crowdfunding overview (propel arizona) - for eureka loft scottsdale library

Widows & Orphans Homeless

Financial

Armageddon

Disruption

An Economic DevelopmentPhenomenon

Funding for entrepreneurs!

Fraud & Scams?

CROWDFUNDING has arrived!

revolution!

Propel Arizona – CJ Cornell @PropelArizona @cjcornell

Crowdfunding

• What is Crowdfunding? Fact vs Fiction.• How does it work? & Why does it work?• How can we use crowdfunding?• Success & benefits: For entrepreneurs &

communities

Beyond the headlines and hype: How can crowdfunding help our economy?

serial / parallel entrepreneur

• 10+ companies

• $250M Funding 4 Exits (great !)

• $3B Revenues 4 Failures (awful !)

• Lots of lessons. Chaos, Pain and Joy.

• EIR, Venture Partner

• Angel Investor

• 5 Companies

• 9 Boards

• 3,000 Tylenol Caplets.

• Ego and Brain Atrophy.

Investor, Venture Capitalist

CJ Cornell is ...

• Professor of Digital Media & Entrepreneurship• Arizona State University, SJSU, Stanford (Lecturer)• New York Institute of Technology • Knight Center for Digital Media Entrepreneurship• Research in digital media, behavior, entrepreneurship

University ProfessorAdvisor, Mentor, Author

• ASU – Skysong, Venture Catalyst, RSS etc

• Arizona Commerce Authority / Venture ready

• Arizona Innovation Challenge

• Book: Age of Metapreneurship. Blog/Articles

First, let’s talk about …

Entrepreneurship &

Arizona

1 #

AZ Entrepreneurship

10top

Places to do business …

46th in the U.S.A.

venture capital, equity investing

We’re Great at Starting up (planting Seeds) **

** and just AWFUL at outcomes – quality, scale, wealth & economic growth

…

WE’RE NOT THE ONLY ONES …

** (fostering entrepreneurial success is hard)

The Funding Gap

concept

IPO (market share, revenues etc )

Product(Risk, growth)

Entrepreneurial Growthconcept->product->market->profit

$$

$

$

Venture Capital

Angels(accelerators/incubators)

Starting a company is easier than ever …

… but growing a company is harder & riskier than ever …

The Series-A Crunch

Crowdfunding

Crowdfunding

concept

IPO (market share, revenues etc )

Product(Risk, growth)

Entrepreneurial Growthconcept->product->market->profit

$$

$

$

Venture Capital

Angels(accelerators/incubators)

Crowdfunding

Crowdfunding

What is Crowdfunding ?

The safety of crowds

The passion of crowdsThe wisdom of the crowds

Crowdfunding

Crowdfunding

Source: http://theyec.org/making-sense-of-the-jobs-act-and-crowdfunding-infographic/

• Source – http;//crowdfunder.com

• Source – http;//crowdfunder.com

5 April, 2012 (and … AugUst 2012, December 2012 …)

0

Equity (investment) crowdfunding in US

cases

2015

Equity crowdfunding practical in US

0

FRAUD

cases

• Equity Crowdfunding - not in the USA (yet)

• JOBS act (April 2012) technically enables CF – but has not yet been approved by SEC.

• No documented fraud in USA or other areas.

• Equity CF is for “high growth companies” seeking significant funding from experienced investors

• Will dramatically change in 3-5 years (CJ prediction)

www.propelarizona.com

WYNTK(what you need to know)

Rewards based,

“contribution” crowdfunding

The Kickstarter model – ‘donations’

“THE KICKSTARTER MODEL”Rewards-based, Donation Crowdfunding:

ALL OR NOTHING

Perks &Rewards

Updates (and Blogging)

Updates (and Blogging)

Comments & Engagement

Kickstarter (2012)

2.2 million people pledged a total of

$319,786,629

(up 221% from 2011)

Backers pledged $606.76 per minute

People in 177 countries backed a project in 2012

(That's 90% of the countries in the world)

Source: http://KickstartersHQ.com

WHY …Do people Crowdfund?

