Overview of Crowdfunding, for Entrepreneurs, and some of the practical aspects of fundraising for early stage startups/

1. CROWDFUNDING
has arrived!
Propel Arizona – CJ Cornell @PropelArizona @cjcornell

2. www.PropelArizona.com
Slideshare/PropelArizona
@PropelArizona
cj@PropelArizona.com

3. Crowdfunding
•What is Crowdfunding? Fact vs Fiction.
•How does it work? & Why does it work?
•How can we use crowdfunding?
•Success & benefits: For entrepreneurs & communities
Beyond the headlines and hype:
How can crowdfunding help our economy?

4. CJ Cornell is ...

5. First, let’s talk about …
Entrepreneurship
&
Arizona

6. 1
#
AZ Entrepreneurship

7. 10
top
Places to do business …

8. 46th in the U.S.A.
venture capital, equity investing

9. We’re Great at
Starting up
(planting Seeds) **
** and just AWFUL at outcomes –
quality, scale, wealth & economic growth …

10. WE‟RE NOT THE ONLY
ONES …
** (fostering entrepreneurial success is hard)

12. concept
IPO (market share,
revenues etc )
Product
(Risk, growth)
Entrepreneurial Growth
concept->product->market->profit
$
$
$
$
Venture Capital
Angels
(accelerators/incubators)

13. Starting a company
is easier than ever …
… but growing a company is
harder & riskier than ever …

19. The Series-A Crunch

20. Crowdfunding
Crowdfunding
concept
IPO (market share,
revenues etc )
Product
(Risk, growth)
Entrepreneurial Growth
concept->product->market->profit
$
$
$
$
Venture Capital
Angels
(accelerators/incubators)
Crowdfunding
Crowdfunding

21. What is Crowdfunding ?

22. The safety of crowds
The passion of crowds
The wisdom of the crowds
Crowdfunding

25. Source: http://theyec.org/making-sense-of-the-jobs-act-and-crowdfunding-infographic/

26. • Source – http;//crowdfunder.com

27. • Source – http;//crowdfunder.com

31. 0
Equity (investment)
crowdfunding in US
cases

32. 2015
Equity crowdfunding practical in US

33. 0
FRAUD
cases

34. • Equity Crowdfunding - not in the USA (yet)
• JOBS act (April 2012) technically enables CF – but has
not yet been approved by SEC.
• No documented fraud in USA or other areas.
• Equity CF is for “high growth companies” seeking
significant funding from experienced investors
• Will dramatically change in 3-5 years (CJ prediction)
www.propelarizona.com
WYNTK(what you need to know)

35. Rewards based,
“contribution”
crowdfunding
The Kickstarter model –
„donations‟

36. “THE KICKSTARTER MODEL”
Rewards-based, Donation Crowdfunding:

40. ALL OR NOTHING

41. Perks &
Rewards

42. Updates (and Blogging)

43. Updates (and Blogging)

44. Comments & Engagement

45. Kickstarter (2012)
2.2 million people pledged a total of
$319,786,629
(up 221% from 2011)
Backers pledged $606.76 per minute
People in 177 countries backed a project in 2012
(That's 90% of the countriesin the world)

46. Source: http://KickstartersHQ.com

47. WHY …
Do people Crowdfund?

49. Lessons from Ethan Mollick‟s “The Dynamics of Crowdfunding: Determinants of Success and Failure”

50. 3 Why’s: 1. They connect to the greater
purpose of the campaign
2. They connect to a physical
aspect of the campaign like the
rewards
3. They connect to the creative
display of the campaign’s
presentation
three main reasons why
people unconnected to a
project or business would
support it:
What Is Crowdfunding And How Does It Benefit The Economy - Forbes
http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy

51. The Real
(Crowdfunding)
Why’s
• Passion
– For the technology
– For the industry
– For the cause
– For the product
• Affinity
– For the Entrepreneur
– For the region, industry etc
• Connection
• Every reason BUT R.O.I. …

52. emotional ROI.
Not financial ROI
WYNTK(what you need to know)
Crowdfunding is about …

