Online crowdfunding

What is crowdfunding?Raising finance from ‘the crowd’ – usually raising small sums from a large number of people

• It’s not that new!• New opportunities online – lots of different cloudfunding platforms

that host your ‘pitch’ and facilitate financial transactions for a fee• Can collect finance in the form of loans or donations• All or nothing / keep it all approaches• Rewards can be offered in return (but don’t have to be)• Equity crowdfunding is different (we can’t cover that today)

Facts and figures

Information taken from Nesta publication ‘The Rise of Future Finance’ www.nesta.org.uk/sites/default/files/the_rise_of_future_finance.pdf

Backers, donors and investors

6.35million 2011

7.69million 2012

9.4million 2013

A 21.5% increase each year

How does it work?

www.whitefusemedia.com/blog/crowdfunding-viable-option-uk-charities

1. Pitch – your idea / project with fundraising target or milestones

2. Screening – the ‘platform’ (website you use) will screen your pitch before it goes live

3. Pitch goes live – your pitch gets a webpage which will include your project details, targets, milestones, funding deadline, any rewards and amount raised so far

4. Public pledge money before your deadline. If your funding is ‘all or nothing’, you will receive funding if your target is reached, otherwise backers will receive the amount they’ve pledged back. If your funding is the ‘keep it all’ model, you will receive money pledged even if your target isn’t reached

5. Project development. If you have offered rewards to those who have pledged, this is the time to give them.

Things to consider before jumping in

Advantages DisadvantagesAccess to capital funding that traditional funders may not support, especially in a more competitive climate

Lots of work and no substitute for other forms of fundraising

Shows you real demand for your project rather than perceived demand

Risk / pressure – all or nothing model

A cheaper way to fail! Intellectual property may be at riskOnline nature means you can go beyond your geographical area

Beware what legislation may apply to you

Could help with marketing

Further reading / informationNesta is a great starting point for all things crowdfunding. It is currently running a crowdfunding project and has lots of information on its website, as well as a blog to give you some further guidance about whether crowdfunding is right for you: www.nesta.org.uk/project/crowdfunding

One of those blog posts by Nesta. This one gives ‘10.5 tips to help you reach your crowdfunding goal’: www.nesta.org.uk/news/crowdfunding-tips

Nesta has also launched a website called Crowding In, which has a useful FAQ on the topic, as well as a directory to help you choose the right crowdfunding platform for you: www.crowdingin.com

Funding Central’s introduction to crowdfunding: www.fundingcentral.org.uk/Page.aspx?SP=6549

Useful guide to crowdfunding and some hints and tips for getting started, choosing a platform and making an engaging pitch: www.thefundraisingauthority.com/internet-fundraising/crowd-funding-your-non-profit

Charity Comms article on how to run a successful crowdfunding campaign: www.charitycomms.org.uk/articles/how-to-run-a-successful-crowdfunding-campaign

A summary of crowdfunding platforms available to UK charities: www.whitefusemedia.com/blog/crowdfunding-viable-option-uk-charities