Lessons from Ethan Mollick’s “The Dynamics of Crowdfunding: Determinants of Success and Failure”

3 Why’s: 1. They connect to the greater purpose of the campaign

2. They connect to a physical aspect of the campaign like the rewards

3. They connect to the creative display of the campaign’s presentation

three main reasons why people unconnected to a

project or business would support it:

What Is Crowdfunding And How Does It Benefit The Economy - Forbeshttp://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy

The Real(Crowdfunding)

Why’s

• Passion– For the technology– For the industry– For the cause– For the product

• Affinity– For the Entrepreneur– For the region, industry etc

• Connection

• Every reason BUT R.O.I. …

emotional ROI.Not financial ROI

WYNTK(what you need to know)

Crowdfunding is about …

(when crowdfunding …)

“its not what you do, but why you do it,”

WYNTK(what you need to know)

http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-multi-touch-watch-kits

http://trendwatching.com/trends/infographics/presumers/

“Consumers who want products before they are developed”

Pre-ordersEarly adopters

Supporters

UH OH …The Kickstart Model..

1. Crowdfunding = New “1st Money” for ventures($10k - $50k average– but wild exceptions)

2. Equity Crowdfunding is Still Far away3. Rewards based Model IS Crowdfunding today4. All or Nothing Crowdfunding – Standard5. Perks and Rewards: Pre-order Crowdfunding6. Social Media & Content Intensive

www.propelarizona.com

WYNTK(what you need to know)

What does success look like?

• The iPhone-friendly Pebble watch earned $7.6 million more than its $100,000 goal.

• And the Galileo iPhone platform closed its Kickstarter campaign at $702,000, far surpassing its $100,000 goal.

• Ouya raised $2 million in one day for a new Android gaming console (it’s raised more than $5 million to date),

• the Nifty MiniDrive, external memory for Apple MacBooks. The tiny storage company is more than 2,000% above its $11,000 goal with 15 days left in the campaign.

What do successful campaigns have in common?

http://www.kickstarter.com/projects/hop/elevation-dock-the-best-dock-for-iphone

Projectio

http://www.kickstarter.com/projects/1209578799/projecteo-the-tiny-instagram-projector

http://www.kickstarter.com/projects/mikebond/ti2-sentinel-titanium-cache?ref=home_popular

http://www.kickstarter.com/projects/poots/kingdom-death-monster?ref=home_popular

http://www.kickstarter.com/projects/smartthings/smartthings-make-your-world-smarter?ref=category

http://www.kickstarter.com/projects/thejumpshot/jumpshot-a-new-weapon-to-battle-pc-frustration?ref=category

http://trendwatching.com/trends/infographics/presumers/

Successful campaigns took an average 11 days preparing for their launch.

http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

Campaigns ran an average 49 days in 2012, as opposed to 60 in 2011.

Successful campaigns fundraised for 39 days.

http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

Crowdfunding Myths & Mistakes

• Myth #1: If You Build It, They Will Come• Myth #2: Cash is Free• Making it about you• Unrealistic Expectations• Lack of clarity• No call to action• Expecting to be found: (No Marketing)• Ignoring Small Donations/Donors

http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-themhttp://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804

www.propelarizona.com

WYNTK(what you need to know)

Successful Crowdfunding Campaigns Focus on

The new 4 P’s …

PEOPLEthe

1. PITCH

the

2. PROMOthe

4. PERKSthe

3.

focus on “them” – not your company

WHO are they?What motivates them?Interests, Values … PEOPLE

the

1.The new 4 P’s of Crowdfunding ..

www.propelarizona.com

PITCHthe

2.You are pitching to “them”

TELL A STORY !!

WHY is more important than $$

VIDEO(s) & VISUAL(s)

Tell the story in small ‘chapters’

VIDEO(s) & VISUAL(s)

And even smaller “sound bites”

Give them a Story they can tell to others.