53. (when crowdfunding …)
“its not what you do,
but why you do it,”
WYNTK(what you need to know)

54. http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-
multi-touch-watch-kits

56. http://trendwatching.com/trends/infographics/presumers/
“Consumers who want products before they are
developed”
Pre-orders
Early adopters
Supporters

57. UH OH …
The Kickstart Model..

60. 1. Crowdfunding = New “1st Money” for ventures
($10k - $50k average– but wild exceptions)
2. Equity Crowdfunding is Still Far away
3. Rewards based Model IS Crowdfunding today
4. All or Nothing Crowdfunding – Standard
5. Perks and Rewards: Pre-order Crowdfunding
6. Social Media & Content Intensive
www.propelarizona.com
WYNTK(what you need to know)

61. What does success
look like?

62. • The iPhone-friendly Pebble watch earned $7.6
million more than its $100,000 goal.
• And the Galileo iPhone platform closed its
Kickstarter campaign at $702,000, far
surpassing its $100,000 goal.

63. • Ouya raised $2 million in one day for a new Android gaming
console (it’s raised more than $5 million to date),
• the Nifty MiniDrive, external memory for Apple MacBooks.
The tiny storage company is more than 2,000% above its
$11,000 goal with 15 days left in the campaign.

64. What do successful
campaigns have in
common?

65. http://www.kickstarter.com/projects/hop/ele
vation-dock-the-best-dock-for-iphone

66. Projectio
http://www.kickstarter.com/projects/1209578799/projecteo-the-tiny-instagram-projector

67. http://www.kickstarter.com/projects/mikebond/ti2-sentinel-titanium-cache?ref=home_popular

68. http://www.kickstarter.com/projects/poots/kingdom-death-
monster?ref=home_popular

69. http://www.kickstarter.com/projects/smartthings/smartthings-make-your-
world-smarter?ref=category

70. http://www.kickstarter.com/projects/thejumpshot/jumpshot-a-new-weapon-to-
battle-pc-frustration?ref=category

71. http://trendwatching.com/trends/infographics/presumers/

72. Successful campaigns took an average
11 days preparing for their launch.
http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

73. Campaigns ran an average 49 days in
2012, as opposed to 60 in 2011.
Successful campaigns fundraised for
39 days.

74. Crowdfunding Myths & Mistakes
• Myth #1: If You Build It, They Will Come
• Myth #2: Cash is Free
• Making it about you
• Unrealistic Expectations
• Lack of clarity
• No call to action
• Expecting to be found: (No Marketing)
• Ignoring Small Donations/Donors
http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-them
http://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804

75. www.propelarizona.com
WYNTK(what you need to know)
Successful Crowdfunding
Campaigns Focus on
The new 4 P’s …
the
1.
the
2.
the
4.
the
3.

76. focus on “them” –
not your company
WHO are they?
What motivates them?
Interests, Values …
the
1.
The new 4 P’s of
Crowdfunding ..
www.propelarizona.com
the
2.
You are pitching to “them”
TELL A STORY !!
WHY is more important than $$
VIDEO(s) & VISUAL(s)
Tell the story in small „chapters‟
VIDEO(s) & VISUAL(s)
And even smaller “sound bites”
Give them a Story they
can tell to others.
the
3.
$$ Value is a negative driver !
UNIQUE
It‟s about THEM
EXCLUSIVE
And what is important to “Them”
FIRST
Make sure it is …
BUZZWORTHY
the
4.It‟s a daily/hourly effort …
SOCIAL MEDIA
It‟s a conversation …
UPDATES, BLOGS, NEWS
Provide Value, and Talking Points
RE-POST, TWEETable
It‟s about … for their network
VALIDATION & EVIDENCE

77. Crafting a
Successful
Crowdfunding Campaign

78. Some initial rules ….

79. 1. Crowdfunding takes work, new skills.
2. It takes a strategy, and preparation.
3. The rules are different.
4. You can’t just post and run …
5. It’s a public success or failure – that “stays on
your resume”
www.propelarizona.com
WYNTK(what you need to know)

