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Starting your Etsy shop:
how to use the crowd to
fund your growth
What you need to know about navigating the world of crowdfunding
CROWDFUNDING IN PLAIN ENGLISH
Lots of individuals contribute small amounts
... they add up to fund a creative project, a business or a cause
... facilitated by online, digital platforms
2
3
Crowdfunding
can help lower
costs of
increasing your
etsy shop’s
profitability by
lowering cost of
goods,
expanding
quality/scale/
capability
IF YOU ARE
a small business in the US
looking to crowdfunding as an
alternative source of financing,
there’s good news
and there’s bad news.
4
5
USA = the home of
crowdfunding:
60% of every $
Crowdfunded
6
So many! Just how
do you choose?
7
This Workshop.....
“101”
4 Different
models of
crowdfunding
“OMG!”
“So many sites...
how do I choose
the right one for
my biz?”
Tips for your
Campaign:
How Not to
Fail
8
This Workshop.....
“101”
4 Different
models of
crowdfunding
“OMG!”
“So many sites...
how do I choose
the right one for
my biz?”
Tips for your
Campaign:
How Not to
Fail
9
REWARDS DONATION
EQUITY
(INVESTMENT)
CROWDLENDING
4 different
models of
crowdfunding
10
REWARDS
Contribution > $X,
gets you a cool
reward from the
startup
DONATION
EQUITY
(INVESTMENT)
CROWDLENDING
11
REWARDS
DONATION
“give and
get nothing
in return but
feelgood”
EQUITY
(INVESTMENT)
CROWDLENDING
12
REWARDS DONATION
EQUITY
(INVESTMENT)
CROWDLENDING
Peer-2-peer lending
for low or no
interest
13
REWARDS DONATION
EQUITY
(INVESTMENT)
crowd earns equity,
debt, or a revenue
share for their
contributions
(pending JOBS act)
CROWDLENDING
14
Over the years,
models have
overlapped.
15
REWARDS DONATION
EQUITY
(INVESTMENT)
CROWDLENDING
{Note: sizes of the
circles roughly
indicate current
relative site traffic/
activity in 2013
according to Alexa}
16
REWARDS DONATION
EQUITY
(INVESTMENT)
CROWDLENDING
Note:
Sites selected for discussion are those with highest traffic in each category according to Alexa (Q1 2013),
Kiva traffic from multiple Kiva domains incl Kiva.org and Kiva.org
More and more
crowd-funding variants
every year...
17
18
This Workshop.....
“101”
4 Different
models of
crowdfunding
“OMG!”
“So many sites...
how do I choose
the right one for
my biz?”
Tips for your
Campaign:
How Not to
Fail
19
Q1:
What kind of
project/ biz
is it?
20
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
revenue
Innovative
“sexy” idea -
uncertain
success
Not “sexy”
but clear
revenue
No plan yet,
just bet on
ME
21
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
revenue
Innovative
“sexy” idea -
uncertain
success
Not “sexy”
but clear
revenue
No plan yet,
just bet on
ME
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q2:
Belongs to these 13 categories:
Art, Comics, Dance, Design,
Fashion, Film, Food, Games,
Music, Photography, Publishing,
Technology, or Theatre?
Y
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q2:
Belongs to these 13 categories:
Art, Comics, Dance, Design,
Fashion, Film, Food, Games,
Music, Photography, Publishing,
Technology, or Theatre? N
25
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q2:
Belongs to these 13 categories:
Art, Comics, Dance, Design,
Fashion, Film, Food, Games,
Music, Photography, Publishing,
Technology, or Theatre?
Y
N
Q3:
Definitely requires loan
$5,000-35,000 AND your Credit
Score > 600
Y
26
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q2:
Belongs to these 13 categories:
Art, Comics, Dance, Design,
Fashion, Film, Food, Games,
Music, Photography, Publishing,
Technology, or Theatre?
