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Crowdfunding For Tech Startups Crowdfunding as a Pathway to Marketing and Funding Your Tech Startup

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Crowdfunding For Tech Startups

Crowdfunding as a Pathway to Marketing and Funding Your Tech Startup

1. The Statute of Liberty was the first American Crowdfunding Project

2. Joseph Pulitzer appealed to the American people using his Newspaper “The World”

3. Raised over $100K in 5 months with over 120K donations of less than a dollar

The History of Crowdfunding

Crowdsourcing-The practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people.

Social media is an essential component of crowdsourcing that allows organizations to reach a wider audience faster, cheaper and more efficiently than ever before. 

Crowd Sourcing & Social Media

Crowdfunding is an internet-driven means of raising money from the mass market by receiving small amounts of money from a large group of people, to fund a project or business

Crowdfunding was a response to the “Great Recession”

What is Crowdfunding?

• Crowd Funding was initially seen by many as a concept unsuitable for use in the business world.

• Despite this skepticism, the tightening of banks’ lending criteria and unavailability of commercial finance has transformed crowdfunding into $5 Billion global industry

The Genesis of Crowdfunding

The 5 Types of crowdfunding

1. Crowdfunding has spread around the globe and reaches over 160 countries worldwide and more than 90% of the world's online population.

2. Global crowdfunding produces 500 new projects per day, and between 18,000 & 22,000 projects are open at any one time

3. A new crowdfunding project is created every three minutes globally

The Global Crowdfunding Economy

City Cincy Indy Lou Col

NEW PROJECTS EACH DAY 1 1 <1 1

PROJECTS CREATED IN Q2 92 101 30 101

ENDED FULLY FUNDED 33% 17% 26% 21%

PEOPLE BACKED EACH OF THESE

59 76 32 152

WAS THE AVERAGE AMOUNT RAISED

$11, 668 $64,553 $3,293 $21,577

THE TOTAL RAISED IN THE PERIOD

$366,673 $1,010,505

$21,362 $561,362

Crowdfunding in the Cincinnati Region

SUCCESSFUL PROJECTS

AVERAGE BACKERS TOTAL FUNDS RAISED

5,729 KICKSTARTER 251 KICKSTARTER $125M KICKSTARTER

2,649 INDIEGOGO 152 INDIEGOGO $49M INDIEGOGO

572 FUNDRAZR 136 CROWDCUBE $12M CROWDCUBE

91 CROWDFUNDER UK

101 ROCKETHUB $1M FUNDRAZR / ROCKETHUB

60 ROCKETHUB 67 CROWDFUNDER UK

$763K CROWDFUNDER UK

The Top 5 Crowdfunding Platforms

1. Pirate3D Inc set out to bring affordable 3D Printing to the home and raised $1.4M of its $100K goal on Kickstarter

2. Kreyos raised $1.5 million from a $100,000 goal.

3. Tile a location tracking device has garnered $2.6 million to date and almost 50,000 backers

4. The Ubuntu Edge raised $12 million, but failed to meet is lofty goal of $32 million

Tech Startups Using Crowdfunding

1. Market Research2. Market Validation3. Proof of Concept4. Build an engaged community of customers5. Build brand advocates that spread the word

about your brand6. Product development feedback7. Testimonials and case studies8. Pre- Orders for your product and service

The Benefits of Crowdfunding

1. Clearly define your product and your goals2. Tell a compelling story about what you can

do for others3. Create a powerful video it is crucial4. Brand development is a key component5. Produce powerful & persuasive

copywriting6. Implement targeted social media

management & Pr campaigns

Campaign Best Practices

1. Too little time devoted to planning and promotion

2. Project owner did not successfully engage their personal network

3. Project owner did not build press relationships

4. Campaign funding threshold set too high

5. No video or poor video included

Top 5 Reasons Campaigns Fail

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The Future of Crowdfunding•Crowdfunding is estimated to be a $300 Billion global industry by 2025

•Crowdfunding will become a global alternative for SMB and Startup finance

•73% of Tech Startups that successfully crowdfund for $50K or more go on to receive later round funding

•Crowdfunding is a great route for alternative financing for Black Tech Startups if we can grow and mobilize the needed social capital