3. 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
4. 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 Investment
Return on investment if company
does well. Rewards sometimes also
offered and intangible benefits may
motivate too.
Debt-based Loan
Repayment of loan with interest.
Alternatively intangible benefits if
loan given interest-free.
Ingram & Teigland 2013
5. Market size
Global crowdfunding almost doubled 2012 to
2013 to USD 5.1 bln
March 2014 Kickstarter passes USD 1 bln in total
pledges
FundedByMe raised USD 10.5 mln to date
By 2025, global crowdfunding could reach USD
90 to 96 bln (1.8 times today’s global VC industry)
Growth potential greatest in emerging markets?
USD 50 bln in China by 2025?
12. P2P lending in the US and UK…
•>USD 3.8 bln in personal
loans since 2007
• USD 750 mln growth each
quarter
•Now offering business loans
•Strategic alliance with Union
Bank
15. Ingram &Teigland, 2013
Why crowdfund?
Test market or establish user base
Marketing & publicity for your product or service
Faster time to market
Funding (may not be large amount of money
though)
Screening device for investors
Access greater pool of investors: further afield or
people without right “connections”
Skills, connections, and other resources?
16. 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 Loans
State 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)
Crowdfunding
Donation, pre-purchase/reward, or
equity, depending on platform and
entrepreneur’s preferences.
Estimated 37 million SEK p.a.
Ingram & Teigland 2013
17. “It’s not just about the money.”
685 people talking
about product on
social media
Australia’s “Major Disaster Department”
World’s largest telecom
21. Democratizing innovation
through access to capital
Kickstarter
• Women 13% more likely to to meet
crowdfunding goals than men
• 67% of women-led technology ventures
reached goals vs 30% of male-led
ventures
Indiegogo
• Women 61% more likely than men to
meet goals
• Women account for 41% of projects
that meet goals
http://online.wsj.com/articles/kickstarter-closes-the-funding-gap-for-women-1407949759
23. For all ages - including teenagers
http://www.indiegogo.com/projects/afripreneurs-and-the-leapfrog-effect
24. “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
25. Crowdfunding challenges?
Skills: How to ensure knowledge/awareness and necessary skills
for crowdfunding?
Lack of support and strategic advice for funders/investors, entrepreneurs,
public sector?
How to deal with many small investors in equity crowdfunding?
Regulation: How to protect investors without stifling
innovation?
Cross border investments?
Secondary markets for crowd equity shares?
Taxation issues for investors and entrepreneurs?
Local market: How to protect/ensure local markets against
foreign competition?
Local platforms vs global platforms?
Significant/sufficient level of funding from local market?
How to better leverage “crowd” for resources?
Source: Own research, Nesta
28. If you love knowledge,
set it free…
Robin Teigland
robin.teigland@hhs.se
www.knowledgenetworking.org
www.slideshare.net/eteigland
@RobinTeigland
If you like this presentation and would like to contribute to our
research, we accept bitcoins:
14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC.
Thank you!!!!!
40. Who are the funders?
Educated experts(?)
University degree
Knowledge and previous experience in same field
“In-crowd”
“Entrepreneurs”
Risk lovers
Skoglund & Stiernblad 2013
41. 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
funded
49% 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 lovers Skoglund & Stiernblad 2013
42. 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
43. Equity crowdfunding
EU/EEA
No country can require a prospectus to be prepared
for rounds of <EUR 100 000
For rounds of >EUR 5 million, EU prospectus always
required
Sweden
For rounds of >EUR 2.5 million, EU prospectus
always required
<150 ‘non-qualified’ investors without prospectus
46. 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 understood
Make it personal?
Feed the crowd
Ensure initial critical mass (social media, newspapers)
Keep followers up to date
MAGIC
47. Lots to think about....
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?
48. Trends in crowdfunding
Peer to peer lending
Niche
Community
Hybrid platforms
Enterprise sponsored
Internal corporate crowdfunding
LIVE!
Economic development
Celebrities
…
51. Celebrities entering the scene
Executive Producer Robert Redford
Narrated by Jodie Foster
Donald Trump’s crowdfunding site
Open to anyone
52. Internal corporate crowdfunding
iFundIT
More than 300 participants
Entry-level workers to VPs
Given $2,000 to invest over 8 week period
Choose internal projects in which to invest