MASSOLUTIONCOM

2013CFCROWDFUNDING MARKET SOFTWARE AND SOLUTIONS

EXCERPT

PURCHASEThis version is an excerpt only To purchase a full version of the

report please click here or visit wwwcrowdsourcingorgresearch

2

copy massolution 2013 All rights reserved Confidential

Massolution provides you with a limited license to view and use this report subject to the

terms contained herein If you do not agree to the terms of this license agreement you

may not view or use this report and must immediately delete or destroy all copies of this

report within your possession

Massolution provides you with a limited non-exclusive personal non-transferrable

and revocable license to view one copy of this report and to publish up to two charts

contained within this report for non-commercial use All published charts must contain a

full citation to the report and a link to httpwwwcrowdsourcingorgresearch All other

rights are reserved

You are expressly prohibited from reproducing creating derivative works of distributing

publicly performing publicly displaying or transmitting the report in a manner not

otherwise expressly allowed under these terms including photocopying forwarding

publishing or providing the report to unlicensed users You acknowledge and agree that

all proprietary information contained within this report is the property trade secrets

and confidential information of massolution Please contact massolution directly with all

inquiries concerning multiuser licenses or any other questions

2013CF MASSOLUTIONCOM2

2013CF SWS EXCERPT

SECTION OvERvIEW

bull ACROSS THE MODELS

bull FINANCIAL vS

NON-FINANCIAL

CROWDFUNDING

MODELS

bull INDIvIDUAL MODELS

2013CF MASSOLUTIONCOM

2013CF Crowdfunding Market Software and Solutions is the fourth report in

Massolutionrsquos 2013CF series of research publications on the crowdfunding market

in 2013 The 2013CF series informs industry participants such as crowdfunding

platform operators service providers (accountants lawyers technology providers

etc) investors enterprises governments and anyone else interested in the industry

about its current state its evolution its societal impact and provides the context for

emerging trends

The report at hand is an account and analysis of the considerations new entrants

are faced with when creating a new crowdfunding platform (ldquoCFPrdquo) It follows the

entire decision process beginning at the decision to enter the market through the

choice of crowdfunding model to best serve the intended client base (crowdfunders

and campaign owners) to the main chapter which provides information about the

analysis to support the ldquoBuy vs Buildrdquo decision We provide guidelines and deep

insight into this process

This report is based on the most comprehensive and unique data set ever complied

to provide crowdfunding market participants with the information needed to

understand the various options for entering the crowdfunding market Over 30

software and solution options are outlined analyzed and put in context of the

specific needs they service

INTRODUCTION

2013CF Crowdfunding Market Software and Solutions

3

THE REPORT AT HAND

IS AN ACCOUNT AND

ANALYSIS OF THE

CONSIDERATIONS

NEW ENTRANTS ARE

FACED WITH WHEN

CREATING A NEW

CROWDFUNDING

PLATFORM

ldquo

4 2013CF MASSOLUTIONCOM

The evolution of the crowdfunding market has been exceptional over the past few

years growing from $530 million funded through 200 platforms worldwide in 2009

to $27 billion from 600 platforms last year Furthermore Massolutionrsquos recent

2013CF ndash Crowdfunding Industry Report forecasts that the total funding volume for

2013 will exceed $5 billion

Crowdfunding has proven itself as an effective tool for capital formation for social

causes and creative projects as well as startups and established companies Enabled

by hundreds of platforms all over the world that host the campaigns and facilitate

the transactions crowdfunders can now participate in this exciting new ecosystem

New platforms are launching weekly and many new players are evaluating and

developing their market strategies As crowdfunding becomes mainstream we see

indications of the market maturing exemplified by the emergence of third parties

offering crowdfunding software and solutions Therefore a multitude of options exist

for people wishing to enter the crowdfunding market and launch their own platform

