introduction to crowdfunding...•once approved, your project appears on the site. •you have...
Post on 25-Jun-2020
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Introduction to
Crowdfunding
Nick Wolff, Andersonville Chamber of Commerce
Trista Li, Kiva Zip Fellow Chicago
Introduction
• Kiva is a non-profit community fundraising
organization.
• Online community of 1,000,000 lenders who
love to support small businesses.
• Kiva’s lenders provide interest-free loans to
entrepreneurs.
• Kiva has loaned more than $500,000,000 to
1,000,000 borrowers in 79 countries.
What is Crowdfunding?
• Hundreds (or thousands) of people support a business with a small donation or loan.
• Entrepreneur uses internet & social media to build ‘buzz’ and support to fund their project.
• The ‘crowd’ votes with their dollars for the project to succeed or fail.
What is Crowdfunding?
How big is it?
What are the websites?
(Chicago specific)
How does it work?
How does it work?
• You submit your proposal to the website for
approval. Approval can take several weeks
(Kiva Zip takes one week).
• Once approved, your project appears on
the site.
• You have (usually) 30-60 days to secure
funding (Kiva Zip 45 days).
• Once funded, you receive money and
website takes a fee (Kickstarter 3-5%; Kiva
Zip is FREE)
What if I don’t hit 100%?
• Depends on the website you use.
• For Kickstarter and Kiva Zip, if you don’t hit 100% of your target, you will not get the funds . It’s all or nothing.
• These sites choose this funding model because it motivates users and has a higher funding rate.
• Indiegogo will still pay funds if the target is not reached, but they will take a fee of 9%.
Is crowdfunding
right for me?
• Our mission: Empower local
businesses and neighbors to
shape their communities
• Local businesses open a
LendSquare loan and create
an outreach campaign to
fund it
• Customers and neighbors
receive a return on their
investment and help grow
their neighborhood
Opportunity for:
o Chambers/business/citi
zen engagement
o Augmentation of TIFF
funds or façade grants
programs
o Growth of drought
zones
o Several businesses to
develop a community
campaign together
www.lendsquare.com
• Largest website ($1 billion dollars funded)
• 8-10% fee charged
• All or nothing model
• Money raised is a “donation” to the user in exchange for a “reward.”
• Restricted to creative projects, E.g. you must make a product or produce a creative work.
• Strict review process by Kickstarter before acceptance.
• Seed Chicago is Accion Chicago's
curated Kickstarter page that
highlights small businesses and
community development projects
that will grow jobs, facilitate economic
activity, revitalize communities or
promote education and training.
How were projects chosen for Seed Chicago?
• Accion Chicago and the Local
Initiatives Support Corporation
Chicago (LISC) assisted WBC in
identifying Seed Chicago’s inaugural
projects
• Around 11-12 projects are chosen a year
kickstarter.com/pages/seedchicago
• Smaller website (1/6th size of Kickstarter).
• 4% fee charged (9% if you don’t reach 100% of funding goal).
• Not all-or-nothing, you get what you raise.
• Money raised is a donation.
• No restrictions on purpose, you can raise money for anything.
• Open to anyone (no review process).
• Smaller website, but strong community who lend frequently.
• The loans are 0% interest and there are no fees. The loans are repaid over 2 years.
• All or nothing funding model.
• Loans up to $5,000 for first-time borrowers, $25,000 for repeat borrowers.
Pay for legal fees
Hire staff and help
Purchase vehicles
Upgrade their websites
Improve their technology
Market and advertise
Purchase inventory
Invest in equipment
Expand product lines
Use of the loan
How to succeed?
• Strong personal story and business plan
• Great photo or video
How to succeed
• Promote yourself to your own community
• Push hard on social media (Facebook,
Twitter, Instagram, LinkedIn, Yelp, etc)
Success rates?
• >90%
• 44%
• 33%
Questions?
top related