80. Components
of a
Crowdfunding Campaign

81.  Title & Short Description
• (repeatable & compelling)
 Long Description (“The Pitch”)
• Make it a story … about “them”
 Visuals: Video, Photos, Images
 Team, Deliverables, Details
 Perks & rewards
 Funding Goals: Amount and Timeframe
 Updates & SOCIAL MEDIA CAMPAIGN
• Repeatable Messages
• Daily “routine”
• Traditional marketing too

82. Crafting the “Pitch”

83. First: Who What Why When …
• The 3 Who’s:
– Who are the donors? (affinity & passion)
– Who is benefits? (the market)
– Who are you?
• The 3 Why’s
– Why would your donors care?
– Why does the market care?
– Why are you the right team to do it?

84. First: Who What Why When …
• What is your project & goal?
– Understandable & Simple
– Compelling & Intriguing
– Repeatable & Memorable
• How and When
– How will you achieve your goal? Realistic?
– When, after funding? When will I get my perks?

85. Other Tips
• Tell a story
• Make it about them
• The History of the idea is intriguing
• What is the Impact? – why is this important?
• Try a FAQ
• Call to action – get them involved!

86. Exercise –
Craft the Pitch

87. Crafting your Pitch
Title & Short Description
•(repeatable & compelling)
Long Description (“The Pitch”)
•Make it a story … about “them”
Visuals: Video, Photos, Images
Team, Deliverables, Details
Perks & rewards
Funding Goals: Amount and Timeframe
Updates & SOCIAL MEDIA CAMPAIGN
•Repeatable Messages
•Daily “routine”
•Traditional marketing too
Tell a story
Make it about them
The History of the idea is intriguing
What is the Impact?
Why is this important?
Try a FAQ
Call to action – get them involved!
The 3 Who’s:
Who are the donors? (affinity & passion)
Who is benefits? (the market)
Who are you?
The 3 Why’s
Why would your donors care?
Why does the market care?
Why are you the right team to do it?
What is your project & goal?
Understandable & Simple
Compelling & Intriguing
Repeatable & Memorable
How and When
How will you achieve your goal?
Realistic?
When, after funding?
When will I get my perks?

89. Pitch Notes - 1
• Who (donors, market)
• “Why” – the story
• Impact (on the market)
• Impact (on the donors)

90. Pitch Notes - 2
• Story, and History …
• FAQ
• Perk Ideas (what’s important to donors)
• Calls to Action

91. Visuals

92. The Importance of Visual Media
• 64% of successful campaigns in had pitch videos.
• Campaigns with videos under 5 minutes were 25% more likely to reach
their goal than those with videos that were longer.
• Average campaign video length for campaigns was 3 min, 27 seconds.
Campaigns that reach their goal are 16 seconds shorter.
• On average, successful campaigns uploaded 6 media to their gallery.
• http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

93. Perks & Rewards

95. Directed by
Patrick Million
Executive Producer
CJ Cornell
a Patrick Million FILM
American Grandmaster

96. Rewards Crowdfunding
• Incentives & perks
• Pre-Orders
• Pre-Sumers
• Market Validation

98. Rewards don’t have to worth $$

100. • $25 perk is the single most claimed perk,
representing nearly 25% of all perks that are
selected.
• While the $25 dollar perk is only responsible
for raising 11% of total funds.

101. • $100 perks raise more money than any other
perk price and make up nearly 30% of total
funds. A $100 perk combined with the next
three perk price points: $50, $500, and $1000
makes up about 70% of total money raised by
perks

103. some
Rules for Rewards

104. 1. Make perks unique &
exclusive
Avoid T-shirts, Mugs & Hugs

105. 2. Target them

106. 3. Give them a
connection

107. “The
Cocktail Party
Effect”

108. “The
Restaurant
Effect”

109. “The
Carey School
Effect”

110. The less tangible the perk,
the more public (visible) &
EXCLUSIVE it needs to be.

113. The Campaign

114. How much $$ ?
How long?

115. Discussion
• How much should we raise?
– Have you raised money before? Return?
– Do you/did you work at a highly visible position?
– *** Your social network? Large? Followers?
– Idea - big market? How unique?
– How much (marketing) work will you do?