The 2013CF - Crowdfunding Software amp Solutions provides you with a comprehensive

study of available solutions - the first of its kind It presents you with the range of

options and considerations to with the ldquoBuy vs Buildrdquo decision

Whether you plan to operate a platform invest in the market or simply wish to

keep track of market developments this report provides you with the necessary

reference guide to assist you in your thought process

Kevin Berg Kartaszewicz-Grell PhD

Research Director (crowdfunding) Massolution

FOREWORD

2013CF Crowdfunding Market Software and Solutions

MASSOLUTIONrsquoS

RECENT 2013CF ndash

CROWDFUNDING

INDUSTRY REPORT

FORECASTS THAT

THE TOTAL FUNDING

vOLUME FOR 2013

WILL EXCEED

$5 BILLION

ldquo Evolution of the Crowdfunding Market

5 2013CF MASSOLUTIONCOM

Over the course of four months Massolution conducted extensive market research

on available crowdfunding software and solutions Providers of crowdfunding

software and solutions were surveyed via multiple questionnaires and individual

interviews from January to April 2013

Massolution identified thirty providers of white label solutions as well as a range of

additional options for building and launching crowdfunding platforms A number of

third-party providers who offer supporting services and tools were also considered

and included where applicable

2013CF ndash Crowdfunding Market Software and Solutions report contains unique

insights on the ldquoBuy vs Buildrdquo decision process Subscribers to this report also

receive access to online profiles of thirty providers of crowdfunding software

and solutions and functionality tables for each of the five crowdfunding models

donations- rewards- equity- lending- and royalty-based crowdfunding

This report has been structured to guide the reader through the process of deciding

1) Should they enter the market

2) Should they buy or build a platform

3) If buy who should they partner with

Massolution has developed a ldquoBuy vs Buildrdquo decision matrix specifically for

crowdfunding based on standard industry approaches for software selection

METHODOLOGY AND PRESENTATION2013CF Crowdfunding Market Software and Solutions

MASSOLUTION

IDENTIFIED THIRTY

PROvIDERS OF WHITE

LABEL SOLUTIONS AS

WELL AS A RANGE OF

ADDITIONAL OPTIONS

FOR BUILDING

AND LAUNCHING

CROWDFUNDING

PLATFORMS

ldquo

6 2013CF MASSOLUTIONCOM

2013CF ndash Crowdfunding Market Software and Solutions Research Team Members

Kevin Berg Kartaszewicz-Grell

Research Director

Kevin is massolutionrsquos Research Director for Crowdfunding and Crowdsourcing

orgrsquos CAPS Program Director Research interests include Information-flow in

distributed networks and Network driven asset allocation He holds a PhD in

finance an MSc and a BSc in mathematics and economics

Paul Spinrad

Research Associate

Paul is a former editor at Wired and MAKE magazines and a crowdfunding

thought leader who catalyzed the movement for the JOBS Actrsquos crowdfunding

provision He began his career as a software engineer for government and

business applications

Maria Adamowicz

Senior Analyst

Maria is a multi-lingual researcher with a variety of financial and analytical experience

from various countries She holds a double MBA in Capital Markets (Warsaw

University) and International Business (HULT International Business School)

Mayra Sernas

Research Assistant

Mayra is a bilingual-research assistant that has supported massolutionrsquos

crowdsourcing and crowdfunding research in North America and Latin America

RESEARCH TEAM2013CF Crowdfunding Market Software and Solutions

7 2013CF MASSOLUTIONCOM

There is a revolution in how we work and how we fund business and

massolution is at the heart of it

Massolution is a unique research and advisory firm that is pioneering the

use of crowd-solutions in government institutions and in enterprises

Massolutionrsquos pioneering work includes

bull Consulting to enterprises on the adoption of crowdsourcing and

crowdfunding to leverage enterprise innovation portfolios

bull Supporting enterprises in the design and delivery of new work processes

that enable crowd labor solutions

bull Advisory work to Governments and institutions on national crowdsourcing

and crowdfunding strategies that drive social and economic impact

bull Advising nations on the design and build of future digital workforce

strategies to create new high-income digital jobs

bull Agency advisory on the use of the crowd to improve public sector processes

and drive new forms of capital formation

Massolution is helping to write the guidelines for a new way to do and

fund business

ABOUT MASSOLUTION2013CF Crowdfunding Market Software and Solutions

CROWDSOURCING INC

Crowdsourcing Inc operates two business units massolution (Research Advisory and Events) and Crowdsourcingorg (Publishing) and is headquartered in Los Angeles California at

