Crowdfunding Investment

By Lou Carlozo | 

Crowdfunding: a New Frontier for Investors

Crowdfunding for businesses is a new opportunity, but is it a safe place to put your investment dollars?

In 2012, director Steve Taylor embarked on a Kickstarter project just short of impossible: His goal was to raise $125,000 in 30 days after financial backers pulled funding for his movie “Blue Like Jazz,” an adaptation of Donald Miller’s best-selling memoir.

With the help of two fans, Taylor’s campaign blitz succeeded big – as in history-making big. It netted $346,000, a record fundraise for any film project on a crowdfunding platform. And as a promised perk, Taylor made thank-you phone calls to every person who pledged. All 3,500 of them.

Now, with the advent of investor-based crowdfunding, there’s a better way to thank those who pony up dough: by offering them a piece of the financial action. Would Taylor consider it for a future project? “I’d do it in a heartbeat if it could retain the elegance and integrity of Kickstarter,” he says. “But it needs an ingredient the movie business doesn’t understand: transparent accounting.”

Taylor has a point. Since President Barack Obama signed Jumpstart Our Business Startups (the JOBS Act) in 2012, it paved the way for small businesses and startups to raise capital from just about anyone, through the Internet and social networking sites. Yet some experts have urged caution as equity-based crowdfunding gathers steam.

“Like all private investments, these are high-risk,” adds Rory Eakin, co-founder and chief operating officer of CircleUp, a leading equity crowdfunding marketplace that teams up investors with consumer and retail companies. For as little as $1,000, an investor can get a piece of the pie – or scoop of the ice cream, as one of the companies on CircleUp is Alchemy Creamery, a business that makes dairy-free frozen desserts.

An early equity-based investment could result in a big return. But as Eakin acknowledges of crowdfunded hopefuls, “Many of the companies are very early stage and could end up not being successful.” To improve the odds for investors, CircleUp is picky about which companies can raise capital through its site. It has accepted only around 100 of the more than 5,000 that have applied since 2012.

Until now, equity and debt crowdfunding was available only to accredited investors – those the Securities and Exchange Commission defines as having at least $1 million in assets (excluding a main residence) or annual income greater than $200,000 in each of the past two years. But in late March, the SEC adopted what it calls Regulation A+, meaning non-accredited investors can now join the fray.

“The potential upside for investors is that they will be able to review a large number of alternative investments through crowdfunding portals,” says Jacqueline M. Benson, partner at Moye White LLP, a law firm in Denver. “The major concern about crowdfunding is that unsophisticated, unaccredited investors may not understand the true risk of investing in early-stage companies. Not to be all Debbie Downer about early-stage investments, but most early-stage companies do not achieve the level of success that they anticipate on the timeline they estimate.”

Nor will the companies hoping to attract money necessarily have it easy. “The SEC must have graded itself on a very generous curve, because once the cost and time involved are considered, Regulation A+ is more like a B-,” says Jeffrey A. Kelley, senior vice president of Equity Institutional, based in Westlake, Ohio. “The cost of completing the necessary documents has been estimated to be about $100,000.” By the way, that doesn’t include accounting fees to meet reporting requirements, state regulatory fees or costs to promote the crowdfunding opportunity.

Will entrepreneurs want to give crowdfunding a second thought, then? “As someone who has founded a startup, it has become clear to me that all money is not created equal,” says Taylor McPartland, co-founder of CrowdfundX, a Los Angeles-based crowdfunding agency that works with top brands and celebrities. “I would rather give more equity to one or two investors who were very strategic and provided me with insights and introductions than several hundred investors who want their money back if the company doesn’t turn into the next Snapchat.”

“Entrepreneurs funded by lots of smaller investors receive less oversight, and receive less valuable guidance, than those backed by a few larger investors,” adds Clifford Holekamp, senior lecturer in entrepreneurship and director of the entrepreneurship platform at Washington University in St. Louis’ Olin Business School. “Founders might operate their businesses with less discipline when their funders are less engaged and more distant.”

That established, companies that jump trough all the hoops – and attract smart investors – will stick out from the crowdfunding crowd as much as any clever Kickstarter campaign. (Taylor gave his effort urgency when he dubbed it “Save ‘Blue Like Jazz.’”)

“Poorly managed firms and downright charlatans will come and go, but that doesn’t mean crowdfunding is a bad idea,” says Kim Kaselionis, founder and managing partner at Breakaway Funding LLC in Sausalito, California. “A good rule of thumb is to learn the rules of engagement and build an understanding of the pros and cons as well as the pitfalls of the marketplace – and not to fall for the hype some firms will subject you to.”

In other words, “Don’t invest your life savings,” Chris Tsai, CEO of Celery, a key player in the rewards-based crowdfunding realm. “Start small, and get to know the space. Choose projects that are transparent, ideally with a good track record of delivering on previous promises.”

Whether investors strike it rich or strike out, at least the crowdfunding sector itself appears headed for success. McPartland points to a March report by Massolution that shows that more than 1,200 active crowdfunding platforms raised a total of $16.2 billion in 2014. That’s a 167 percent jump from the $6.1 billion raised in 2013.

Yet the monetary possibilities only tell part of the story. “The real reward for crowdfunding investors isn’t financial,” Holekamp says. “It’s the opportunity to participate. Helping an entrepreneur achieve their dreams, and being a part of a company that changes its industry – or maybe even the world – is exciting and personally rewarding. Everyone should have the freedom to make a difference with their dollars.”

Crowdfunding Tips

Crowdfunding has caught on, making it possible for countless entrepreneurs to turn their dreams into reality without having to go through an arduous process of raising capital. The trend has caught the interest of large corporations too, however, and the prospect of multibillion-dollar concerns possibly kicking the proverbial little guy off Kickstarter has some people squirming.

By Richard Adhikari  | Sep 11, 2014 9:07 AM PT

A notification that UC Berkeley this October will host the first executive program dedicated to teaching major corporations how to tap into the US$80 billion crowdfunding marketplace recently kicked off an email exchange between ECT editor Mick Brady and me about issues raised by the program.

Me: Hey, Mick… Coke Dodge and other F500 companies are apparently crowdfunding… and UC Berkeley is running a course on this for them… think this is worth a news piece or a feature? Let me know… this is amazing.

Mick: Thanks — yeah, this is interesting — let’s whip up a feature on this. This pitch kind of makes it sound like corporations are moving in on the little guy’s turf, but why should the crowd’s options be limited to cash-poor startups? If the crowd becomes excited by a corporate initiative and wants in on a “reward,” how could that hurt anyone else? Could it be that corporate types are using their resources to manipulate and take over the process in some way?

Me: I agree — we shouldn’t limit crowdfunding only to cash-poor startups… if this lets ordinary people buy shares of large companies that would be a good thing, though [I’m] not sure that’s the case … OTOH large companies could be sucking up funds that might otherwise have gone to the cash-strapped… I’ll look into this later.

The Good, the Bad and the Pragmatic

“We are seeing established companies turn to Indiegogoto build new communities, engage with customers, test ideas, demonstrate value, and mitigate risk in a way previously not possible,” Shannon Swallow, vice president of marketing for Indiegogo, told the E-Commerce Times.

For example, $6.5 billion semiconductor company Marvell launched its Kinoma Create construction kit for consumer electronics on Indiegogo, Swallow said.

Should a company of that size turn to crowdfunding to raise money? By doing so, are large companies like Marvell drying up a source of funding that otherwise would be available to startups? Is that morally reprehensible?

“Ethics is a personal set of standards and beliefs, and what may be considered an unethical act by some will often be considered as totally acceptable by others,” Larry Chiagouris, a professor of marketing at Pace University, told the E-Commerce Times.

“It is distinctly different when companies are using crowdfunding to test the market before releasing a product as opposed to receiving investment capital from the public,” Sang H. Lee, CEO and founder of Return on Change, pointed out.

There are two popular types of crowdfunding. Donation- or reward-based funding is basically a feel-good exercise for the investors and is typified by sites such as Kickstarter. Investment-based crowdfunding, offered by companies such as Crowdfunder and CircleUp, aims to give participants a return on their investments.

Many corporations use reward-based crowdfunding as a way to test markets and “pretail” products before proceeding to mass production, Lee told the E-Commerce Times.

Investment-based crowdfunding, on the other hand, originally was intended to “democratize finance and provide small businesses new capital formation opportunities as well as allow the everyday investor to participate in high-growth opportunities which were previously strictly controlled and regulated,” he explained.

A New Approach to Marketing

Sales can be driven through crowdfunding campaigns, which indirectly increase brand awareness or shift consumers’ perceptions, Richard Swart, director of research on crowdfinance at UC Berkeley and one of the faculty involved in the executive program, told the E-Commerce Times.

