crowdfunding - sweden and trends
DESCRIPTION
Presentation made for Finansinspektionen on Crowdfunding in Sweden in March 2014 providing an overview of and trends in crowdfunding.TRANSCRIPT
Crowdfunding
ROBIN TEIGLAND & CLAIRE INGRAM
STOCKHOLM SCHOOL OF ECONOMICS
MARCH 2014
CLAIRE [email protected]
Crowdfunding in Sweden
Dr. Robin TeiglandAssociate Professor
Stockholm School of Economics [email protected]
@robinteigland
Claire IngramPhD StudentStockholm School of [email protected] @Claire_EBI
Today’s presentation
What is crowdfunding?From crowdfunding to crowd equityWhy and how to crowdfund?Trends in crowdfunding Q&A
What is Crowdfunding?
Accumulation of small investments in individual projects by large number of individuals (the
“crowd”) via or with help of Internet and social networks (De Buysere et al., 2012)
Picture: FundedByMe
Local Stockholm success story:
Flippin’ Burgers
Money raised: SEK 36,502 / €4,000
Number of investors: 186
Date funded: September 2011
Sector: Food
Enabling local, small-scale solutions
Top 5 Best American Restaurants in Europe
http://travel.cnn.com/best-americana-restaurants-europe-023346
Crowdfunding 2012
Massolution 2013
Worldwide $2.7 bln
470k projects 800+ platforms
Est. 5.5 mln (Oct 2013)
A true story
That made GBP 2 million for cancer research at Uppsala University
Most popular crowdfunding activities
Massolution 2013
Who are the funders?Educated experts(?)University degree Knowledge and previous experience in same field
“In-crowd”“Entrepreneurs”Risk lovers
Skoglund & Stiernblad 2013
Who are the funders?Educated experts(?)85% respondents have university degree (vs 16%
women/22% men in general population, 2013)42% had knowledge in same field as project they
funded49% reported to have been better at judging project
quality due to previous experience“In-crowd”47% of “the crowd” classified themselves as
entrepreneurs – compared to only 7% of Swedish population (2012)
77% never bought shares in unlisted company before 41% risk loversSkoglund & Stiernblad 2013
Four forms of crowdfunding
Form Benefits for funders
Donation-based Donation Intangible benefits.
Reward-based Donation or pre-purchase
Rewards in addition to intangible benefits.
Equity-based InvestmentReturn on investment if company
does well. Rewards sometimes also offered and intangible benefits may
motivate too.
Debt-based LoanRepayment of loan with interest. Alternatively intangible benefits if
loan given interest-free.
Ingram & Teigland 2013
Skoglund & Stiernblad 2013
Investment Role and Type Investment Value 2012
Angel Investors
Invest large amounts, make few investments, take equity share.
3.3-3.9 billion SEK p.a. (approximation based on 2008
data)
Soft LoansState loans at high interest rates
that can be written off if enterprise dissolution.
2.4 billion SEK p.a. (ALMI alone)
Venture Capitalists
Invest large amounts, make few investments, take equity share. 1.8 billion SEK p.a. (2010 data)
CrowdfundingDonation, pre-purchase/reward, or equity, depending on platform and
entrepreneur’s preferences.Estimated 37 million SEK p.a.
Ingram & Teigland 2013
Crowd equity raising its head…
• Politicians generally positive -> entrepreneurs + job creation
• But regulation is lagging in most countries
• US, Italy, Denmark changing regulations enabling equity
Massolution 2013
Millions of dollars
Increasing focus on Crowd Equity in Sweden
UK 2010
To Sweden 2013
Equity only
Finland 2011
To Sweden 2013
Equity only
Sweden 2011
Equity
Reward
Crowd Equity in Sweden
SEK 28 mln(Nov 2012)
Equity crowdfundingEU/EEANo country can require a prospectus to be prepared
for rounds of <EUR 100 000For rounds of >EUR 5 million, EU prospectus always
required
SwedenFor rounds of >EUR 2.5 million, EU prospectus
always required<150 ‘non-qualified’ investors without prospectus
http://www.fundable.com/blog/crowdfunding-infographic---the-jobs-act-explained
Ingram &Teigland, 2013
Why Crowdfund?Test market or establish user baseMarketing & publicity for your product or serviceFaster time to marketFunding (may not be large amount of money
though)Screening device for investorsAccess greater pool of investors: further afield or
people without right “connections”Skills, connections, and other resources
“It’s not just about the money.”
685 people talking about product on
social media
Australia’s “Major Disaster Department”World’s largest telecom
International expansion
How to succeed?Choose right platform– and crowdfunding form
Going global or local?What do you give in return (thank you, reward, pre-
purchase, shares)?Keep in mind platform fees
Define the concept Make it easily understoodMake it personal?
Feed the crowdEnsure initial critical mass (social media, newspapers)Keep followers up to date
MAGIC
Going global? Going local?Reward-based? l Niche product or
service?l Global appeal?l What are rewards?l How do you reach
international audience – and stand out?
l Community-specific product or service?
l Local appeal?l What are rewards?l Does community know
about you – can you reach them?
l Local benefits
Equity-based? l Looking to scale up?l How much equity?l How to value your
project?
l Looking to establish foothold?
l How much equity?l How to value your
project?l Local benefits –
experience, connections etc?
Lots to think about....
But potential downsides…
Project may not be understood by crowdNot significant amounts of money• More about publicity• But changing with crowd equity
Other skills/resource may not be forthcomingLots of small investors problem in equity crowdfunding?
Trends in CrowdfundingPeer to peer lendingNicheCommunityHybrid platformsEnterprise sponsoredInternal corporate crowdfundingLIVE!Economic developmentCelebrities…
Peer to peer lending
Crowdfunding for research
Strategic partnership
+
Celebrities entering the scene
Executive Producer Robert RedfordNarrated by Jodie Foster
Donald Trump’s crowdfunding siteOpen to anyone
Internal corporate crowdfunding
iFundIT
More than 300 participantsEntry-level workers to VPs
Given $2,000 to invest over 8 week period Choose internal projects in which to invest
Enabling entrepreneurs anywhere
Ushahidi of Kenya
Kenya
“Made in Africa” 3D printer (Togo)
Winner of International Space Apps Challenge
http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
For all ages - including teenagers
http://www.indiegogo.com/projects/afripreneurs-and-the-leapfrog-effect
Many unanswered questions
Cross border investments?Secondary markets for crowd equity shares?Taxation issues for investors and entrepreneurs?Lack of support and strategic advice for both investors and entrepreneurs? How to better leverage “crowd” for resources?
Venture capitalists are the travel agents of yesterday – here today, gone tomorrow.
Venture capitalist in Silicon Valley –
June 2013
http://www.slideshare.net/eteigland/crowdfunding-in-sweden
Thank you!
Questions?
Image via NewYorker.com
Robin [email protected] School of
Economicswww.knowledgenetworking.o
rgwww.slideshare.net/
eteiglandwww.opencrowds.org
RobinTeigland
Photo: Lindholm, Metro
Photo: Nordenskiöld
If you love knowledge, set it free…
För mer information:• Research article: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263965• Industry report: http://blog.fundedbyme.com/robin-teigland/
What’s next?
