2. Crowd funding is Not New,
But Crowdfunding is.
Source : http://www.forbes.com/sites/jimblasingame/2014/08/01/crowd-funding-is-not-new-but-crowdfunding-is/
3. What is it?
Traditional Funding
- Large amount from one
- A few source
CrowdFunding
- Many small sums from
a large group of individuals
4. The Power of CrowdFunding
A little Money A lot of people The power of CrowdFunding
x =
5. Crowdfunding Characteristics
• Enabled by internet technologies
• Platform
• Payment systems
• Leverage social media
• For start-ups and SMEs
• Lack of access to traditional finance
• Platform takes fees on money invested
• Minimum investment very low
6. How does it work?
Source : Working the Crowd, 2013, P.9
7. How does it work?
Source : Working the Crowd, 2013, P.9
8. How does it work?
Source : Working the Crowd, 2013, P.9
9. How does it work?
Source : Working the Crowd, 2013, P.9
10. Different models
Form of contribution Form of return Motivation of funder
Donation based Donation Intangible benefits Intrinsic and social motivation
Reward based Donation/ Pre-purchase Rewards but also intangible
benefits
Combination of intrinsic and social
motivation and desire for reward
Lending based Loan Repayment of loan with interest.
Some socially motivated lending
is interest free.
Combination of intrinsic, social and
financial motivation
Equity based Investment Return on investment in time if
the business does well. Rewards
also offered sometimes.
Combination of intrinsic, social and
financial motivation
Source : Introduction to crowdfunding,2012, p.2.
13. $ 10
Potato Salad
Reading Rainbow
Oculus Rift
Zubits
Durio Sound
$ 1.5k
$ 29k
$ 250k
$ 500k
Different scale
$ 1 Million
Pebble Time
14. Some Possible Benefits
• More than money : time, assets?
• Crowds of support – network effect
• Innovative/high relevance ideas
• New types of audience reached
The entrepreneur pitches idea to the platform (1).
The platform does some screening of the proposal to make sure it lives up to its criteria (2) and,
if approved, the pitch is launched on its own campaign page within the platform (3).
*There are two main models. With ‘all or nothing’ the project only gets the money
pledged if they reach their target on time.
The ‘keep it all’ model lets the project keep any money pledged by the deadline, even
if the target is not reached.
5
PROJECT DEVELOPMENT
The microsite stays live beyond the financing period, becoming a forum for the entrepreneur to communicate
with funders on project development and progress