“Nothing beats people engaging with a brand through a contribution or purchase,” he explained. “Corporations realized that crowdfunding is wildly popular, relatively cheap, and effective at mobilizing communities of people around causes or ideas.”

For example, Dodge ran a Dodge Dart registry that let community organizations raise money to purchase a car for a needy person or for a cause, which “significantly increased” sales of that brand following the campaign, Swart said.

Sharing the Wealth

Equity crowdfunding is just another avenue for corporations to raise money, Swart said.

“Whether it’s a public company trying to raise awareness and gauge feedback through a campaign or your neighbor who needs funds to start a bakery, anyone can launch a campaign on Indiegogo, and it’s ultimately up to the crowd to decide whether or not to fund it,” Indiegogo’s Swallow explained.

Google, Philips, Honda, Domino’s and Warner Bros. all have turned to Indiegogo to raise funds.

Crowdfunding by large corporations “could definitely represent a way for small investors to get in on the ground floor of new and exciting marketing opportunities without the investment bankers taking a piece of the action,” suggested Pace University’s Chiagouris.

It also might improve trust in the process.

Further, while large corporations may have “much better access to resources” to launch a popular campaign, many small companies “have had great success … even with limited resources,” Return on Change’s Lee noted.

A Question of Trust

Trust has been battered in the reward-based crowdfunding sector.

For example, 9,500 people who donated $2.4 million to Oculus VR through Kickstarter got nothing except the chance to vent online when the company’s founders sold it to Facebook for $2 billion.

Nearly 14,000 people who coughed up almost $600,000 for the Yogventuresgame project on Kickstarter did not see a penny of their money when the developers canceled it. They were, however, offered early access Steam keysfor the game TUG.

“The Internet has changed the way people connect with one another — yet the act of investing remains the same,” Lee said. “To spur entrepreneurial growth and advance innovation around the world, we believe in the importance of utilizing technology and equity crowdfunding.”


Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it’s all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon’s Law still hold true? You can connect with Richard on  Google+.

BidOkee-Loyalty-DIY

A lot of crowdfunding campaigns offer backers swag like T-shirts or virtual rewards. BidOkee’s model takes things a serious step forward.

BidOkee’s loyalty program lets you reward your backers with valuable points they can use in BidOkee’s auction hub and ecommerce store. That gives real value to the reward points you offer. It also drives supporters to your site and encourages them to increase their pledge levels.

There is nothing in the crowdfunding world quite like BidOkee’s loyalty rewards program. It is a powerful tool for recruitment, retention and social sharing.

The quality of loyalty rewards programs broadly depends on: the ease and rate of point collection; breadth of collection opportunities; ease of redemption; extent of redemption opportunities; and holistic, experiential merit (how it feels to participate).

Compared to other loyalty programs, BidOkee offers ease of acquisition, with slightly more involved redemption schemes. BidOkee excels at the rate of collection, and overall fun of engagement.

The DIY culture means consumers expect to have equity, fair play, transparency and control over their circumstances. They want to know that the information collected on them will benefit them, not just the company. They want to know that the social currency they provide a company will benefit them also – via rewards. BidOkee honors these beliefs.

BidOkee’s crowdfunding experience allows backers to amass Net Worth, in the form of soft currencies – in this case BidOkee points. These currencies can be used in the BidOkee MarketPlace to participate in auctions and contests – providing tangible value to users and a return on investment to campaigners. The MarketPlace, where backers can utilize their Net Worth points by participate in fun, exciting and competitive auctions and contest giveaways, also has a “Buy Now” option where users can utilize their loyalty rewards for immediate purchases.

Loyalty rewards are earned based on BidOkee’s ‘give or get’ approach. Either earn loyalty rewards by financially supporting a campaign or earn loyalty rewards by referring others to a campaign. Either way, the user earns points and becomes a backer of a campaign. Campaigns win by increasing their user base, which earns them revenue through actions taken on the BidOkee MarketPlace or by obtaining more donations because backers earn great loyalty rewards.

But campaigns also win by placing their innovative inventions and products on the BidOkee marketplace. This is where millions of users from thousands of campaigns can utilize their loyalty rewards to purchase these products, driving revenue and new backers for startups from unanticipated prospects.

Beyond an outstanding return ratio to campaigns, loyalty rewards via gamification and on-trend design differentiate BidOkee from other crowdfunding campaigns.

Reciprocal loyalty is also the foundation upon which BidOkee is constructed. Reciprocal loyalty is two-way loyalty, where backers support BidOkee through social@thecore activity, being remunerated with high-value intangible and tangible rewards.

Loyalty rewards are just one of the unprecedented features that make BidOkee a revolution in crowdfunding.

We are building the world’s first cooperative do-it-yourself crowdfunding platform, which will allow anyone to build and run their own successful crowdfunding campaign. Loyalty rewards are a powerful tool to drive support to your crowdfunding campaign.

We have built the platform and now we are raising the capital to turn it into a do-it-yourself tool that can help everyone reach their crowdfunding objectives. And we need your help.

We are crowdfunding for crowdfunding. With your support, we will soon launch BidOkee as the world’s first gamified do-it-yourself crowdfunding platform with features not offered by the crowdfunding mega-sites.

Will you join the revolution? Click here for more information and to support BidOkee’s crowdfunding for crowdfunding campaign.

 

Crowdfunding-Flexibility-DIY

By Richard Swart, PhD Director of Research Program for Innovation in Entrepreneurial and Social Finance University of California, Berkeley with Mary Eileen Milner Global Solution Networks Fellow | CrowdfundBeat

NEW REPORT: Crowdfunding A Roadmap for Global Solution Networks

download (14)

Crowdfunding asks innumerable individuals to contribute small amounts of money in support of a goal, project or new organization—even if the ”funding applicants” are unincorporated, experimental or short-term.

Crowdfunding decreases the time required to identify and vet solutions, helps mobilize donors and project backers outside the network of the initiating organization, generates richer sources of data from stakeholders, and allows for incremental program building while funds are being collected. Crowdfunding augments the annual donor campaign model and facilitates deeper engagement between financial backers, the network, and the targets of the program. While the concept of crowdfunding may give securities and tax regulators pause, it presents a considerable opportunity for global solution networks to overcome the limitations and challenges of obtaining funding through traditional channels.

Read the full article here.

Get The Full Report here.

Crowdfunding

Published by:  CrowdMappedPR

Once upon a time, sourcing funds for projects required deep pockets or a strong personal network which the Chinese termed ‘Guan Xi‘. Today, however, the word on the street is ‘crowdfunding’.

So what is it that makes crowdfunding such a buzz word?

One of the topmost reasons is its severe reduction of risk. With the pie sliced up to bite-sized portions, investors don’t feel as if they are biting off more than they can chew. Investors can also hedge their bets on a wide range of ventures, as they no longer need to put all their eggs in one basket. With less initial start-up required, this also means entrepreneurs with less capital are able to get a piece of the action. It is no longer about the rich becoming richer, as those with keen foresight and street smarts now have a chance to improve their lives or to make a difference to society.

Crowdfunding is also a great way to get unique ideas funded. Ideas that are not run-of-the-mill may not appeal to traditional investors, but might be attractive to communities of random strangers out there who are only too happy to push creative boundaries and try out something fresh and innovative.

global crowdfundingA crowdfunding campaign is great not just as a form of accumulating funds, but also as a marketing and feedback tool. It creates curiosity & publicity about the product, idea or cause both locally and internationally. Additionally, the ability to beta test, gather honest feedback and engage in audience interaction can also be used to tweak the products and construct a more accurate picture as to what appeals to buyers. This reach once eluded smaller startups.

Angel investors from all over the world are seeking fresh ventures and ideas to adopt and co-fund. You might have an innovative product, an indie film, a real estate venture or a social cause to promote. There are no boundaries as to what can be crowdfunded. And with several hundred crowdfunding sites such as Indiegogo, Kickstarter and Crowdfunder to tap into, many have fulfilled otherwise impossible dreams.

 

This article is written by the CoAssets Editorial Team. CoAssets.com is South East Asia’s first real estate crowdfunding website. CoAssets also operates Crowdfunders.Asia, a magazine dedicated to the Asian crowdfunding scene.

crowdfunding time limits

A common rule in crowdfunding is to put a time limit on campaigns — usually a few weeks.

There is no logic to this rule except for the sense of urgency it allegedly stimulates. Yet this is a primary reason why the majority of campaigns fail.

Almost all crowdfunding campaigns are launched by people with no prior experience, so the process involves, by definition, a steep learning curve.

Time-limited crowdfunding platforms undermine their very purpose by cutting off campaigns at precisely the time when initiators are gaining their footing, learning the basics of user-acquisition, conventional and social media relations, customer service, retention and vertical cultivation. Time-limiting rules are among the crowdfunding mega-sites’ most detrimental features.

