is Crowdfunding?• How is it linked to social?• Advantages, disadvantages & examples• What is typical?• How to be successful• Kirsty Burnham - SoLoCo• Q&A

What is Crowdfunding?What is Crowdfunding?

What is Crowdfunding?What is Crowdfunding?

“Crowdfunding is a method of raising capital, or resources, by collecting

together lots of small amounts from a large number of people generally using

the Internet and social media.”

“Crowdfunding is a method of raising capital, or resources, by collecting

together lots of small amounts from a large number of people generally using

the Internet and social media.”

www.xplane.com/obamawww.xplane.com/obama

Obama 2008 CampaignObama 2008 CampaignObama 2008 CampaignObama 2008 Campaign

$122

$264.5M

$27.7m

$88.2m

Obama McCain

Total

<$200

•First time any First time any company in Europe had company in Europe had attempted to raise attempted to raise money via an online money via an online share offeringshare offering

11stst round: round:• 10% Firms 10% Firms

EquityEquity• £230 per £230 per

shareshare• 1300 1300

investorsinvestors• 20% off in 20% off in

the shop!the shop!

BrewdogBrewdogBrewdogBrewdog

22ndnd round: round:• 8% Firms Equity8% Firms Equity• £95 per share£95 per share• 5000 investors5000 investors• 90% sold in 3 months90% sold in 3 months• £1m investment in less £1m investment in less

than 2 weeks.than 2 weeks.• £95 to £12k individual £95 to £12k individual

investments investments

All or Nothing

Take it All

Holding Model

Club Model

Micro-lending

P2P

Reward Based

Equity Based

Micro-finance

CrowdfundingPlatform Models

Where is it Used?Where is it Used?

Source http://www.core77.com/blog/kickstarter/crowdfunding_revolution_should_i_do_this_21697.asp

CrowdcubeCrowdcube

Source: www.crowdcube.com

How is it linked to social?How is it linked to social?

The Long TailThe Long Tail

Products

Popu

lari

ty

Quantity

Valu

e

?Re-imagine YourselfRe-imagine Yourself

£

Viral ReachViral ReachViral ReachViral Reach

Expectation of ReturnExpectation of Return

• Non-traditionalNon-traditional• Brand loyaltyBrand loyalty• Less aggressive?Less aggressive?• Longer term?Longer term?

Coase’s Penguin – Yochai BenklerCoase’s Penguin – Yochai Benkler

Advantages, disadvantages and examples

Advantages, disadvantages and examples

AdvantagesAdvantages

• Market testingMarket testing• Distributed cognitionDistributed cognition• Not just cashNot just cash• Small sums quickly availableSmall sums quickly available• Brand advocatesBrand advocates• Increasingly a location for VCsIncreasingly a location for VCs• Stable investmentStable investment• Expectation of returnExpectation of return

DisadvantagesDisadvantages

• It doesn’t always workIt doesn’t always work• Damaging?Damaging?• It’s not freeIt’s not free• It is not a panaceaIt is not a panacea• How will other investors view itHow will other investors view it• Administration costAdministration cost

Printrbot – 3D PrinterPrintrbot – 3D PrinterPrintrbot – 3D PrinterPrintrbot – 3D Printer

•$25,000 Goal$25,000 Goal

•Avg. donation $460Avg. donation $460

•17 Reward categories17 Reward categories

The Bicycle AcademyThe Bicycle AcademyThe Bicycle AcademyThe Bicycle Academy

•£40,000 Goal£40,000 Goal

•9 Reward categories9 Reward categories

•Funded in 6 daysFunded in 6 days

•Campaign Campaign Build-up/Preparation Build-up/Preparation time: 5+ monthstime: 5+ months

What is typical?What is typical?

So what is typical?So what is typical?Pledged

SuccessfulProjects Backers Avg # backers Avg Project Value Avg Pledge Value

Film & Video $32,473,790.40 3,284 308,541 94 $9,888.49 $105.25

Music $19,801,685.21 3,653 260,178 71 $5,420.66 $76.11

Design $9,180,637.55 319 99,923 313 $28,779.43 $91.88

Art $5,900,166.14 1,172 78,558 67 $5,034.27 $75.11

Publishing $5,134,388.55 774 74,280 96 $6,633.58 $69.12

Technology $4,673,470.41 125 39,341 315 $37,387.76 $118.79

Theatre $4,051,962.62 931 50,144 54 $4,352.27 $80.81

Games $3,616,530.88 253 45,622 180 $14,294.59 $79.27

Food $2,809,503.31 241 30,682 127 $11,657.69 $91.57

Photography $2,116,261.93 343 26,897 78 $6,169.86 $78.68

Comics $1,763,628.48 267 27,544 103 $6,605.35 $64.03

Fashion $1,351,659.85 182 16,793 92 $7,426.70 $80.49

Dance $1,054,763.95 292 14,377 49 $3,612.21 $73.36

Source: www.kickstarter.com

Source: www.crowdcube.com

How to be successfulHow to be successful

KickstarterKickstarter fundit.iefundit.ie

44%

100

0

75%

Relative SuccessRelative Success

Keys to SuccessKeys to Success

Keys to SuccessKeys to Success

Keys to SuccessKeys to Success

Keys to SuccessKeys to Success• Be Social Media readyBe Social Media ready• Have a plan and prepareHave a plan and prepare• Don’t forget your offline community Don’t forget your offline community • Select your project carefully Select your project carefully • Select your platform carefullySelect your platform carefully• Develop your rewardsDevelop your rewards• Create your pitchCreate your pitch• Select your channels Select your channels • Develop a publishing plan Develop a publishing plan • Define and allocate the resource and skills required Define and allocate the resource and skills required • Get advice Get advice • Get legal adviceGet legal advice

[email protected]@twintangibles

www.twintangibles.co.uk

twintangibles 2012

Tim WrightTim Wright

Kirsty Burnham