11400 West Olympic Blvd

Suite 200

Los Angeles CA 90064

To reach a member

of the massolution or

Crowdsourcingorg team

please contact

researchcrowdsourcingorg

Media ContactJennifer Moebius

jennifercrowdsourcingorg

TwitterCrowdsourcing_

8 2013CF MASSOLUTIONCOM

TABLE OF CONTENTS FULL REPORT2013CF Crowdfunding Market Software and Solutions

1 Introduction a Foreword

i Evolution of the Crowdfunding Market ii An Emerging Ecosystem

c About this Research i Methodology and Presentation ii Research Team iii About massolution

c Definitions and Taxonomy i Crowdfunding Defined ii Crowdfunding Models

2 Entering the Crowdfunding Market a Market Strategy

i The Crowdfunding World Map ii Funding Volumes iii Crowdfunding Activity

b Business Model i Crowdfunding Model ii Revenue Model iii Cost Components

c Market Positioning i Understand Your Crowd ii Branding and Uniqueness iii Integration with an Existing Site iv Affiliate Programs v Platform Networks

d Buy vs Build

3 Buy vs Build a Requirements d ldquoBuy vs Buildrdquo Decision Matrix

i License Standard Solution ii License a Standard Solution or Assemble In-House iii Build and Assemble In-House iv Develop with a Partner

9 2013CF MASSOLUTIONCOM

TABLE OF CONTENTS FULL REPORT2013CF Crowdfunding Market Software and Solutions

4 Other Considerations a Ongoing Support Costs b Platform Features

i Dashboards and User Experience ii Administrators Interface iii Configurability iv Mobile Integration v Social Media Integration and Widgets

c Operational Considerations i Traffic and Scalability ii Payment Processing iii Electronic Signatures (for Lending- and Equity-Based Platforms)

5 Crowdfunding in the US a Introduction

i A New Market b Compliance

i Implications ii Tax Compliance iii Rewards and Securities iv Securities Deslers-Brokers v Transactions vi Investor Network Platforms vii Other Issues

6 Trends and Developments a Outlook

i Expansion of Build Your Own Options

ii API Markets

iii Investor Network CFPs

iv Integration of Advanced Tools

v Mobile Offerings

b Summary

i Moving Forward

Additionally subscribers to this report also receive access to online profiles of thirty

providers of crowdfunding software and solutions and functionality tables for

each of the five crowdfunding models donations- rewards- equity- lending- and

royalty-based crowdfunding

10 2013CF MASSOLUTIONCOM

CFPs worldwide cover an impressive range of categories funding models and of

course a variety of ways to provide the functionality required by the specific crowds

they service How your platform should stand out from (or mimic) the existing

platforms is basically a matter of what you want to achieve

Every prospective CFP operator should consider the following questions before

entering the market Who will be the crowdfunders and who will be the campaign

owners What type of campaigns should be hosted What is the best funding model

for these types of campaigns to offer for the crowdfunders and campaign owners

The last question not only corresponds directly to your choice of crowdfunding model

but it also has vast implications for the choice of service provider Furthermore it

also influences your business model back-end management and additional services

(such as legal advice) decisions

In order to answer the progression of questions you need to have a clear

understanding of who you are trying to service how they are to be serviced and

what platform and service providers will offer the best value In this regard the full

report outlines what you need to consider in terms of Branding and Uniqueness

Site-Integration Affiliation Programs and Platform Networks

ENTERING THE MARKET2013CF Crowdfunding Market Software and Solutions

HOW YOUR

PLATFORM SHOULD

STAND OUT FROM

(OR MIMIC)