What is so infuriating is that they are simply arbitrary. It’s as though an all-powerful gym teacher is standing with a stop-watch telling grown entrepreneurs when they can go and when they have to stop. It’s degrading, self-defeating and entirely unnecessary.

Time limits are one of the major reasons why well more than half of all crowdfunding campaigns end in failure. Yet crowdfunding mega-sites insist time limits are necessary and good.

How long are consumers (that is, campaigns) going to put up with being told how to run their affairs?

Until something better comes along and no longer.

Continue reading our series on the crowdfunding crisis to find out more about the future of this massive phenomenon.

crowdfunding monuments to failure

Most crowdfunding campaigns fail.

There are plenty of reasons for this. Some initiators do not do the legwork to succeed.

Yet there are systemic reasons for this insanely high failure rate.

But get this: Not only do the crowdfunding mega-sites make it hard to succeed, many of them even maintain a sort of showcase of failure, a display or disappointments. For thousands of unsuccessful campaigns, the evidence of their failed campaigns remains on the crowdfunding site, publicly available for anyone to see in perpetuity.

Despite the fact that a project may have succeeded in raising funds on another crowdfunding platform, or through debt, equity or angel funding and moved on to wild success, it will still be immortalized as a failure on many of the crowdfunding mega-sites.

Nobody needs to remind the world of our past failures. Yet many of today’s crowdfunding sites seem determined to rub our faces in past disappointments.

Crowdfunding is still a newish concept. The time is coming when users will start demanding real customer service, better conditions and crowdfunding platforms that have the best interests of the campaigns in mind.

Keep watching this space for more about the problems with contemporary crowdfunding (and a revolutionary solution)!

Crowdfunding-Flexibility-DIY

So many crowdfunding mega-sites have a narrow-interest focus that you can find a platform for almost any project you can imagine from a short documentary film to breast augmentation.

Yet even if you wade through the hundreds of crowdfunding platforms to find the one that suits your project, there is no guarantee they are going to let you join.

On many, if not most, crowdfunding platforms, projects require approval from the site before listing. The acceptance process differs for every site, but what they all share in common is a lack of transparency and openness – both in terms of how decisions are made and what sort of projects are welcome. This draconian policy subverts the basic philosophy of crowdfunding, which was invented to realize open, accessible, less restrictive funding for start-up ventures.

Trying to launch a crowdfunding campaign these days takes a lot of research. You first need to find the one that suits you … then it turns into a kind of random crapshoot to find out whether the site will accept your project. It’s like standing outside an exclusive nightclub hoping to get picked by a judgey doorman.

This is not consumer-friendly. This is not customer service.

People are not going to put up with this sort of nonsense. Onerous acceptance barriers are among the major faults in the contemporary crowdfunding landscape.

There are solutions in the works, though, to make crowdfunding what it was meant to be: open, accessible, flexible and user-friendly. Watch this space.

crowdfunding competition

The proliferation of crowdfunding sites is getting a bit unwieldy.

There are 450 crowdfunding platforms worldwide. If you are launching a campaign, you have a lot of research to do in order to find out which one is right for your purposes.

And while every one is a little different, in important ways, they are all the same. There is a very basic and significant fault in almost every one of these sites: Inherent competition.

Every campaign listed on a crowdfunding mega-site is in direct and immediate competition with every other campaign.

The more campaigns there are on a site, the more competition there is for every single campaign.

Successful crowdfunding campaigns require the initiators to build their own success. “Discoverability” – the chance that someone will go to a crowdfunding site, see your campaign and pledge money – is evaporating as the number of platforms and campaigns expands massively.

The only way to succeed is to drive your friends and family to your campaign, then build concentric circles of backers from among those closest to you.

Yet you are driving them to a platform where any number of shiny projects could distract them from the reason they went there – your project.

And the bigger the crowdfunding mega-sites become, the worse this inherent fault.

Crowdfunding is still new. Most people who launch campaigns are doing it for the first time.

And, slowly but surely, they are coming to realize that crowdfunding platforms as they exist now are rife with very serious flaws that undermine success. These are among the reasons why well more than half of crowdfunding campaigns fail.

Crowdfunding has huge potential, obviously. It grew 1,000% in five years.

But crowdfunding as it exists now has deep flaws that consumers will not put up with.

Change is gonna come.

crowdfunding lack of available features

If crowdfunding platforms were serious about helping campaigns succeed, you’d think they would provide the tools for success.

More than half of all crowdfunding campaigns fail. So something is seriously wrong in the system.

One of the big challenges is the one-size-fits-all approach of the crowdfunding mega-sites.

Don’t like the limited options a crowdfunding site offers? Too bad?

Want to brand your crowdfunding campaign to match your online and offline presence? Sorry.

Need more than one way to raise funds? Forget it.

Want to combine crowdfunding with ecommerce? Don’t be crazy.

Crowdfunding as we know has its challenges. It can be cumbersome, user-unfriendly, weighted against the little guy and built for failure.

Serious entrepreneurs, start-ups and non-profits need flexibility, brandability and choices.

Crowdfunding mega-sites, where almost all crowdfunding currently takes place, have so little flexibility that campaigns are straight-jacketed. Solutions for serious businesses and non-profits need to reflect the changing and diverse needs of the causes they are supposed to be serving. But the mega-sites haven’t got the memo.

History shows that consumers demand flexibility. When a better choice comes along – for crowdfunding or anything else – they will jump as it.

So, as huge as crowdfunding has become in so short a time, the future holds a lot of change. In a few years, the kinds of crowdfunding sites we know now are going to be dinosaurs. What will replace them?

Stay tuned.

crowdfunding campaigns

Crowdfunding is still remarkably new and it is changing radically day by day. A lot of crowdfunding campaigns are learning on the job, finding out what works (and, too often, what doesn’t) by trial and error.

It would be ideal if successful campaigns could give a leg up to newbies. And it would be especially valuable if campaigns could support each other through cross-pollination.

BidOkee is making that possible.

We are building a do-it-yourself crowdfunding platform that will let anyone build their own crowdfunding site with features and components that exceed anything in the industry today – including multiple revenue streams.

Among the ways BidOkee will help is letting campaigns work together to build cross pollination of their products. For example, because BidOkee incorporates a loyalty rewards system that lets backers earn points to use in contests and live online auctions, there are diverse opportunities to feature products that have been previously successfully crowdfunded. Therefore, a new up-and-coming campaign will offer loyalty rewards points to its backers who will then bid on auctions populated with products from other start-up campaigns. Rather than the auctions offering only familiar consumer products, the goal is to have thousands of backers from thousands of campaigns spending loyalty points purchasing innovative products from start-up campaigns on the BidOkee auction platform. This provides enormous exposure and sales for the new start-ups.

This kind of mutual support is just one of the ways BidOkee is revolutionizing crowdfunding.

Our do-it-yourself gamified crowdfunding platform is going to change the way the world crowdfunds.

We have a prototype. Check it out at www.BidOkee.com! Help make it happen – we need your support.

Crowdfunding-Migration-DIY

Birds fly south for the winter. So do people in some cases. But crowdfunding, as we now know it, tends not to encourage migration.

Here’s what we mean: Successful crowdfunding campaigns build networks, usually by engaging the family and friends of initiators, followed by concentric circles outward as word spreads.

When the campaign succeeds, the community that has been built around it tends to disappear.

BidOkee is building a (do-it-yourself) DIY crowdfunding platform that will allow anyone to create their own crowdfunding site, with features and components that exceed anything existing crowdfunding sites offer, including e-commerce and gamified capabilities and other revenue-generation steams.

Central to our vision is independence and freedom. We are liberating crowdfunding – and that means the campaigns have control over the communities they create. Think of it as a cooperative model.

When a campaign completes successfully (or even if it doesn’t) those networks can be encouraged to migrate to another campaign initiated by the same owners, or to stretch goals for the original campaign or … well, anywhere the initiators want their networks to migrate.

In crowdfunding, there is nothing more important than the crowd. When BidOkee launches, crowdfunders will finally be in control of the communities they have built.

That’s freedom. And it is a new way of doing crowdfunding.

BidOkee’s gamified DIY crowdfunding platform is launching a revolution.

We have a prototype. Check it out at www.BidOkee.com! Help make it happen – we need your support.

crowdfunding marketing

Published February 4th, 2014 – by @trycelery

Crowdfunding Marketing

“It’s not about the money”. This overused line serves as a “trump” card when illustrating unadulterated passion in the face of conflict. It’s also kind of the truth when it comes to a growing primary use case for crowdfunding — marketing.

Marketing as the primary reason for crowdfunding is gaining considerable traction with celebrities, fortune 500 companies, and venture-backed startups alike: those who can’t even pretend to be in financial binds worthy of public contribution.

