2. • Do you need to raise funds to get your idea off the ground?
You’ve got a brilliant business idea, but your bank lacks your vision.
(Or perhaps you lack the collateral.)
• Maybe you reached out to friends and family, but you know they lost their shirts when your
brother-in-law’s salmon-flavored energy drink flopped.
Is this the death of your nascent business?
• Not. So. Fast.
• Social media is changing more than the way we
market and communicate.
It’s changing the way we raise capital.
• Market place investing websites are popping up
that connect entrepreneurs with investors,
producers with patrons, and causes with
contributors.
3. Market place investing
• What is Crowdfunding/Market place investing ?
Market place investing builds upon the idea of crowdsourcing: “the act of outsourcing
tasks, traditionally performed by an employee or contractor, to an undefined, large group of
people or community (a “crowd”), through an open call.” (Wikipedia)
• Market place
investing pulls
together a
community—tightly
knit or disparate—to
fund a project,
business or cause,
usually via the
Internet.
4. 1. How does it work?
•Although the rules differ from site to site, generally people (or businesses or
charities) pitch an idea, set a fundraising goal and set a deadline for raising funds.
•Potential investors can review the pitches and decide if there are any they’d like to
invest in it.
5. • You start with a pitch: you describe your project (idea, innovation or enterprise), specify
what rewards hat returns investors will receive if the fundraising is successful and create a
funding goal and a timeline.
• If you don’t reach your funding goal by the deadline, no money changes hands. This
“protects everyone involved. Creators aren’t expected to develop their project without
necessary funds, and it allows anyone to test concepts without risk.”
● Commitments are made via
clicking the “Expression of
Interest button”; if you’re
backing a project you are
not required to make your
investment until the project
is successfully funded and
all the requirements for
funding have been met.
6. 2. Know your target audience(s)
• Anthony Kaufman recommends identifying your target audiences, like Jennifer Fox did
while raising money for her film, My Reincarnation.
• Fox had two built-in niche audiences to target: fans and followers of her primary subject
Tibetan Buddhist Master Chögyal Namkhai Norbu, of which there are many worldwide,
and the estimated 7,000 people that Fox cultivated during the grassroots release of her last
film, 2006’s “Flying: Confessions of a Free Woman.”
• Focusing on a passionate niche can help, too. Many of the successful projects on Market
place investing sites target a specific, narrow audience.
• The target audience might be focused in a geographic area, religious in nature or share a
common background. Graphic novels and music tend to do well, too.
7. 3. Plan ahead
• According to John T. Unger, an artist and designer who has successfully funded a project.
• The best advice I have is to plan ahead. A project can go by really quickly.
• The vast bulk of backers seem to happen at the very beginning and very end of a project,
according to reliable data. That makes sense… it’s exciting when it’s new and it’s exciting
when it’s down to the wire.
• In the future, I’ll be sure that I have emails written specifically for the beginning, middle
and end of a project so that I can keep it active. When a project does take off it can be
kind of overwhelming to respond to everyone quickly enough, so FAQ-type emails that
are pre-written help a lot too.
• Craig Mod, who successfully raised Kshs.24,000 reiterates this idea of the reverse bell
curve of patron interest.
• “People engage things: a) when they’re brand-new, or b) when they’re nearing a deadline.
We lose interest in that middle space.”
8. 4. Passionately pitch your project.
• You’ve heard the old saying, “you only get one chance to make a first impression.”
Well, it’s even tougher on Market place investing sites where there are 30 other projects
simultaneously trying to make a first impression on the same page.
● Create a compelling
name, description and
an image as part of
your project to help you
stand out. A video is
critical, too. (See #10
for more on that.)
9. 5. Have a plan for spending their money.
• No matter how cool your idea is, most people want to know that you’ve got a plan
that will get you there. Ricebowlproject suggests that you “give a detailed
explanation of how exactly you’ll be using their money and keep all costs transparent.
• This will
build trust
in you and
credibility
in your
project.”
10. 6. Leverage your social networks.
• Market place investing sites aren’t much different from any other launch in a lot of
ways—so to get attention, use the same tools as usual: email to the list, Twitter, Facebook,
etc
• Yet again, the importance of list-building and networking can’t be overstated.
7. Break up bigger projects
• None of your potential patrons are likely to drop Kshs.100,000 on your next big
thing. Your project has a better chance of reaching its funding goal if you break the
project into smaller, bite-sized pieces.
• You might break your video into filming, editing and distribution. Rather than trying to
raise enough to start a business and make payroll for two years, start by raising enough to
build a prototype of that solar-powered toothbrush you’ve been dreaming about.
•People like to feel like their contribution is going to make a difference.
•Fifty dollars makes a bigger splash when you’re raising Kshs.1,000 than when you’re
raising Kshs.10,000. Smaller requests seem more attainable, and people want to feel like
they’re on a “winning team.”
11. 8. Treat your Market place investing like a campaign
● Pitching a project is the
beginning, not the end, of
your work. You need to
continually drive people to
your project page. Many
Market place investing sites
use traffic and early success
as indicators of which
projects to feature. 50% of
deciding who gets featured
comes down to “page views,
number of funders, % of goal
completed.”
12. 9. Tell a great story… and ask for the sale
• As Jeanie Finlay says in her post, Adventures in Crowd Funding, “when I launched the
first campaign, I simply put up the trailer and we raised about 10 pence… I made a new
trailer with me pitching the film… it made a world of difference. I now believe that
people invest in the filmmakers as much as the project.”
13. 10.Promise—and give—credit where credit is due
• People love to be acknowledged. Whether it’s on the liner notes, film credits or etched
into the wall in your retail space.