PERKSthe

3.$$ Value is a negative driver !

UNIQUE

It’s about THEM

EXCLUSIVE

And what is important to “Them”

FIRST

Make sure it is …

BUZZWORTHY

PROMOthe

4.It’s a daily/hourly effort …

SOCIAL MEDIA

It’s a conversation …

UPDATES, BLOGS, NEWS

Provide Value, and Talking PointsRE-POST, TWEETable

It’s about … for their network

VALIDATION & EVIDENCE

Crafting a

Successful

Crowdfunding Campaign

2.

Some initial rules ….

1. Crowdfunding takes work, new skills.2. It takes a strategy, and preparation. 3. The rules are different.4. You can’t just post and run …5. It’s a public success or failure – that “stays on

your resume”

www.propelarizona.com

WYNTK(what you need to know)

Components

of a

Crowdfunding Campaign

Title & Short Description • (repeatable & compelling)

Long Description (“The Pitch”)• Make it a story … about “them”

Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN

• Repeatable Messages• Daily “routine”• Traditional marketing too

Crafting the “Pitch”

First: Who What Why When …

• The 3 Who’s:– Who are the donors? (affinity & passion)– Who is benefits? (the market)– Who are you?

• The 3 Why’s– Why would your donors care?– Why does the market care?– Why are you the right team to do it?

First: Who What Why When …

• What is your project & goal?– Understandable & Simple– Compelling & Intriguing– Repeatable & Memorable

• How and When– How will you achieve your goal? Realistic?– When, after funding? When will I get my perks?

Other Tips

• Tell a story• Make it about them• The History of the idea is intriguing• What is the Impact? – why is this important?• Try a FAQ• Call to action – get them involved!

Exercise –

Craft the Pitch

Crafting your Pitch Title & Short Description

• (repeatable & compelling) Long Description (“The Pitch”)

• Make it a story … about “them” Visuals: Video, Photos, Images Team, Deliverables, Details Perks & rewards Funding Goals: Amount and Timeframe Updates & SOCIAL MEDIA CAMPAIGN

• Repeatable Messages• Daily “routine”• Traditional marketing too

Tell a storyMake it about themThe History of the idea is intriguingWhat is the Impact? Why is this important?Try a FAQCall to action – get them involved!

The 3 Who’s:Who are the donors? (affinity & passion)Who is benefits? (the market)Who are you?

The 3 Why’sWhy would your donors care?Why does the market care?Why are you the right team to do it?

What is your project & goal?Understandable & SimpleCompelling & IntriguingRepeatable & Memorable

How and WhenHow will you achieve your goal? Realistic?When, after funding? When will I get my perks?

Pitch Notes - 1• Who (donors, market)• “Why” – the story

• Impact (on the market)• Impact (on the donors)

Pitch Notes - 2• Story, and History …• FAQ

• Perk Ideas (what’s important to donors)• Calls to Action

Visuals 3.

The Importance of Visual Media• 64% of successful campaigns in had pitch videos.

• Campaigns with videos under 5 minutes were 25% more likely to reach their goal than those with videos that were longer.

• Average campaign video length for campaigns was 3 min, 27 seconds. Campaigns that reach their goal are 16 seconds shorter.

• On average, successful campaigns uploaded 6 media to their gallery.

• http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

Perks & Rewards 4.

Directed by

Patrick Million

Executive Producer

CJ Cornell

a Patrick Million FILM

American Grandmaster

Rewards Crowdfunding

• Incentives & perks• Pre-Orders• Pre-Sumers

• Market Validation

Rewards don’t have to worth $$

• $25 perk is the single most claimed perk, representing nearly 25% of all perks that are selected.

• While the $25 dollar perk is only responsible for raising 11% of total funds.