Celebrities like James Franco, Neil Young, Shaq, Kristen Bell and Zach Braff have each tried their hands at crowdfunding. Pair these Hollywood millionaires with major brands like Dodge, Honda, Kimberly-Clark, DC Entertainment, Phillips, Microsoft, and Coke, and it becomes obvious that marketing isn’t just a side-effect of crowdfunding.

Here are 4 ways brands use crowdfunding to kick-ass at marketing.

1. Get Product Validation (or not)

There’s nothing like a crowd to either validate or stomp the last shred of life out of a new idea. Generating as much product feedback as possible is a key component in creating something people want. As it turns out, crowdfunding is a fairly inexpensive way to quickly reach thousands of potential customers and find out what they really think. Nothing says “great idea!” like backer dollars, and fewer things can spell out “m-e-h” faster than a failed campaign paired with dozens of “I just didn’t get it…” emails.

For innovative marketers, crowdfunding is a modernized focus group with wider spread, more feedback, and a less contrived means for public discussion. It’s a way to test the waters without diving headfirst into building something with shaky demand.

Example: Bonobos Katy Perry Shark Suits

Bonobos is an American apparel designer that wondered if everyone else was as obsessed with Katy Perry’s Super Bowl shark costumes as they were. They took testing the market for ‘yay’ or ‘nay’ one step further by publically capturing demand before even launching a crowdfunding campaign. Taking to Twitter, the designer received 3.7K affirmative retweets that they should launch on Kickstarter.

Bonobos and the shark suits illustrates how even social crowdfunding can be used to capture demand, vamp up support, generate early-stage feedback, and validate what we already know: people loves costumes!

2. Create Brand Advocates

A marketing ‘win’ is when people are talking. Preferably they’re saying good things, but even that’s up for debate. In today’s realm, it’s not easy to cut through the clutter, and even harder to make an impact that’ll encourage brand advocacy. Creativity, uniqueness, and story matter more than ever: all things a well-executed crowdfunding campaign brings forth effortlessly.

Crowdfunding allows customers to become apart of the plot-line. Instead of passively consuming online advertisements or watching a television commercial, crowdfunding as marketing encourages activity and revolves around engagement. Closely resembling guerrilla marketing, seemingly intangible brands cross into unchartered public territory, becoming humanized in their vulnerability. Giving consumers the opportunity to experience brands actively, on their own terms, forges a connection that’s truly worth talking about.

Example: Dodge Dart

In 2013, Dodge Dart introduced a clever marketing ploy where customers could crowdfund their new car. The commercial announced, “Dad sponsors the engine for your birthday. Grandma sponsors the rims for your graduation.” Those registered would invite their family and friends to “sponsor” parts of the car within their selected timeframe, hoping that by the end of their “campaign” the car is paid for.

The campaign changed the way individuals and even communities thought about buying cars. The process became public, shareable, and in some cases, cause-driven, with groups banding together to purchase a vehicle for nonprofit programs and outreach. With over 1 million social shares, the campaign generated thousands of leads to remarket to, and according to Richard Swart, Berkeley’s crowdfunding professor (yes, Berkeley has crowdfunding courses), the Dodge Dart “saw sales more than double the following quarter.”

3. Have Greater Exposure

Crowdfunding and its success stories make the news. When this exposure is harnessed, it can give products and projects the final nudge they need to cross into ‘viral’ territory. Using crowdfunding to propel exposure in unique product campaigns is commonplace, and is even becoming a popular means for marketers and musicians alike to reach the ‘next level’.

In 2015 7 Grammy-nominated musicians were Kickstarter alum. Among them is American singer, Antonique Smith, who played Faith Evans in the biopic “Notorious”. She used her 2012 $50K Kickstarter funding to promote and market her finished debut album, and soon after gained public recognition. This year, she was nominated for a Grammy for Best Traditional R&B Performance.

Example: TLC

The all-girl trio TLC, famous for “Waterfalls” and “No Scrubs”, has had four platinum albums and won four Grammy awards. Despite this great success, the group turned to Kickstarter to get rolling on a new album, 23 years after their debut.

It’s unlikely the group was cash-strapped, but rather wanted a marketing edge to make their fifth album notable and most of all, relevant. Involving fans in the process was a strong marketing play, resulting in national and international coverage, plus a 14.5% increase in total Twitter followers.

Do you think TLC could have created this same buzz through traditional marketing and PR?

4. Become a Beloved Brand (it’s possible, really)

Crowdfunding as a storytelling tool cuts through noise, and connotes innovation, virality and a certain edginess. When properly harnessed, even big brands like Honda and Coke can break down a corporate wall (or two), and appeal to smaller communities and causes. Honda did this with their Indiegogo “Project Drive-in” crowdfunding campaign to save American drive-in theatres, and Coke with their campaign to crowdfund cleaner water in rural Mexico.

Crowdfunding allows for companies both small and large, to tell different stories, in an alternative way, and change the way their messaging is received.

Example: Newcastle

Newcastle Brown Ale knew what they were up against when it came to locking down a $4.5M 30-second advertisement spot during this year’s Super Bowl. Unwilling to blow their yearly marketing budget, the company spearheaded the “Band of Brands” to crowdfund the cost of the ad spot. For an estimated average of between $150–250K, 37 contributors appeared in one hodgepodge Super Bowl advertisement.

This brilliant crowdfund became one of this year’s most talked about Super Bowl ads. It also secured the beer brand’s role as one of America’s most beloved archetypes: the successful underdog. The “band of brands” showed the world how fun Newcastle is, and highlighted them as a relatable, creative force to be reckoned with.

The best part? It cost Newcastle a fraction of the $9.5M Busch spent on their flopped ‘anti-craft beer’ ad.


Crowdfunding as marketing can snowball exposure and network products to the power of 10. The transparency, call for action, and real-time story creation of a crowdfunding campaign is something that is unparalleled in today’s marketing realm. Although inviting customers along for the ride may be unpredictable, the reward is marketing that feels genuine, memorable, and two-sided — something close to human.

Indie Crowdfunding

Published February 17th, 2015 by Celery

Indie Crowdfunding

The idea of crowdfunding has been around since early human community and collaboration, but the mainstream uses are in constant motion. ArtistShare, said to be the world’s first crowdfunding platform emerged in 2003 as a way for creative artists to publicly fund projects; Indiegogo launched in 2008 during the Sundance Film Festival with a focus on independent films and ‘democratizing fundraising’; Kickstarter joined the scene in 2009 as the go-to place for indie hardware innovations.

What were formerly geared towards artists and modest ‘indie’ inventors, crowdfunding platforms now host major hardware launches where bullet-proof campaigns — backed by millions of investor dollars — are executed with scientific precision. Has the original idea of crowdfunding to gain independence, project control, and to circumvent traditional investment channels been lost somewhere along the way? Does crowdfunding need to be synonymous with Kickstarter’s cookie-cutter formatting and flow?

Like any song, micro-banged hairstyle, or business process that goes mainstream, the original ‘magic’ or use-case can become lost. However, this loss often coincides with the emergence of ‘the next generation’ — a reinvention that propels that song, hairstyle, or business process forward. This reinvention is brought about by thought-leaders or ‘rebels’ in a particular space — those who make the former way of doing things look as dated as 80’s hair bands.

In 2012, Lockitron became that rebel, and offered a window into what ‘next generation crowdfunding’ is shaping up to look like.

Lockitron: Crowdfunding Rebel

It was September 2012. “We Are Never Ever Getting Back Together” by Taylor Swift was number one on the radio, Kickstarter had just published their ‘We’re Not a Store’ blog, and Lockitron’s debut keyless entry lock was rejected by the number one crowdfunding platform in the world. Lockitron’s co-founder, Cameron Robertson reminisces, “We got caught up in the new ‘not a store’ requirements…And when we talked to people at the time, they were like ‘you can’t get on Kickstarter? That sucks. You’re screwed.’”

Instead of anchoring themselves to the very-sinkable ‘we’re screwed’ ship, co-founders Cameron Robertson and Paul Gerhardt got to work. Within a few days they had built their own crowdfunding web app, and opted to run their own pre-order campaign — a bold first in the heat of Kickstarter’s hardware market dominance.

The result of their self-crowdfunded campaign: $150K worth of orders in less than 24 hours, and a campaign total of $2.27M with 15,000 backers.

“You Don’t Need to Be on Kickstarter to Kickstart Anything Anymore”

After their campaign, team Lockitron affirmed themselves as the ‘Robin Hood’ of crowdfunding by releasing Selfstarter, their crowdfunding API, to the public. Selfstarter, is an “open source starting point for building your own ad-hoc crowdfunding site”, and although its framework is basic, the code has been copied over 1500 times by developers.

