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Crowd Funding

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Jackie Cantwell

on 14 October 2012

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Transcript of Crowd Funding

Jackie Cantwell
Molly Myer
Tyler Beddoe Crowd Funding Alternative Methods for Fundraising TOP REASONS FOR FAILURE:


1. Crowd funding is not easy money. The fact is most ventures never get financed except for the cream. You need a highly competitive business plan.

2. Investors are more likely to finance ventures they understand as opposed to something that is unproven. Likewise going concerns have a better chance compared to complete start-ups.

3. Constant updates on a project are essential to keep investors interested.

4. Equity-based crowd funding can be tricky and require lots of formalities like registering the shares or stock.

5. Though some businesses have raised millions of dollars through crowd funding, it is more ideal for small businesses.

6. The use of social media is essential to create awareness.

7. Given the risk premium crowd funding interests are higher than your average bank loan rate, at least in the West.

8. Some crowd funding platforms cater to specific countries or regions. THINGS TO REMEMBER Comparing Sites It's important to research the rules of engagement, such as how long your campaign can be live, what costs and percentages will be a taken by running a campaign with a specific site, and whether or not you get to keep all the funds if you don’t meet your goal. Will you be penalized if you don’t meet your goal? Each site has very different rules that you need to know up front. BASICS Kickstarter:

Free to launch

limit is 90 days

you cannot touch your funds until the time frame has elapsed and you are successful

Kickstarter requires you to start completely from scratch

Kickstarter charges a 5% fee to successful projects, and nothing to unsuccessful projects.

However, they process payments through Amazon, which charges a variable fee of 3-5%. IndieGoGo:

Free to launch

fees are the lowest in the industry at 4% (if your funding is successful)

If not, the fees jump to 9% which is meant to act as a motivator to be active in your campaign.

limit is 120.

IndieGoGo allows you to update your pitch and link with an Update to your old campaign Make sure you take these numbers into consideration, both when choosing a crowdfunding model and when determining how much money to ask for (it might be a good idea to list the fees as part of your operating costs on your campaign’s home page, too). No / poor video... need to connect to the viewer in some way!

Unrealistic goals

Unclear where funds will be going
Not knowing your audience or asking for too much/too little

Poor social media skills... you need to actively share your campaign!

Bad rewards... people want to be recognized for giving money, make them feel special! Direct, Clear, fun to watch

Clear goals

Great rewards

Great social media presence Dont overlook fees ALL OR NOTHING VS TAKE WHAT YOU CAN GET
If your project has 501 c-3 nonprofit status, both IndieGoGo and Kickstarter allow contributors to make tax-deductible donations. But only IndieGoGo offers artists the option to apply for fiscal sponsorship through their site. While it affects their fees, raising the overall combined take to 6 before third-party processing, it’s definitely an option to explore if you are looking to sweeten the pot for larger donations.

Note: neither nonprofit status or fiscal sponsorship are available to campaigns that are solely for commercial gain. However, fiscal sponsorship can be applied to both discreet projects and larger, more ongoing goals. TAX -DEDUCTIBLE DONATING VISIBILITY How do each of these sites allow you to to reach more donors? front page features projects in three categories: “New and Noteworthy”, “Popular this Week”, and “Recently Successful”. The staff of the site determine which projects are recommended. According to the Kickstarter FAQ’s, “We pay particularly close attention to fun projects that use the system creatively, have compelling videos and rewards, and have a nice head of momentum behind them.” Kickstarter’s
Employs an algorithm rather than an editorial process to determine visibility.

This algorithm tracks activity- updates, comments, promotions- and while the site promotes all projects, the GoGo effect, and therefore your involvement with your own campaign, directly influences the extent of promotion that you’ll receive. IndieGoGo, What about the other sites, how do I choose? Although there’s plenty of overlap in many of the crowdfunding sites out there, each caters to a specific audience. CREATIVE: Be sure to check out Kickstarter or IndieGoGo.

TRADITIONAL BUSINESS/ ENTRPRENEURS: Head over toProFounder or Peerbackers

SOCIAL IMPACT: You might do well at Buzzbnk or 33needs.

NON PROFITS: can fundraise at sites like CauseVox, Crowdrise (started by actor Edward Norton), or FirstGiving.

APPS: AppBackr that focuses exclusively on mobile app businesses.

WOMEN’S PROJECTS: Crowdfunding Live
A great way to research sites is through

Through the site directory here, you can learn about and find a site that is a good fit for you. www.Crowdsourcing.org.
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