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How small investmensts can turn an idea into a reality

Inês Gonçalves

on 4 March 2013

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Transcript of Crowdfunding

Definition: 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. Source: oxforddictionaries.com What is it? How it works: Arts, Fashion, Design, Food, Games, Technology, Music, ... Crowdfunding platforms Entrepreneurs Investors 95% funded $9,500 pledged 1 day to go Some History Patronage Angel Investors Crowdfunding JOBS Act Benefits Risks Creators can prove that their project is worth attention;
Creators have access to feedback from the investors;
It can help the economy;
Creators keep the rights of their idea;
It develops communication and marketing skills. •Not all types of projects are adequate;
•Ideas might be stolen;
•Policies vary from website to website;
•Risk of fraud;
•Projects may seem better than they are. All in all In 2008, the first crowdfunding platforms appear and change this reality by allowing entrepreneurs to share their ideas with "common" people, who are finally able to support the projects they believe in. Yet, where do people with less money but who want to help fit in? In 2012, the Congress of the USA passed a law called Jumpstart Our Business Startups, which facilitates the access to funding and allows investors to get equity from the company they supported. Individuals who provide both funding and expertise to not only artists and scientists but also to entrepreneurs and those willing to start a business or company who need help to bring their ideas or prototypes into reality. As a part of social status during some periods of History, especially during the Renaissance, this system was extremely important to the development of the Arts. However, it also had disadvantages as most patrons helped others solely based on the society's opinion. What crowdfunding is changing in our society The industry The relationship between entrepreneurs and investors Marketing What is wrong: Some major labels and investors change the entrepreneurs' original ideas; How crowdfuding changes this: Entrepreneurs are allowed to freely create and develop their projects as those judging the product are the consumers; Only a small percentage of the money raised goes to the crowdfunding platform in which the project was posted. Entrepreneurs only get a small percentage of the income for what they created; vs Project work by Conceição Barros and Maria Inês Gonçalves How small investments can turn ideas into a reality Social networks: Videos: Rewards: Entrepreneurs have to create creative and engaging videos so that they can sell their ideas as well as gain the investor's trust. These platforms give great visibility to projects, yet entrepreneurs need to know how to use them in order to reach as many people as possible. By offering some kind of reward (usually merchandising), entrepreneurs can both create deeper relationships with the investors and advertise their products. In our opinion, crowdfunding is a really interesting concept, with the potential to change some aspects of our society; We believe people will start recognizing this system and start using it, which can lead to the creation of useless projects; However, this, as well as many of the crowdfunding's disadvantages, can be solved by the creation of regulations and mechanisms which limit the types of projects accepted; It is a global concept, therefore anyone can help people from different countries. Not so global... As crowdfunding is based in the cooperation between two groups who do not know each other personally, entrepreneurs and investors need to share a strong trust relationship, in order to limit the risks of fraud. Furthermore, in case something goes wrong, it is necessary for entrepreneurs to share information about the situation since investors who trust them will not only be more patient and understanding but also keep their interest in supporting the project, despite the difficulties. Do you back this idea?
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