Y
N
Q3:
Definitely requires loan
$5,000-35,000 AND your Credit
Score > 600
Y
N
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q2:
Belongs to these 13 categories:
Art, Comics, Dance, Design,
Fashion, Film, Food, Games,
Music, Photography, Publishing,
Technology, or Theatre?
Y
N
Q3:
Definitely requires loan
$5,000-35,000 AND your Credit
Score > 600
Y
N
WHAT
CONTRIBUTORS
RECEIVE
DONATION + REWARD
(pre-selling goods,
pre-determined rewards)
DONATION + REWARD
(pre-selling goods,
pre-determined rewards)
DONATION + REWARD
(pre-selling goods,
pre-determined rewards)
INVESTMENT
(equity, share of
revenue)
INVESTMENT
(equity, share of
revenue)
NON-PROFIT
(purely emotional/
feel-good)
NON-PROFIT
(purely emotional/
feel-good)
Main players
Kickstarter Indiegogo rockethub Upstart Prosper Kiva Zip Causes.com
Size / Volume
(ave $ fundraising p/day)
$1.04mil n/a n/a n/a $330K
$500k (all Kiva)
$24k (Zip only) n/a
Failure to meet
Goal %
56%
90%
on projects >
$1000
N/a
non goal-
oriented site
Varies -
est 50%
0.5%
non goal-
oriented site
Fundraising limits
(Whether donation/Loan)
No limit No limit No limit
Varies: $100 up
to$20,000 for
experienced
depends on
credit score,
$35,000 max
1st loan
$5000
No limit
Platform Cost
($paid directly to platform)
5%
4% if goal met
9% if goal not
met
4% if goal met
8% if goal not
met
3%
Fees vary by
Prosper rating
0.5%-5%
FREE
No interest
No commission
FREE
No interest
No commission
Other expenses
(not paid to site but incurred
based on platform’s model)
Video +
Reward + 3-5%
credit card
processing
Video +
Reward + 3-5%
credit card
processing
Video +
Reward + 4%
credit card
processing
(only late
fees)
Interest rate
varies:
9%-35% APR
FREE
Paypal-Kiva
transactions free
4.75% credit
card
processing
Financial
Criteria / eligibility
No No No
min FICO
score > 640
min credit
score > 600
Character
endorsement
No
Type of
business’
restrictions
Art, comics,
dance, design,
fashion, film,
food, video,
games, photo,
publishing, tech,
theatre
No
Not only arts, but
largest crowd-
funder for
Science and
Academic
projects
College
Grads only
No No
GuideStar-
verified and
active 501(c)(3)
nonprofits
Quick overview of numbers (size, fees, costs, limits, etc)
{note: best avail numbers at Mar 2013, please verify for yourself}
“So now I’ve chosen the
most suitable crowdfunding
site or sites for myself”...
What’s Next?
29
30
Next, Rise Above
the Noise
of all crowdfunding
campaigns fail.71.3%
31
This Webinar.....
“101”
4 Different
models of
crowdfunding
“OMG!”
“So many sites...
how do I choose
the right one for
my biz?”
Tips for your
Campaign:
How Not to
Fail
32
Don’t forget to include the crowd-funding platform
success and/or failure fees, any credit card fees (usually
2-3%), all reward costs and reward delivery costs.
BUDGET
Find rewards that are exclusive but not costly - name an
ice cream flavor after donors who give >$200, free farm
tours, studio tours or concert passes, collectables, etc.
COOLrewards
CRAFTyour story w/TLC
BUDGET*BUDGET
Watch videos, look at photos or read stories that do well.
Learn. Write your own story. Improve it. Run it by
people who don’t know you well. Improve it again.
HEART
Marketing with no marketing budget is always about
social media heart & hustle. Ask friends to share your
campaign. Ask influentials to retweet you/email intro
you to others. The more people you ask, the luckier you
get in social media.