It was a done-deal. By 2012, Lockitron and Selfstarter had begun paving the DIY crowdfunding path.

Today, Robertsons explains, “You don’t need to be on Kickstarter to kickstart anything anymore. Hundreds of products have done this in the last two years.”

To illustrate, highly anticipated hardware innovations like Coin, Tile, August, Plastc, Navdy, and Vessyl each wrapped-up million-dollar crowdfunds independently. Interestingly, innovations perfectly aligned with Kickstarter’s hardware hold, are strategically opting out and choosing to run pre-orders on their own websites.

Speaking toward the independent crowdfunding shift, of the 25 innovations highlighted in world-class hardware incubator, Highway1’s portfolio, one third have chosen to run crowdfunding campaigns on their own sites.

Why Crowdfund on Your Own Website

1. Create Your Brand Identity

If the product you’re launching isn’t a one-off, it’s important to establish your brand, and build out an all-compassing company identity. For entrepreneurs that aim to build product collections, or have previously launched products, it doesn’t make sense to fall under the ‘Kickstarter’ or XYZ brand umbrella.

Notably, the templated format of Kickstarter makes all innovation look like ‘Kickstarter’. Essentially, your product is being plugged into the colours, layout, and design of another highly-recognizable brand. Adam Lee, co-founder of Bohemian Guitars, suggests “At the end of the day, all Kickstarter campaigns look the same. You can’t make the page your own or reflect the brand you’re trying to build with that product.”

We recently spoke with The Coolest Cooler team, who holds the top spot for their $13M crowdfunding campaign. When asked about what The Coolest was working to solve today, they replied with a question about branding: “How do we want to set up this company to really represent the heart and soul of Coolest?”

2. Keep Your Traffic

Instead of driving traffic to the platform, crowdfunding on your own website means keeping it all to yourself (insert evil laugh). This will prove quite fruitful when SEO sets in, and you can reap the rewards of an awesome pagerank, a more established website, and a higher rank on Google.

Adam Lee admits, “When someone searches Bohemian Guitars, the Kickstarter link is one of the first hits. Nearly two years later, I’d rather that wasn’t the case.” Bohemian guitars isn’t alone with this one. For several months (even years), company websites rank after their 30–45 day Kickstarter or Indiegogo campaign pages on Google. You can see this firsthand when googling Bohemian Guitars, The Coolest, Exploding Kittens, and dozens of other top campaigns.

3. Fewer Fees

When all fees are accounted for, Kickstarter and Indiegogo charge between 8–10% and 7–10% respectively of total backer funding.

Comparatively, Celery’s platform which manages both pre-orders and DIY crowdfunding, charges 2%, plus the transaction fee. When paired with Stripe, this equates to total fees of 4.9% +.30 per transaction (2% Celery +2.9% Stripe +.30).

For instance, with Lockitron’s $2.27M crowdfund in 2012, they would have had to pay Kickstarter and their payment processor anywhere between $181K-$227K in total fees. In opposition, crowdfunding through Celery’s platform paired with Stripe, would have meant a max ending total of $115K, with end-to-end order management.

4. Optimize Flow

With a customized crowdfund on your own website, you’re entirely responsible for the look and feel of your backer’s checkout experience. If something, anything’s, not entirely optimized for your buyers, you can adjust it to improve the flow. You also have full access to any of your metrics and data. This allows you to really own your company analytics right from the get-go.

Will You Crowdfund Differently?

As Robertson of Lockitron argues, “The amount that Kickstarter helps you in terms of traffic and additional sales is nowhere near the cut that they take.” For the Lockitron team and entrepreneurs like them, going it alone may present additional challenges, but the short and long-term payoffs are huge.

Recently, Lockitron began crowdfunding pre-orders on their latest keyless entry lock, Bolt. They’ve poetically referred to the Bolt as the “Next Generation” connected lock; a title that not only brings this article around full-circle, but perfectly underscores Lockitron’s larger brand identity as the forward-thinking, crowdfunding rebels of today.

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3 things to look for in a real estate crowdfunding platform

Published by Scott Picken on Apr 20th, 2015

Whether it’s tracking steps for a workout or booking a flight online, we’re all aware that technology has connected us more than ever. However, the “Information Age” has changed a lot more than our fitness routines and travel plans — it has transformed how we see the world. Through the invention of online investment tools such as crowdfunding, technology has significantly impacted how we interact — both with each other and with our money.

Recently, the international real estate market, in particular, has been revolutionized by the advent of crowdfunding, which has brought new life to the industry’s formerly outdated investment practices. Each day, more and more real estate investors are turning toward crowdfunding to conduct their transactions.

In fact, real estate crowdfunding, especially global investment, is the fastest-growing segment of crowdfunding, having expanded over 156 percent through 2013-2014. With the total size of the real estate crowdfunding market now at over $11 trillion, the growth of platforms is radically changing the rules of the real estate game as we’ve known it. Online platforms are leveling the international playing field by opening the floodgates to market information and giving minor league and rookie investors a shot at the big leagues safely.

However, it’s important to stress that not all crowdfunding portals are created equal. Although most are very secure and credible, some platforms can provide inaccurate or dishonest investment information due to either their lack of experience or integrity. And as more real estate investors jump on the crowdfunding bandwagon, it is imperative to know which platforms to pursue, and which to avoid. In order to weed out the bad from the good, you should know exactly what a legitimate real estate platform looks like by fully understanding how one should operate.

Before you make a decision about which real estate crowdfunding platform is best for you, here are three important elements a good platform should provide:

1. Accurate and up-to-date information on the market and investment opportunities

If you want to see your investments thrive and grow, it’s crucial to gather the most current information about your targeted markets. Real estate platforms should provide constant access to expert information, allowing you to acclimatize to the market’s natural ebb and flow as needed. With a credible platform, you should have access to firsthand data on current market trends to keep you continually updated on your property’s status and the market’s current climate. Put simply, the right platform should place you in the right market and connect you to the right information so you can locate and choose quality international real estate properties to invest in, while partnering with the best local partners.

Your platform should also allow you to plan strategically better before making any investment decisions by providing you all the resources necessary to do proper and extensive research. This way, you can prepare to take on any unforeseen situations or market instability. Unfortunately, most people who invest in international properties lose their initial investments because of inaccurate or incomplete information. But as long as you do your homework, it’s easy to dodge the bad properties or partners. An excellent real estate platform should help investors maximize profit by ensuring they know about investment prospects and are aware of the current market trends. In order to succeed, you have to have the right information and the right partners.

2. Convenient access to vast opportunity        

In our always-connected world, we are no longer bound by countries, currencies and economies, and, as a result, it’s now less about where you live and more about where your wealth lives. By blurring the lines between investors and capital, international real estate crowdfunding platforms have the potential to unleash unlimited wealth opportunities that have since been submerged beneath language barriers, time zones and cultural differences.

Global real estate can open many doors for investors to increase their financial wealth through widening exposure to a larger array of markets. And by broadening the overall reach of capital formation, real estate crowdfunding platforms can provide issuers and investors a much-needed source to meet the demands of today’s globalized economy.

That being said, your platform should be able to connect you easily with every opportunity the international real estate market poses by granting you access to an entire network of investors and investment options. Ideally, a real estate platform should also substantially simplify the investment process with a responsive, online support system and an efficient, user-friendly interface.

Platforms should ultimately provide a “one-stop” personalized service for you, fusing the convenience of the Internet to the investment process and acting as your go-to source for any real estate information and communication. Remember, buying a property is only one-third of the transaction. Tax, structuring and compliance make up another third, and the ongoing maintenance and managing of the transaction comprises the remaining third. This is why you need to make sure the platform and partners you are working with provide you with a real “end-to-end” solution.

3. Thorough background checks on potential investments and partners

Above all else, a legitimate crowdfunding platform should hail your safety as its chief concern by providing various security measures, such as comprehensive background and security checks. Essentially, an honest platform centers on bringing safety to an investment opportunity.

For example, before choosing another investor to go in on a property with, a platform should offer you ample resources to make sure you align with partners who are legitimate and well-versed on the global real estate landscape. When transacting in the international market, it’s incredibly important that you choose partners who have a strong global presence and understand each country’s set of real estate guidelines and nuances. By providing you access to company track records and successful global deals, platforms should help make sure you select an established partner who’s it for the long haul. And since time is critical to real estate investment and sound partnerships are pivotal, your platform should keep you up to speed on your potential partners.

At the end of the day, the appeal of real estate crowdfunding platforms lies in their ability to welcome a wider spectrum of players to the game. And as long as you know what the rules are, you’ll find a well-equipped crowdfunding team in no time. So don’t let fear of foul play keep you from your next big win — get informed, suit up and step up to the plate. After all, who wants to watch everyone hit home runs from the bench?