THE EXISTING

PLATFORMS IS

BASICALLY A MATTER

OF WHAT YOU WANT

TO ACHIEvE

ldquo

2013CF MASSOLUTIONCOM11

As with any other software development task the decision to buy a solution (which

for the purposes of this research includes licensing software) build it yourself (from

scratch or by assembling components) or use a combination of these two options

depends on two essential factors uniqueness of needs and development experience

A thorough understanding of these two factors is advisable before reaching out to

potential providers This chapter explains and analyzes these two factors in context

of the Buy vs Build decision for crowdfunding software

Consideration 1

How unique are your needs

If you require a unique platform as discussed in the previous chapter then you will

either need to perform some custom development work yourself or select a solution

that provides the support of a development partner But if you plan to launch a CFP that is

based on a standard user interface then you have the option to license one of a number

of white label solutions And if itrsquos not a lending- or equity-based platform you also have

the option to assemble it yourself from available software tools and components

Consideration 2

What level of development experience do you have

Your Buy vs Build decision also depends on what professional development

resources you have in-house and are able to direct to the development of your CFP

Building your own platform will require software development and design expertise

Maintaining it will require further software expertise Lending- or equity-based

platforms also require additional ldquoback-officerdquo professional services that from a cost

and effort perspective are likely to exceed the level of technical support required

Back-office professional services include the need to obtain a broker-dealers license

or to partner with broker-dealers (note some solutions such as Community Leader

provide the optional services of an affiliated broker-dealer) lawyers accountants

and compliance officers

BUY vS BUILD2013CF Crowdfunding Market Software and Solutions

AS WITH ANY

OTHER SOFTWARE

DEvELOPMENT TASK

THE DECISION TO BUY

A SOLUTION BUILD

IT YOURSELF OR USE

A COMBINATION OF

THESE TWO OPTIONS

DEPENDS ON TWO

ESSENTIAL FACTORS

UNIQUENESS

OF NEEDS AND

DEvELOPMENT

EXPERIENCE

ldquo

2013CF MASSOLUTIONCOM12

The following decision matrix depicts how different combinations of the two factors

translate into four main solution options The remainder of this chapter outlines

each of these solution options in greater detail

BUY vS BUILD (CONT)2013CF Crowdfunding Market Software and Solutions

LicenseStandard Solution

orAssemble In-House

LicenseStandard Solution

(white label co-brandedor partner network)

Build and AssembleIn-House

(using open source orcommercially available

components)

Developwith a Partner

(custom solution provider)

High

Low High

Uniqueness of Need

Dev

elop

men

t Ex

peri

ence

Crowdfunding Solutions ldquoBuy vs Buildrdquo Decision Matrix

Figure Crowdfunding Solutions ldquoBuy vs Buildrdquo Decision Matrix

13 2013CF MASSOLUTIONCOM

There are basically four options available today They are License Standard Solution

Assemble in-House Build and Develop with a Partner

Depending of your uniqueness of needs and in-house development expertise you could

have alternative options as illustrated in the Buy vs Build decision matrix For example

if your requirements are not unique but you have a high level of in-house expertise

you have the option to either license a standard solution or assemble in house from

purchased (or free) components

As explained previously each of these options is available because the demand from

new CFPs pertains to both the uniqueness of needs and the in-house expertise

LICENSE STANDARD SOLUTION

A standardized solution will be a good fit for you if the CFP you are aiming for is somewhat

similar to the ones we see operating today and your level of in-house expertise is low

Applying an existing model to a new category of campaigns a new region or similar

strategies that do not require any tweaks or customization is well suited for one of the

many standard solutions Every provider of crowdfunding software and solutions will

have a standardized solution to offer The donation- and reward-based models are by

and large the cheapest ones the royalty-based and lending-based models require more

sophisticated back-end design and are therefore more costly and the equity-based

models are generally the most expensive

ASSEMBLE IN-HOUSE

Although a standardized solution is a good match for CFPs that do not require tweaks

or customizations you should still keep in mind the potential in-house resources that

might be able to assemble the CFP from individual components rather than purchasing

a complete solution This is particularly viable if you have a high level of in-house

development expertise There are several options available in this situation and the

full report outlines several ways the white-labels in the market can be customized to