&HUSTLE
33
Creative (Low cost- high desire) Reward Strategies
Initials
Mystery
Custom
34
ETSY KIVA
35
Q1:
What kind of
project/ biz
is it?
non-profit,
good cause
Innovative
“sexy” idea
with clear
need, end,
and revenue
Innovative
“sexy” idea -
uncertain
rev$, date of
completion
Not “sexy”
but clear rev
$, just needs
capital
No plan yet,
just bet on
ME!
Q3:
Definitely requires loan
$5,000-35,000 AND your Credit
Score > 600
Y
N
Your best option is Kiva Zip if...
....If you’re an everyday small
business or startup with a clear
business plan
AND
.....you could use a 0% interest
zero fee small loan <$5000 to help
your business start/ grow more
profitably....
0% interest, zero fee crowdfunded loans <$5000
99.5% of loans posted are FULLY funded.
Any kind of small business: Cooks, farmers,
craftmakers, coffeeshops, home contractors,
beauticians, landscapers, cleaners, etc.
“Just everyday small businesses
funded directly by ordinary people’s
generosity - facilitated directly online.
No one makes money but you.”
36
&
• “Etsy+kivazip” program : getting Kiva and Etsy communities to support new/growing Etsy sellers
• Getting the Etsy community teams to publicly endorse great sellers for interest-free loans
• Because they are ʻvouched forʼ qualify for a <$5000 zero interest zero fee crowdfunded loan
• funded by a base of 1.3mil registered Kiva lenders from around the world
• No bank, no interest no fees.So far 3 Etsy sellers on Kiva Zip, more on the way
37
$3,000 loan to hire a stay-
at-home mom to help with
yarn-making, hire pro
photographer
Ximenelle
Yarn Shop
$5,000 loan to expand
range to bridal
accessories + marketing
outreach
PRINCESS PUDDLE
DUCK
hairbows
$5000 loan for cold vending cart
& equipment for festivals
HEALCREST URBAN
FARM
Herbal Teas
38
What a loan profile looks like (Ximenelle example)
39
40
What an endorsement looks like (Ximenelle example)
Questions?
- about crowdfunding options in general
- about Kiva Zip specifically
41
42
Support a local small business with a $25 loan
Zip.Kiva.org/loans
Found a trustee within your committee? Apply for a starter loan <$5000
Justin@kiva.org
(coming soon)
Etsypluskivazip web hub
Appendix:
Additional web resources on crowd-funding
(recommended)
43
44
1) Broad search:
what different crowd-funding sites exist?
2) Compare & Select:
Of the larger sites serving my type of biz, which
one(s) suit my needs (size, speed)& resources best
3)
Free Tips:
How to activate the
crowd and minimize
wasting time and
money?
http://www.rockethub.com/education
Rockethub Success School

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Kiva + Etsy joint workshop: Beginners Guide to Crowdfunding Your Creative Startup

  • 1. Starting your Etsy shop: how to use the crowd to fund your growth What you need to know about navigating the world of crowdfunding
  • 2. CROWDFUNDING IN PLAIN ENGLISH Lots of individuals contribute small amounts ... they add up to fund a creative project, a business or a cause ... facilitated by online, digital platforms 2
  • 3. 3 Crowdfunding can help lower costs of increasing your etsy shop’s profitability by lowering cost of goods, expanding quality/scale/ capability
  • 4. IF YOU ARE a small business in the US looking to crowdfunding as an alternative source of financing, there’s good news and there’s bad news. 4
  • 5. 5 USA = the home of crowdfunding: 60% of every $ Crowdfunded
  • 6. 6 So many! Just how do you choose?
  • 7. 7 This Workshop..... “101” 4 Different models of crowdfunding “OMG!” “So many sites... how do I choose the right one for my biz?” Tips for your Campaign: How Not to Fail
  • 8. 8 This Workshop..... “101” 4 Different models of crowdfunding “OMG!” “So many sites... how do I choose the right one for my biz?” Tips for your Campaign: How Not to Fail
  • 10. 10 REWARDS Contribution > $X, gets you a cool reward from the startup DONATION EQUITY (INVESTMENT) CROWDLENDING
  • 11. 11 REWARDS DONATION “give and get nothing in return but feelgood” EQUITY (INVESTMENT) CROWDLENDING
  • 13. 13 REWARDS DONATION EQUITY (INVESTMENT) crowd earns equity, debt, or a revenue share for their contributions (pending JOBS act) CROWDLENDING
  • 14. 14 Over the years, models have overlapped.