Scott Picken is the CEO and founder of Wealth Migrate, the premier global real estate investment marketplace. Scott has more than 16 years of international real estate industry experience, and Wealth Migrate’s leadership team has been a part of $1.34 billion in real estate transactions worldwide.

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Virgin Startup signIs this the start of a new trend – or even a new phase – in crowdfunding? Might it be another step in rewards crowdfunding ‘coming of age’ in the UK? It’s certainly getting noticed as the route of choice to seed a startup.
In a an interesting move Crowdfunder UK has hooked up with Virgin Startups – who worked with the UK government to create it’s flagship ‘Startup Loans’ scheme – is to offer loans to those who raise funds on their rewards-crowdfunding platform.
The logic is that ‘it’s about validation of the idea” in the belief that ideas ‘that are successfully crowdfunded are likely to be viable businesses” and “therefore more suited for one of [Virgin Startup’s] start-up loans”. Which, they say “is good news for anyone in need of help turning their idea into reality”. Which rather makes it sound like an option for anyone who has successfully raised a crowdfund.
Richard BransonCertainly a venture which has managed to create a product or proposition and persuade enough people to part with some cash in order to raise the money needed to make it a reality has gone a very long way to proving that a market exists – and that they can reach it. That’s a key part of the power of rewards crowdfunding. It does not however make the venture, at that early stage (which now has the money it needs to progress and prove itself) necessarily a good candidate for a startup, or any other kind of, loan.
Virgin Group Founder, Sir Richard Branson, is quoted as saying, “The great thing about being an entrepreneur today is the vast array of funding options available. The partnership between Crowdfunder and Virgin StartUp is a unique way for entrepreneurs to secure funding and receive the support and information they need to get their business ideas off the ground.” However – it’s unlikely to remain unique for long as undoubtedly it will be, cloned by others.
CrowdfunderIn fact unless and until there are revenues available to service such a loan, or at least they are clearly in sight or there’s some other means of servicing the debt, it’s really not advisable for such a startup to be taking on such a burden. By their nature very few such seed-stage businesses have reliable revenues, a steady income, to support borrowing. Which is why crowdfunding is such a great alternative in the first place.
jess rattyI’m sure that both Crowdfunder and Virgin Startup Loans are reputable companies with good intentions – and it’s reassuring to hear that the amount of such loan offers will be set by the Virgin Startup team. Crowdfunder’s communications manager  Jessica Ratty, kindly also confirmed “It’s not automatic and project owners will be undergoing an application process with Virgin Startup. Crowdfunding will be “assisting with eligibility” for loans.
But it would be a mistake to leave the impression that loan availability may be triggered by a successful raise because if this were the case it would be dangerous, and otherwise misleading.
 
Equity vs DebtOf course not every crowdfunder will want or apply for a loan – but neither should they be under any commercial or other pressure to take one. Especially at a moment of euphoria having just achieved their goal and, quite understandably, feeling on top of the world.
Handled well this combination could help a minority of crowdfunded entrepreneurs further accelerate their ventures.
But this approach is likely to be copied and in other hands however this would undoubtedly pose a real danger to some over-exuberant entrepreneurs unused to such success and tempted to take and spend a loan they think they can repay in the moments of exuberance but which could prove the undoing of their venture in the medium or longer term.
Crowdfunding has proved to be a very effective antidote to the effects of irresponsible lending. It would be a very great pity if, at a time when it’s won it’s spurs and is making great inroads, in an attempt to ‘gild the lily’, it not only marred that record but led to more irresponsible lending, with all the misery that can entail. If this combination is copied elsewhere it is vital that this is done responsibly.

barry-jamesBarry James is the co-founder of TheCrowdfundingCentre and the Social Foundation. Founded in 2012, the organization was created to further research, education and policy initiatives into the new, post-crash economy and “Crowdnomics”. James also created “Crowdfunding: Deep Impact”, the UK’s first national conference held in February 2013 which led to the influential Westminister Crowdfunding Forum. James is a frequent speaker on crowdfunding, entrepreneurship and innovation. He has recently created CrowdPowerTools.
crowdfunding

March 03, 2015 09:00 ET | SOURCE: massolution

Real Estate Crowdfunding Set to Be $2.5 Billion Industry in 2015, Finds Crowdfunding Research Firm Massolution

Report Forecasts Real Estate Crowdfunding to Nearly Triple in 2015

LOS ANGELES, CA–(Marketwired – Mar 3, 2015) – Massolution, the leading research and advisory and firm specializing in crowdsourcing and crowdfunding solutions for private, public and social enterprises, has announced the release of its comprehensive 2015CF-RE Crowdfunding for Real Estate report, which will provide the first ever detailed look at the intersection of real estate and crowdfunding. The 158-page report features data on the exponential growth of real estate crowdfunding, the emergence of specialized real estate crowdfunding platforms and how this revolutionary new method of real estate finance and investment is disrupting this asset class.

The top findings of the report include:

  • Real estate crowdfunding grew 156 percent in 2014, just breaking the $1 billion mark, with campaigns ranging in size from less than $100,000 to over $25 million.
  • In 2014, North America stood as the largest region by funding volume at 56 percent market share, compared with Europe at 42 percent.
  • By 2015, Massolution forecasts that North America will retain its lead, reaching $1.4 billion in funding volume, but Europe will have just broken the $1 billion threshold.
  • Overall, real estate crowdfunding is expected to increase by 150 percent, equaling $2.57 billion in 2015, making it one of the fastest-growing industry segments of crowd capitalism.
  • This year, U.S. commercial and industrial property crowdfunding expects to see a 250 percent increase.
  • Growing investor interest in crowdfunding platforms is proving crowdfunding to be a legitimate source of funds as compared to traditional banking.

“It appears that alternative finance platforms are here to stay and are starting to nibble away, albeit limitedly, at the regulated banking segment,” said Steven Cinelli, senior fellow for Massolution research. “Crowdfunding affords users and providers of new capital options. And with enabled technology and scale, such platforms will even offer traditional banks new ways to enhance their existing client relationships through partnering.”

One of the new and exciting findings in the report is the development of cross-border deals and expansion into other areas of the world due to the emergence of global real estate platforms like Wealth Migrate. This is leading to a dramatic increase in real estate crowdfunding in regions with markets large enough to potentially surpass the U.S. in terms of both investors and available opportunities.

“The intersection of real estate and crowdfunding is enabling a huge leap within the industry away from the old property syndication model to new intermediate marketplaces, further proliferating this model around the world,” said Carl Esposti, founder and CEO of Massolution.

Because crowdfunding platforms have turned their focus internationally, investors from around the world have the chance to capitalize on opportunities on nearly every continent.

“It is important to expand a real estate investment portfolio beyond your own backyard in order to access the global investment community for greater capacity, reduced risk and sustainable growth,” said Scott Picken, founder and CEO of Wealth Migrate, one of the top 10 leading real estate crowdfunding platforms in the world.

While the report includes substantial information on crowdfunding in general as well as segment-specific content on crowdfunding activity, it also examines trends, effects on the traditional banking industry, and the outlook for real estate crowdfunding. As has been the case with all prior Massolution reports, 2015CF-RE Crowdfunding for Real Estate will be a much-cited resource for potential investors and businesses to begin researching how crowdfunding platforms can help them gain wealth through real estate investment, while also analyzing whether this model will remain profitable long term.

“The report does an excellent job of not only identifying trends in the real estate crowdfunding sector, but provides context and insight to explain the field’s significant opportunities for issuers and investors,” added Dr. Richard Swart, Massolution research advisor. “Real estate crowdfunding platforms will transform many of the syndication practices in real estate investing, yet are poorly understood. This valuable report is the first to provide insight to the professional community.”

You can purchase a licensed copy of the report here. Broad distribution of the report was made possible by Founding Research Sponsor Wealth Migrate.

Journalists interested in a copy of the report can contact research@crowdsourcing.org.

About Massolution
Massolution® is a unique research and advisory firm specializing in the crowdsourcing and crowdfunding industries that is helping write the guidelines for a new way to do and fund business. Massolution works with governments, institutions and enterprises in the design and implementation of crowdsourcing and crowdfunding business models that drive improved business performance, product and service innovation, enhanced levels of customer engagement and in the formation of new sources of capital. Massolution also publishes the industry website www.crowdsourcing.org. To enquire about services, contact research@crowdsourcing.org, or for more information, visit www.massolution.com.