• $100 perks raise more money than any other perk price and make up nearly 30% of total funds. A $100 perk combined with the next three perk price points: $50, $500, and $1000 makes up about 70% of total money raised by perks

some

Rules for Rewards

1. Make perks unique & exclusive

Avoid T-shirts, Mugs & Hugs

2. Target them

3. Give them a connection

“The Cocktail Party Effect”

“The Restaurant Effect”

“The Carey School Effect”

The less tangible the perk,

the more public (visible) & EXCLUSIVE it needs to be.

The Campaign 5.

How much $$ ?

How long?

Discussion

• How much should we raise?– Have you raised money before? Return?– Do you/did you work at a highly visible position?– *** Your social network? Large? Followers? – Idea - big market? How unique?– How much (marketing) work will you do?

HOW to Crowdfund?

PUSH - Running the campaign• Social Media• Comments & Updates• Networking• Personal Pitches

Your mission: To get them talking about your project

Now that you’ve launched …

Continue the story

Social Engagement

– Transparency & Trust– Social Proof & Viral FX

– Engagement & “The Fundamentals”– Twitter– Facebook– Blogging

most successful projects receive about 25-40% of their revenue from their first, second and third degree of connections.

This could include friends, family, work acquaintances, or anyone that the owner is connected to.

• http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy/

1. Create: (of course)

- A Facebook Account- A Twitter Account

(for your campaign)

2. Tweet & Post –Frequently–Uniquely–Personally

3. Post Updates & Blog•About your progress•About the subject•About the industry•About the People

4. Go 1-1•Reply to comments•Retweet/Repost

Your fans and donors are your most powerful advocates!

5. Target, Measure & Adjust•Different Messages for different groups

•Google, Hootsuite, others•Learn and Adjust focus

Metrics

http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

Metrics

http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

the importance of google analytics to track and improve performance

• + perks from fivvr

• http://www.perlsteinlab.com/blog/anatomy-of-a-crowdfund-week-3-slow-and-steady

Campaign CheckistSocial Media Create a schedule 2-5x / week Use an automated tool Eg HootsuitePost interesting info – Not just pleas for moneyNot just updatesVary your targetsCall to action 1/3-1/2 time

Use analytics and other metrics

Traditional Marketing

Pitch Events Press Releases Demos Testamonials Use an automated tool

What to Communicate:1. Your Progress2. Successes, Evidence of success3. Ammunition for your supporters4. Industry Info, Factoids5. People Info

Plan, Schedule & Update

Your Social Network is a Force Multiplier – but you have to give them help.

Success Factors 6.

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http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-more-money-than-campaigns-that-dont.html

http://www.indiegogo.com/blog/2012/05/indiegogo-insight-campaigns-that-take-these-six-actions-raise-8-times-more-money-than-campaigns-that-dont.html

http://www.indiegogo.com/blog/2012/07/indiegogo-insight-winning-the-middle-game.html

successful campaigns raise, on average, 49% percent of their goals during the first and

last 10% of the campaign length.

The most important secret is …

Showing Momentum

(the perception of momentum)

The most obvious secret is …

Credibility

= trust, competence & follow-through

www.propelarizona.com

Crowdfunding

Entrepreneurship & Innovation

Arizona Economic Growth

Practical Crowdfunding

Workshop

www.propelarizona.com

@PropelArizona

Slideshare/PropelArizona

daysCrowdfunding is measured in …

Entrepreneurship

Crowdfunding Arizona

Can it jumpstart entrepreneurship?

1. Kickstarter “Fails”

Arizona does poorly …

2. Members =/ Supporters

% of supporters is the key ….

3. Entrepreneurship is Different

Products, Companies, Entrepreneurs …

4. The role of “Ecosystem”

Incubators, accelerators, mentors etc ..

5. The power of Community

Shared Goals, Passions, Outcomes …

Shared Goals, Passions, Outcomes …

Crowdfunding for Entrepreneurship & Economic Growth

Shared Goals, Passions, Outcomes …

People as Important as Projects …

Organizations & Affiliations …

Entrepreneurs success as much as funding …

$15k - $100k *(Average $50k) ….

Crowdfunding for Entrepreneurship & Economic Growth