  • 15. 15 REWARDS DONATION EQUITY (INVESTMENT) CROWDLENDING {Note: sizes of the circles roughly indicate current relative site traffic/ activity in 2013 according to Alexa}
  • 16. 16 REWARDS DONATION EQUITY (INVESTMENT) CROWDLENDING Note: Sites selected for discussion are those with highest traffic in each category according to Alexa (Q1 2013), Kiva traffic from multiple Kiva domains incl Kiva.org and Kiva.org
  • 17. More and more crowd-funding variants every year... 17
  • 18. 18 This Workshop..... “101” 4 Different models of crowdfunding “OMG!” “So many sites... how do I choose the right one for my biz?” Tips for your Campaign: How Not to Fail
  • 20. 20 Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear revenue Innovative “sexy” idea - uncertain success Not “sexy” but clear revenue No plan yet, just bet on ME
  • 21. 21 Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear revenue Innovative “sexy” idea - uncertain success Not “sexy” but clear revenue No plan yet, just bet on ME
  • 22. Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME!
  • 23. Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME! Q2: Belongs to these 13 categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, or Theatre? Y
  • 24. Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME! Q2: Belongs to these 13 categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, or Theatre? N
  • 25. 25 Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME! Q2: Belongs to these 13 categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, or Theatre? Y N Q3: Definitely requires loan $5,000-35,000 AND your Credit Score > 600 Y
  • 26. 26 Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME! Q2: Belongs to these 13 categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, or Theatre? Y N Q3: Definitely requires loan $5,000-35,000 AND your Credit Score > 600 Y N
  • 27. Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME! Q2: Belongs to these 13 categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, or Theatre? Y N Q3: Definitely requires loan $5,000-35,000 AND your Credit Score > 600 Y N
  • 28. WHAT CONTRIBUTORS RECEIVE DONATION + REWARD (pre-selling goods, pre-determined rewards) DONATION + REWARD (pre-selling goods, pre-determined rewards) DONATION + REWARD (pre-selling goods, pre-determined rewards) INVESTMENT (equity, share of revenue) INVESTMENT (equity, share of revenue) NON-PROFIT (purely emotional/ feel-good) NON-PROFIT (purely emotional/ feel-good) Main players Kickstarter Indiegogo rockethub Upstart Prosper Kiva Zip Causes.com Size / Volume (ave $ fundraising p/day) $1.04mil n/a n/a n/a $330K $500k (all Kiva) $24k (Zip only) n/a Failure to meet Goal % 56% 90% on projects > $1000 N/a non goal- oriented site Varies - est 50% 0.5% non goal- oriented site Fundraising limits (Whether donation/Loan) No limit No limit No limit Varies: $100 up to$20,000 for experienced depends on credit score, $35,000 max 1st loan $5000 No limit Platform Cost ($paid directly to platform) 5% 4% if goal met 9% if goal not met 4% if goal met 8% if goal not met 3% Fees vary by Prosper rating 0.5%-5% FREE No interest No commission FREE No interest No commission Other expenses (not paid to site but incurred based on platform’s model) Video + Reward + 3-5% credit card processing Video + Reward + 3-5% credit card processing Video + Reward + 4% credit card processing (only late fees) Interest rate varies: 9%-35% APR FREE Paypal-Kiva transactions free 4.75% credit card processing Financial Criteria / eligibility No No No min FICO score > 640 min credit score > 600 Character endorsement No Type of business’ restrictions Art, comics, dance, design, fashion, film, food, video, games, photo, publishing, tech, theatre No Not only arts, but largest crowd- funder for Science and Academic projects College Grads only No No GuideStar- verified and active 501(c)(3) nonprofits Quick overview of numbers (size, fees, costs, limits, etc) {note: best avail numbers at Mar 2013, please verify for yourself}