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Cartoon Crowd Links, Layered System Close-Up

Published: Apr 20, 2015 | Marc Prosser | Forbes

Why Small Businesses Are Not Yet Embracing P2P Lending and Crowdfunding

If you read business news, you might think that crowdfunding and peer2peer lending are very popular sources of business financing just by the volume of media coverage that they get. But P2P and crowdfunding platforms are relatively new to the lending space and make up a tiny fraction of business loans. Here, we explain how popular P2P loans and crowdfunding are compared to other sources of financing and why small businesses still haven’t warmed up that much to them.

Peer2Peer & Crowdfunding Lending In The Overall Loan Market

Peer2Peer lenders bring investors and borrowers together in an online platform. Borrowers say how much they need to borrow and provide some basic business information, and individual investors decide whether to fund the loan. P2P loans are like ordinary loans–they carry an interest rate and must be paid back within a certain time. Popular P2P lenders include Lending Club and Prosper.

While Peer2Peer lending is generally for established businesses, crowdfunding is more for startups. Early stage businesses can pitch an idea, and ordinary people as well as wealthy investors (sometimes hundreds) can donate small amounts of money to the project. In exchange, the business owner offers donors some small incentive (e.g. free t-shirt with the company logo) or a larger benefit (e.g. equity in the company). Kickstarter and Circle Up are popular crowdfunding companies.

While these are certainly innovative ways for businesses to raise money, the great majority of small businesses don’t use P2P lending or crowdfunding. In a survey conducted by Manta, only 2 percent of small business owners reported using crowdfunding. Another poll from Gallup-Wells Fargo found that just 3 percent of small businesses used crowdfunding.

CITVoice

Why Don’t More Small Businesses Use P2P Lending and Crowdfunding?

  • They’re hard to qualify for

Even though crowdfunding sites market themselves as being a go-to source of funding for startups, in reality only a few startup ideas are crowdfunded. CircleUp rejects 98 percent of startup applicants because they wouldn’t provide a good return on investment for investors. Another Crowdfunding site rejects “idea stage” companies and prefers more serious businesses.

If you are an existing business, Peer2Peer lenders can also be difficult to qualify for. Peer2Peer lenders require you to have a good credit score (600 or higher), and you should be in operation for at least 2 years.

Alternative lenders, like OnDeck, are actually easier to qualify for because they have lower credit score requirements (above 500), and you only have to be in business for 1 year.

  • Peer2Peer lending can be costly

Even though it may be the most innovative source of funding, Peer2Peer lending is definitely not the most affordable. APRs for one popular Peer2Peer company, Lending Club, range from 14 % to 19 %. This is cheaper than alternative short-term lenders, but banks and SBA loans are significantly cheaper. Granted, banks take a lot longer to issue loans that Peer2Peer sites, but if you can wait and you can qualify for a traditional bank loan or an SBA loan, that will be the less expensive option.

  • Technology

In the Manta survey, many small businesses said that they didn’t use crowdfunding because they didn’t understand the technology or didn’t trust the service being provided. While this may certainly be stopping some small businesses from using crowdfunding or P2P lending, these sites actually aren’t difficult to use. Any business owner can create an account on Lending Club or Kickstarter and pitch their business idea or seek out a loan. I think the distrust stems from a lack of knowledge that crowdfunding and P2P lenders should address by doing a better job of reaching out to the small business community.

  • Too many cooks?

One last reason why small businesses might not be successfully using crowdfunding or P2P lending is because famous ideas are crowding out the little guys. For example, director Spike Lee and actor Zach Braff have used Kickstarter to raise funds for their films! Some people believe this is fine because investors have the right to choose which project to support with their money, regardless of who is leading the project. On the other hand, some people argue that this destroys Kickstarter’s stated mission of bringing visibility to projects that otherwise wouldn’t get off the ground.

Conclusion

Crowdfunding and Peer2Peer lending have the potential to revolutionize the lending space if more businesses catch on to the trend. However, as of now, it still makes up a very small slice of the small business loan pie.

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Published by Daryl Burma | Crowdmapped

5 Tips for Surviving the Final Stretch of Your #Crowdfunding Campaign

You’re crowdfunding campaign is winding down to the last few days remaining. After so much hard work you’re inches away from your goal and, despite feeling anxious among other mixed emotions, you can almost feel the tingling sensation of sweet victory running through your veins. But before you and your team do a victory dance the pressure is on to make that final push to break through the funding goal barrier.

First off, let’s be clear about something before we get started. Failure is not always a bad thing. Even if you put your heart and soul into making the absolute best campaign and marketed it to the best of your ability, not reaching your crowdfunding goal the first time around does not make you a failure especially if you learn from the experience. No matter how bad you need the funds to take your product or idea to the next level the great thing about crowdfunding is that you can always give it another go if need be.

That being said, reaching your campaign goal the first time around is of course ideal and hopefully the following tips will help you avoid having to relaunch your campaign.

1) Be Assertive & Reach Out For Additional Help

reach out for help

In life, there’s nothing wrong with asking for a bit of extra help every now and then. If you’re crowdfunding campaign is running out of time, don’t be afraid to reach out to others to help assist your team in achieving your crowdfunding goals. Try to be assertive as opposed to aggressive. Even if reaching your goal is looking a little bleak what you need to focus on is portraying how confident you are in whatever it is you’re raising money for. If you show desperation and fear about not reaching your goal it will be harder to convince others that such a goal is obtainable and worth their time & support.

Get your entire team together and compile a list of contacts. Strategize ways on generating more buzz through those contacts & create a call to action plan. Encourage all of your contacts to spread the word through their entire networks and create a sense of urgency without being aggressive. Make it a fun, exciting and rewarding experience and let people know how their support will help make a positive difference.

2) Get More Creative With Stretch Goals & Perks

creative crowdfunding campaign stretch goals

Crowdfunding campaign backers love great perks. Being more creative with rewards can result in drawing the attention of a lot more backers. Once you come up with some cool new perks get creative with promotion, marketing and social media. Instead of simply saying something like “please support our campaign” talk about the cool new perk you added instead. This will help you avoid sounding cliche and also get people more enticed.

If the creative juices just aren’t flowing then you can always ask your current backers or the public for feedback on what stretch goals and perks they would like to see and then implement the ones that are feasible and make sense for your campaign.

3) Ask for Advice On Popular Crowdfunding Groups

ask for crowdfunding advice when in doubt

There are some really great crowdfunding groups and forums out there, don’t be afraid to join them and ask for advice from experts or people who have been in your shoes. Popular social media platforms such as LinkedIn, Facebook and Google+ have some very helpful groups that are dedicated to helping people just like you.

Being strong is partly about knowing your weaknesses and if you’re stumped and need help figuring out how to improve your campaign and get more traction there’s no shame in asking the public for assistance.

Here’s a few crowdfunding groups on major social media platforms to get you started:

Facebook Crowdfunding Groups

Google+ Crowdfunding Groups

LinkedIn Crowdfunding Groups

4) Whatever You Do Try Not to Panic

keep calm

States of panic are a natural occurrence and can arise at any time for various different reasons. Sometimes things can seem overwhelming especially when you have so much riding on something. The success or failure of a crowdfunding campaign can be a nail biting experience at times and so much can depend on the outcome.

If you find yourself discouraged after doing everything in your power to reach your campaign goal but can’t seem to raise those last remaining dollars try your absolute best not to panic. Take a deep breath, relax and one way or another know that if you remain focused you’ll get through this.

5) Thank Your Current Backers & Provide Constant Updates

share thanks with crowdfunding campaign backers

Don’t underestimate the power of constant updates. Thanking your current backers and keeping them involved in the success of your campaign is essential. A while back I wrote an article explaining the importance of frequent crowdfunding campaign updates which you may also find helpful.

Letting current backers know how much their support matters & asking them to remain engaged can build momentum. You never know who knows who and encouraging your current backers to help spread the word during the final days of your campaign could be the resulting difference between reaching or not reaching your goal.

Conclusion

Hopefully some of the advice above will help you along your crowdfunding journey. If anyone has other useful tips please feel free to share them in the comment section below. Additionally, you might also find this article helpful by Crowdfunding Pays which explains some great strategies for finding crowdfunding campaign backers offline

Darryl Burma

Darryl Burma

Darryl Burma is the Co-Founder, Vice President and CTO of CrowdMapped Inc.
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How Crowdfunding Changes the Geography of Startup Investing

Several observers have claimed that crowdfunding — the use of an Internet-based platform to raise small amounts of money from many people for a project or business — will “democratize” startup investing, giving any entrepreneur anywhere in the world equal access to potential investors.

While that’s probably an exaggeration, the new fundraising tool will make it easier for entrepreneurs to access capital from investors that aren’t in their local community.

Historically, most investment in start-up companies has tended to come from nearby financiers because investors need to access private information about entrepreneurs and their ventures, carefully monitor the progress of ventures in which they invest, and provide assistance to company founders. All of this is facilitated by investing close by, research on non-crowdfunding investments (angel investments and venture capital) has shown.