accommodate you if you decide to assemble in-house

OPTIONS2013CF Crowdfunding Market Software and Solutions

THERE ARE

BASICALLY FOUR

OPTIONS AvAILABLE

TODAY THEY ARE

LICENSE STANDARD

SOLUTION

ASSEMBLE IN-HOUSE

BUILD AND DEvELOP

WITH A PARTNER

ldquo

14 2013CF MASSOLUTIONCOM

OPTIONS (CONT)2013CF Crowdfunding Market Software and Solutions

BUILD

If your requirements are unique and you do have access to in-house development

resources you have the option to build from scratch or utilize available components and

direct effort toward customization and integration

DEVELOP WITH A PARTNER

If your CFP idea is completely unique and cannot be matched by a standard solution or

assembled from individual components and you do not possess a high level of in-house

development expertise you have the option to develop your CFP with a partner As the

crowdfunding market evolves new approaches to the CFP structure are continuously

tested Requests for solutions that are significantly different from the CFP landscape as of

today have increased to a point where every white-label provider can offer customization

and partnership to some degree

2013CF MASSOLUTIONCOM

EXAMPLES FROM THE FULL REPORT2013CF Crowdfunding Market Software and Solutions

15

23 2013CF MASSOLUTIONCOM

Naturally the representation of current crowdfunding activity is neither a guarantee

that there is room for additional platforms nor does it rule out the possibility that

some of the less active combinations of category focus and crowdfunding model can

be lucrative The bar chart below is simply an overview of where the market is today

CROWDFUNDING ACTIVITY (CONT)

MARKET STRATEGYEntering the Crowdfunding Market

Social Causes

Business and Entrepreneurship

Films and Performing Arts

Music and Recording Arts

Energy and Environment

Fashion

Art (general)

Information and Communication Technology

Journalism Books Photo and Publishing Arts

Science and Technology

Donation andor Rewards Financial Return

0 5 10 15 20 25 30

Figure Financial versus Non-Financial crowdfunding activities

2013CF MASSOLUTIONCOM40

Donation Reward Lending Equity Royalty

Africa Unsigned uuml uuml uuml

Arctic Island uuml uuml uuml

Community Funded uuml uuml

CommunityLeader uuml uuml uuml

Crowd Valley uuml uuml uuml

Crowdculture uuml

CrowdfundHQ uuml uuml

Crowdhoster uuml uuml

Crowdnetic uuml uuml uuml uuml

Engage uuml uuml

FundRazr uuml uuml

Hybrid Funding uuml uuml uuml uuml uuml

Investedin uuml uuml uuml uuml

isePankur uuml

Katipult uuml uuml uuml uuml uuml

Launcht uuml uuml uuml uuml

Mimoona uuml uuml

MIPISE uuml uuml

MyAzimia uuml uuml

Rebirth Financial uuml uuml uuml

Rebuilding Society uuml

Sponsorcraft uuml uuml

Startnext uuml uuml

Symbid uuml uuml

Table of Visions uuml uuml uuml

Towema uuml uuml

Up and Funding uuml uuml uuml uuml

WEBclusive uuml uuml uuml uuml uuml

WiSEED uuml uuml

Zimplemoney uuml

LICENSE STANDARD SOLUTION (CONT)

Buy vs Build

ldquoBUY VS BUILDrdquo DECISION MATRIX

2013CF MASSOLUTIONCOM57

Aside from differences in basic features other functional considerations need to

be taken into account Below we outline three that require careful attention when

building your CFP solution Two of these Payment Processing and Electronic

Signatures involve the integration of third-party providers

TRAFFIC AND SCALABILITY

CFPs that do not anticipate high traffic or transaction volumes have the option to use

low budget but simple to implement DIY solutions An example would be a WPMU

(Wordpress Multi-User) Fundraising site running on an inexpensive WordPress

hosting plan But high-traffic or high-transaction volume CFPs will require optimized

solutions such as turnkey or custom hosting with high capacity and service level

guarantees

PAYMENT PROCESSING

CFPs use various payment processors to initiate the transactions that transfer

funds from the crowdfunders to the campaign owner Some are based on payment

card systems which require credit card details others initiate transfers via direct

bank transfers with account and routing numbers Fees are usually charged per

transaction as a percentage of the amount being transferred or some combination

of the two

The payment processor deducts these fees directly at the time the transaction is

executed representing an added cost that reduces that amount of funds raised by

the campaign owner So long as the payment system is reliable and secure CFPrsquos