• Let people know how they’ll be credited and follow through.
• It gives you a great story to tell and builds your base for your next crowd funded
adventure.
Takeaways Tips
• Successful campaigns require passion, a clear vision and a strategic plan that can be
executed.
• You’ll get the most activity at the beginning and end of your campaigns, but you need to
be working for your goals throughout
Equity Crowdfunding / Market place investing
• If you’re raising investment for your startup or business, via what is called Equity
Crowdfunding / Market place investing (where people actually can become shareholders
for a potential future return)..
14. Market place investing Tip 2: Pitch a Story
• It’s important to remember the context of Market place investing and fundraising online.
You’re vying for a person’s attention while they’re online, and they have tons of other
distractions and things pulling their attention away from you.
• It’s for this reason that your initial pitch and messaging absolutely must grab your funder or
investors attention right away and pull them in.
• Once you have their attention, the way to keep their attention and truly engage them is to
engage “the two brains” as I call it. This means engaging both the Rational Brain (the “what”
of what you’re doing) and the Emotional Brain (the “why” of what you’re doing).
15. • The most effective way to do this is
via telling a great story - either
about yourself, the story of your
project or company, or the story of
your customer or who your project
truly has an impact on.
• You should also be sure to have a
clear and compelling “ask” of your
funders that relates to your larger
story and project.
16. Market place investing Tip 3: Focus On What’s In It For Them
• It may sound counterintuitive, but while your goal in Market place investing is to raise
funding for yourself, the more you can focus on what is in it for your backers or investors
the more likely you are to create a set of rewards or terms that helps you raise the dollars
you’re looking for.
• As a rule of thumb, simply ask yourself, would I go through the trouble to buy this reward
myself? Also think about what is truly and unique and compelling you could offer.
• In Equity Crowdfunding / Market place investing, you need to focus on what terms you’re
going to offer your investors. While there is not “one size fits all” rule in raising investment,
there are some guidelines to follow.
17. Market place investing Tip 4: Supporter Engagement
• The most common mistake that first time Market place investing campaign owners make is
to not adequately engage their first level network of friends, family, and supporters.
• Campaigns that accelerate more rapidly early on and attain a significant percentage of their
funding goal in a short span of time often attract more attention as a whole over the life of
the campaign.
• For Equity Crowdfunding / Market place investing, supporter engagement more often
means having important and notable stakeholders around the company online around the
campaign and represented. This includes the entire team, advisors, board members, partners,
and existing investors. Sites like Crowdfunder.com make this easy by displaying this
important ‘social proof’ of your existing investors and team right alongside your investment
offering online.
18. Market place investing Tip 5: Planned Marketing & Outreach
• Market place investing platforms are not listing services. Period.
• Regardless of the platform, the results you get from the platform are proportional to the
effort and attention you put into the platform and tying this into your own fundraising
efforts both on and offline.
• In rewards Market place
investing, successful campaign
owners put in tens to hundreds of
hours on the creative and
marketing planning side of their
campaign before launching.
They then also have a plan for
several “pushes” in their
marketing to launch, fund, and
push to close funding at or above
their goal.
19. Market place investing Tip 6: The Data Perspective
• The overall Market place investing industry is growing exponentially. In 2011 the total
Crowdfunding / Market place investing market was Kshs.120 billion. In 2014 Market place
investing is expected to finish off the year nearing Kshs.1trillion in funding online.
• Obviously, this means that there are lots of opportunities for those seeking funding and for
those who are donating, pre-purchasing, or investing dollars.
• But what does the data say for you as someone looking to run a Market place investing
campaign?
• In rewards Market place investing, let’s say you’re looking to raise Kshs.5,000,000. A leader
in the space called Kickstarter shared data that the most common contribution amount is
Kshs.2500. Knowing this, you can do some simple math to better understand what success
entails.
20. • Here’s an example of what that looks like…
If all of your funding came at the average of Kshs.2500 per, and you assumed a conversion
rate of 3% of visitors who actually fund your campaign, you’d have to reach over 6,600,000
qualified people on the web and get them to view your campaign. At the 3% conversion
rate, you'd be converting 2,000 people to fund your campaign.
• For most people, that’s a lot of traffic in 45 days, and a lot of backers. Do you have the kind
of existing network, reach press contacts, and marketing plan to really meet these goals?
Equity Crowdfunding / Market place investing Data
• An average investment from accredited investors on the platform of roughly
Kshs.2,500,000, though funding commitments from single investors and funds have been as
large as Kshs.50,000,000.
• Equity Crowdfunding / Market place investing can provide a powerful way to raise your
funding by enabling you to take fewer dollars from more investors. Let’s say you’re raising
Kshs.50,000,000. At an Kshs.1,000,000 average investment, you’d need up to 50 investors.
Though most companies also get commitments in their round sized at Kshs.5,000,000 or
Kshs.10,000,000, or more.
21. • In some ways, it can be easier to find many investors at Kshs.1,000,000 than it is to find
one or two investors at Kshs.20,000,000 to Kshs.50,000,000. The risk is just that much
greater when considering investing that much money.
• What entrepreneurs are finding in Equity Crowdfunding / Market place investing is that
there is a new way of fundraising now available where you can spend less time trying to
convince one or two single investors over three to six months to invest. Instead, by lowering
the minimum investment amount into your funding round down to as little as say
Kshs.100,000, you lower the risk exposure for any single investor, and entrepreneurs often
find it much easier to get the investment and support of many investors online at these
amounts.
• There's no doubt that Market place investing is changing the rules of the game for
fundraising, and investing. Don’t expect the growth or innovation to slow down anytime
soon.