  • 29. “So now I’ve chosen the most suitable crowdfunding site or sites for myself”... What’s Next? 29
  • 30. 30 Next, Rise Above the Noise of all crowdfunding campaigns fail.71.3%
  • 31. 31 This Webinar..... “101” 4 Different models of crowdfunding “OMG!” “So many sites... how do I choose the right one for my biz?” Tips for your Campaign: How Not to Fail
  • 32. 32 Don’t forget to include the crowd-funding platform success and/or failure fees, any credit card fees (usually 2-3%), all reward costs and reward delivery costs. BUDGET Find rewards that are exclusive but not costly - name an ice cream flavor after donors who give >$200, free farm tours, studio tours or concert passes, collectables, etc. COOLrewards CRAFTyour story w/TLC BUDGET*BUDGET Watch videos, look at photos or read stories that do well. Learn. Write your own story. Improve it. Run it by people who don’t know you well. Improve it again. HEART Marketing with no marketing budget is always about social media heart & hustle. Ask friends to share your campaign. Ask influentials to retweet you/email intro you to others. The more people you ask, the luckier you get in social media. &HUSTLE
  • 33. 33 Creative (Low cost- high desire) Reward Strategies Initials Mystery Custom
  • 35. 35 Q1: What kind of project/ biz is it? non-profit, good cause Innovative “sexy” idea with clear need, end, and revenue Innovative “sexy” idea - uncertain rev$, date of completion Not “sexy” but clear rev $, just needs capital No plan yet, just bet on ME! Q3: Definitely requires loan $5,000-35,000 AND your Credit Score > 600 Y N Your best option is Kiva Zip if... ....If you’re an everyday small business or startup with a clear business plan AND .....you could use a 0% interest zero fee small loan <$5000 to help your business start/ grow more profitably....
  • 36. 0% interest, zero fee crowdfunded loans <$5000 99.5% of loans posted are FULLY funded. Any kind of small business: Cooks, farmers, craftmakers, coffeeshops, home contractors, beauticians, landscapers, cleaners, etc. “Just everyday small businesses funded directly by ordinary people’s generosity - facilitated directly online. No one makes money but you.” 36
  • 37. & • “Etsy+kivazip” program : getting Kiva and Etsy communities to support new/growing Etsy sellers • Getting the Etsy community teams to publicly endorse great sellers for interest-free loans • Because they are ʻvouched forʼ qualify for a <$5000 zero interest zero fee crowdfunded loan • funded by a base of 1.3mil registered Kiva lenders from around the world • No bank, no interest no fees.So far 3 Etsy sellers on Kiva Zip, more on the way 37 $3,000 loan to hire a stay- at-home mom to help with yarn-making, hire pro photographer Ximenelle Yarn Shop $5,000 loan to expand range to bridal accessories + marketing outreach PRINCESS PUDDLE DUCK hairbows $5000 loan for cold vending cart & equipment for festivals HEALCREST URBAN FARM Herbal Teas
  • 38. 38
  • 39. What a loan profile looks like (Ximenelle example) 39
  • 40. 40 What an endorsement looks like (Ximenelle example)
  • 41. Questions? - about crowdfunding options in general - about Kiva Zip specifically 41
  • 42. 42 Support a local small business with a $25 loan Zip.Kiva.org/loans Found a trustee within your committee? Apply for a starter loan <$5000 Justin@kiva.org (coming soon) Etsypluskivazip web hub
  • 43. Appendix: Additional web resources on crowd-funding (recommended) 43
  • 44. 44 1) Broad search: what different crowd-funding sites exist? 2) Compare & Select: Of the larger sites serving my type of biz, which one(s) suit my needs (size, speed)& resources best 3) Free Tips: How to activate the crowd and minimize wasting time and money? http://www.rockethub.com/education Rockethub Success School