that utilize payment processing services that offer a competitive fee will be more

attractive to the campaign owner

INTRODUCTION

Other Considerations

ASIDE FROM

DIFFERENCES IN

BASIC FEATURES

OTHER FUNCTIONAL

CONSIDERATIONS

NEED TO BE TAKEN

INTO ACCOUNT

ldquo

OPERATIONAL CONSIDERATIONS

2013CF MASSOLUTIONCOM54

CFP solutions vary in terms of the features they offer and the feature sets offered

depend largely on the types of crowdfunding models supported Some general

categories of features are discussed below Via your link on the sections of this

report hosted on Crowdsourcingorgrsquos Web portal you can see a comparison by

CFP provider of the most common features included within each of their offerings

Additional more unique features offered by CFPs are described in the individual CFP

provider profiles also accessible via the online sections of this report

DASHBOARDS AND USER EXPERIENCE

The CFP solutions include two different components of the front-end interface for

participants of the CFP the campaign owners and funders and a third interface

the admin dashboard for the platform operators CFP solutions differ across these

three elements You should carefully review all of these interfaces to see if they

provide what you need The tables included in the online section of this report list

some of the features that these interfaces include

ADMINISTRATORS INTERFACE

All administrator interfaces should let you revoke user accounts and perform other

housekeeping Some give you helpful views into transaction activity while others

leave you to view that data through your payment provider Some administrator

interfaces let you control the sitersquos design or upload new style-sheet files while

others do not mdash which may be good for preventing poorly presented pages from

going live on the site Some administrator interfaces will include graphs of page-by-

page traffic to your site (via Google Analytics for example) while others do not With

build-your-own providers the administrator interface to is a function of how the

provider has designed the administrators interface

INTRODUCTION

Other Considerations

CFP SOLUTIONS

VARY IN TERMS

OF THE FEATURES

THEY OFFER AND

THE FEATURE

SETS OFFERED

DEPEND LARGELY

ON THE TYPES OF

CROWDFUNDING

MODELS SUPPORTED

ldquo

PLATFORM FEATURES

16 2013CF MASSOLUTIONCOM

The 2013 edition of the report on crowdfunding software and solutions enables

you to decide whether you should buy or build your CFP You will learn exactly what

is available on the market and you will get exclusive access to contact details and

provider information for all the 30 providers highlighted in the report

bull Get the complete overview of the market for crowdfunding software

bull Inform your decision making with unique market insights

bull Execute an efficient search for providers

bull Review your options based of direct provider comparisons

bull Get contact details to all the providers in the market

PURCHASE NOW2013CF Crowdfunding Market Software and Solutions

THE 2013 EDITION

OF THE REPORT ON

CROWDFUNDING

SOFTWARE AND

SOLUTIONS ENABLES

YOU TO DECIDE

WHETHER YOU

SHOULD BUY OR

BUILD YOUR CFP

ldquo

PURCHASEThis version is an excerpt only To purchase a full version of the

report please click here or visit wwwcrowdsourcingorgresearch

17 2013CF MASSOLUTIONCOM

Get all the benefits of massolution researchCrowdfunding platforms raised $27 billion and successfully funded more than 1 million campaigns in 2012

Massolution forecasts an 81 increase in global crowdfunding volumes in 2013 to $51 billion

Get the current state of the crowdfunding market and how 2012 stacked-up against previous years An in-depth analysis of the global market and CF models campaign statistics growth rates geographic breakoutsand more

$245

Get full comprehensive insight into the global crowdfunding industry Almost 100 pages of custom exclusive research including all 2012 CF data global market depth market growth and fundingvolumes best-performing industries geos and markets legal frameworksand more

$495

Get the crowdfunding market trends and outlook for 2013 and beyond An in-depth analysis of the global market and CF models predictions for regions and platforms exclusive information about emerging platforms and models enterprise crowdfundingand more

$295

wwwcrowdsourcingorgresearchLearn more by visiting us at

BUY BUY BUY