116. HOW to Crowdfund?
PUSH - Running the campaign
• Social Media
• Comments & Updates
• Networking
• Personal Pitches

117. Your mission: To get
them talking about
your project

118. Now that you’ve launched …
Continue the story

119. Social Engagement
– Transparency & Trust
– Social Proof & Viral FX
– Engagement & “The Fundamentals”
– Twitter
– Facebook
– Blogging

120. most successful projects receive about
25-40% of their revenue from their
first, second and third degree of
connections.
This could include friends, family, work acquaintances, or
anyone that the owner is connected to.
• http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy/

121. 1. Create: (of course)
- A Facebook Account
- A Twitter Account
(for your campaign)

122. 2. Tweet & Post
–Frequently
–Uniquely
–Personally

123. 3. Post Updates & Blog
•About your progress
•About the subject
•About the industry
•About the People

124. 4. Go 1-1
•Reply to comments
•Retweet/Repost
Your fans and donors are your most
powerful advocates!

125. 5. Target, Measure & Adjust
•Different Messages for different
groups
•Google, Hootsuite, others
•Learn and Adjust focus

126. Metrics
http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

127. Metrics
http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

128. the importance of google analytics to track
and improve performance
• + perks from fivvr
•
• http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-
steady

129. Campaign Checklist
Social Media
Create a schedule 2-5x / week
Use an automated tool
Eg Hootsuite
Post interesting info –
Not just pleas for money
Not just updates
Vary your targets
Call to action 1/3-1/2 time
Use analytics and other metrics
Traditional Marketing
Pitch Events
Press Releases
Demos
Testamonials
Use an automated tool
What to Communicate:
1. Your Progress
2. Successes, Evidence of success
3. Ammunition for your supporters
4. Industry Info, Factoids
5. People Info
Plan, Schedule & Update
Your Social Network is a
Force Multiplier –
but you have to give them
help.

130. Success Factors

131. http://online.wsj.com/article/SB100008723963904438558045776010130940
84438.html?mod=googlenews_wsj#articleTabs%3Darticle

132. http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-more-
money-than-campaigns-that-dont.html

133. http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-more-
money-than-campaigns-that-dont.html

134. http://www.indiegogo.com/blog/2012/07/indiegogo-insight-winning-the-middle-game.html

135. successful campaigns raise, on average, 49%
percent of their goals during the first and
last 10% of the campaign length.

136. The most important
secret is …

137. Showing Momentum
(the perception of momentum)

138. The most obvious
secret is …

139. Credibility
= trust, competence
& follow-through

140. www.propelarizona.com
Crowdfunding
Entrepreneurship & Innovation
Arizona Economic Growth

141. Practical
Crowdfunding
Workshop
www.propelarizona.com
@PropelArizona
Slideshare/PropelArizona

145. days
Crowdfunding is measured in …

146. Entrepreneurship

147. Crowdfunding Arizona
Can it jumpstart entrepreneurship?

148. 1. Kickstarter “Fails”
Arizona does poorly …

149. 2. Members =/ Supporters
% of supporters is the key ….

150. 3. Entrepreneurship is Different
Products, Companies, Entrepreneurs
…

151. 4. The role of “Ecosystem”
Incubators, accelerators, mentors etc ..

152. 5. The power of Community
Shared Goals, Passions, Outcomes …

153. Shared Goals, Passions, Outcomes …

154. Crowdfunding for Entrepreneurship & Economic Growth
Shared Goals, Passions, Outcomes …

156. People as Important as Projects …
Organizations & Affiliations …

157. Entrepreneurs success as much as funding …

158. $15k - $100k *(Average $50k) ….

159. Crowdfunding for Entrepreneurship & Economic Growth

160. www.PropelArizona.com
Slideshare/PropelArizona
@PropelArizona
cj@PropelArizona.com