Crowdfunding will reduce the need for investors to be proximate, recent analysis shows.

In general, the Internet reduces many of the barriers that distance creates, facilitating transactions between geographically-distant parties in a wide variety of business settings; and researchers argue that the Web should do the same for financing start-ups. While only a handful of studies have examined this question, the results suggest that crowdfunding facilitates raising money from geographically-distant investors.

Studies of both Sellabrand, a Amsterdam-based online platform for financing musicians, and Kickstarter, a U.S.-based crowdfunding platform, both indicate that the likelihood of faraway investors financing a start-up is more similar to that of a nearby investor online than offline.

However, these studies show that crowdfunding doesn’t truly “democratize” investments, giving entrepreneurs anywhere in the world the same odds of raising money. The Internet does not eliminate all of the costs and difficulties associated with investing in faraway companies.

For instance, it does little to facilitate access to information about the entrepreneur’s personal characteristics, such as her persistence or resiliency — attributes that tend to be known by people who interact with the entrepreneur regularly. As a result, when entrepreneurs use crowdfunding platforms to raise money, geographically-distant investors tend to favor those businesses and projects that have already garnered support from the entrepreneur’s friends, family, and social network.

In short, the evidence thus far suggests that crowdfunding platforms make it easier for entrepreneurs to raise money from investors outside their local community. But they also increase the importance of getting initial investments from those close by. Money from friends and family signals to faraway investors that they will do okay investing in geographically-distant ventures.

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Published by Terry Collins | April 19, 2015 5:00 AM PDT

Experts believe controversial, political crowdfunding campaigns show no signs of slowing down.

By the next day, as cable news channels played footage from police body cameras that captured, in visceral detail, the shooting of the black suspect by the white officer, the popular crowdfunding site suspended the campaign with little comment or warning.

The site has now officially removed the campaign, saying it “did not meet their standards.” Not a single dollar was raised.

This wasn’t an isolated incident. Just a week ago, Indiegogo removed another campaign to raise cash to pay the legal bills of a white officer charged with murder in the killing of a black man, after a witness’ smartphone video of the shooting went viral. In that case, the campaign for now-former South Carolina police officer Michael Slager raised more than $1,300 of its projected $5,000 goal before it was taken down. GoFundMe, another crowdfunding site, removed a similar page supporting Slager.

A shift is happening. Crowdfunding sites are typically places where people seek public donations for projects ranging from paying medical bills to helping the homeless to starting up businesses to manufacturing a product. Some campaigns even invite donors to contribute in exchange for one of the finished products.

Now those same crowdfunding sites — whose reputations were built on helping musicians, artists and other people behind good causes raise money — are becoming new portals to fund people involved in controversial, emotionally charged issues.

It’s not just to help policemen accused in shootings. A campaign for a small-town Indiana pizzeria that publicly supported a controversial “religious freedom” law critics said was anti-gay took in more than $800,000 in crowdfunding — despite a national backlash. Similarly, a Washington state florist that was fined $1,000 for refusing to sell wedding flowers to a same-sex couple netted nearly $170,000 in crowdfunding.

Also, before the coast-to-coast outcry over the fatal shooting of Michael Brown, who was black, by white Ferguson, Mo., police officer Darren Wilson last summer, fund-raising pages were set up for both men. Wilson’s GoFundMe page even netted more than a quarter-million dollars before it was shut down without explanation.

It raises the question: Is every major polarizing issue now a cause worth crowdfunding?

“I think it was kind of inevitable that crowdfunding would be used to address more controversial, divisive issues,” said Rodrigo Davies, a crowdfunding researcher at Stanford University. “I’m not at all surprised. It was just a matter of time.”

However, Davies, who also is the head of product at the civic crowdfunding site Neighborhly, said what does surprise him is that Indiegogo and GoFundMe pulled the crowdfunding pages of the officers involved in the recent shootings, and that they did so without any rationale.

“They can’t just hold their hands up and say, ‘Hey, we’re just a host,'” Davies said. “What they have done now sets the tone for future campaigns.”

A GoFundMe spokeswoman declined to comment and an Indiegogo spokesman had no immediate comment.

Richard Swart, a researcher at the University of California, Berkeley who focuses on crowdfunding, has a similar point of view.

“I would’ve yanked them down, too,” Swart said, but that doesn’t mean the sites should have. “I think they were politically polarizing, and I don’t think crowdfunding is meant to create polarization.”

Swart said this hot-button type of crowdfunding has been happening in America for the past couple of years with no signs of letting up.

Both researchers say more politicized, niche crowdfunding sites will eventually sprout up.

“We’re just scratching the surface for sure,” Davies said. “Is there an issue you’re passionate about, and can we apply collaborative funding to it? Probably.”

Crowdfunding-Global Challenges

I recently published a report with Mary Milner addressing how crowdfunding models can be used to address global challenges across multi-national networks.   What is fascinating is how rapidly the nature of conversations about crowdfunding is changing among top policy makers, corporate leaders and foundations.

Mary Milner

At a recent international forum, this paper was discussed with global leaders, including the World Economic Forum, and crowdfunding is seen as a significant opportunity for increasing access to capital.  In the US we talk about how the promise – not yet met – of crowdfunding is the democratization of access to capital for entrepreneurs.  Globally, crowdfunding is seen as a mechanism for providing access to capital for a massive amount of the world’s population that remains outside of World Economic Forum Logotraditional banking and finance systems.

It is becoming widely accepted by policy makers and economists that most of our current developmental economic models are an abject failure.  The “world order” of the IMF, World Bank, United Nations, etc., grew out of the Bretton Woods accords at the end of WWII.  China is assertively challenging the hegemony of the US Dollar and the power of the World Bank. There have been meetings at the UN discussing whether the institution should be dissolved and a new institution take its place.  Many respected economists accuse the IMF of predatory or abusive lending practices that serve to protect the economic interests of first world nations over the needs of the developing nations.

Click here to read the full article.

Crowdfunding-8Problems-DIY

Crowdfunding is growing massively – over 1,000% in just five years.
Like a lot of new industries, though, crowdfunding faces a do-or-die moment.

There are inherent challenges in crowdfunding as it exists today that probably hold the seeds of failure for the entire model. Like the promising software programs and platforms of a decade or two ago, the crowdfunding mega-sites of today may be destined to be mere memories tomorrow.

Here’s why, in eight simple numbers.

Lack of flexibility
Crowdfunding mega-sites are take-it-or-leave-it, one-size-fits-all cookie cutters.

Time limits
Arbitrary time limits are among the main reasons why more than half of all crowdfunding campaigns fail.

All or nothing
Raise your entire goal amount of get nothing. Another arbitrary rule that contributes to failure, not success.

Monuments to failure
Want your unsuccessful crowdfunding campaign to remain online forever as a monument to failure? Well, that’s one way the crowdfunding mega-sites are willing to oblige you.

Secrecy and control
Crowdfunding sites maintain control of the user data for the networks and community you build.

Acceptance barriers
After you’ve investigated the hundreds of different types of crowdfunding platforms out there to find the one that best suits you, you can ask politely to join. The answer is often no.

Inherent competition
Want your campaign to be viewed right next to hundreds of featured competing projects? Crowdfunding mega-sites seem perfectly built to undermine your success by putting you up against hundreds or thousands of other projects.

Lack of features
Want to tweak your campaign site? You can’t. Want ecommerce features, cool tools, loyalty rewards or anything fun? Forget it. You’ll take what the crowdfunding sites offer and you’ll like it.

Until something better comes along, these are the eight main problems that define crowdfunding today.

Hoping for something better?

 

Crowdfunding-NewsWatch-DIY

BidOkee – Cooperative Crowdfunding

Crowdfunding is growing massively, 1,000% in the last five years.  Between 2009 and 2012, crowdfunding expanded at a compound annual growth rate of 63%.  As of 2014, the crowdfunding market was estimated at $16.6 billion in funding per year. Of this growth, donation-based crowdfunding comprises the majority of giving, growing at a compounded annual growth rate (CAGR) of 444 percent compared to equity crowdfunding, which is growing at a rate of 168 percent. By 2020, crowdfunding is expected to reach $500 billion in funding per year generating $3.2 trillion in economic value.

“However, a majority of crowdfunding campaigns fail,” says Eyal Lichtmann, CEO of Quilageo, the company behind BidOkee.”81% of unsuccessful projects fail to reach 20% of their funding goal. And nearly 60% of all crowdfunding projects are unsuccessful. There is a systemic problem in crowdfunding if a majority of campaigns are continuously failing. Therefore we need a new model in crowdfunding that provides greater chance of success and which changes the paradigm to a more cooperative model.”

We have a prototype. Check it out at www.BidOkee.com! Help make it happen – we need your support.