Apr 23

Crowd Funding – Safe, Efficient, and Effective Fund Raising for Schools

final logo new small-01Schools are constantly in need of funding to provide the best facilities and experiences for their students. Whether it is sporting equipment, shade for lunchtime seating, props and scenery for the school play, sending students to participate or compete in an event, or any of the many projects schools constantly have in process, there is a never ending need for funds to supplement the governments decreasing bursaries. So is it any wonder that crowd funding is now being seen as the most effective answer to schools obtaining the funding they need, and at the same time engaging the school community.

The current fund raising options are becoming tired and enthusiasm is waning as the efforts required for traditional fund raising far outweigh the funds raised. Selling fund raising chocolates ties up precious family time, and is also seen to be dangerous (allowing small kids to door knock and approach strangers on their own). Not to mention that it is usually the family of the child that ends up purchasing the chocolates themselves, and ending up with sweet treats way beyond the craving of any sweet tooth.

Fetes and other fund raising events require a mountainous effort by a few dedicated souls, so such forms of fund raising usually turn out to be quite inefficient. Seldom do any of the initiators of such events return for a second attempt, which is an indication of the difficulty associated with running them. Schools also need to contend with the fact that the great efforts to stage such an event can be undermined quite quickly by poor weather which can turn the best of intentions into a total wash out.

Crowd Funding now offers schools a quick, simple, and efficient way in which to raise funding for their projects, and astute schools will be quick to adopt regular or rolling programs to continually fund the projects that keep presenting themselves. Loading of a project onto a crowd funding site like iPledg takes just 10 to 15 minutes, and then the school can be raising funds. Communication to “the crowd” and continually driving the message takes no additional time to the standard day-to-day activities of the school, as informing the crowd is as simple as mentioning the campaign in newsletters, at assemblies, and in the regular forms of constant communication that schools undertake.

And there is such a crowd already in place at most schools. There is a broad audience with whom schools engage every day – parents, students, former students or alumni, local residents, sporting and special interest groups, and Parents and Friends Associations. Each of these simply needs to be made aware and constantly reminded of the campaign through the regular course of communication. Asking them to have a look at the project, to pledge their support, and to continue to spread the word to their networks allows for hundreds, if not thousands, of people to get involved and support the campaign – far more than any traditional forms of fund raising used by schools in the past.

At first glance, some schools may struggle to see what rewards they can offer to those who pledge support, but quickly one realises just how many rewards schools can so easily offer. Preferred seating at performances or sporting events, treats from the school canteen, or recognition through naming rights or mention on an honour board are just a few creative ways of rewarding those who pledge their support. Further engagement with the community can be achieved if some of the parents offer rewards from their businesses to those who support the school’s campaign, thus giving greater inducements to pledge.

Currently iPledg are looking for 3 schools to undertake a pilot program to show just how wonderful and successful crowd funding can be for schools. iPledg is not only offering to waive 100% of their success fees, but are also offering tailored and personal mentoring for the schools who opt in for the program, so they will guided and assisted through every step of the program, from designing the campaign, to promoting it, and to how to best wrap up a successful campaign to ensure maximum support the next time a campaign is run. If your school is interested, email now and start crowd funding your school today.

Apr 09

Crowd Funding – The Perfect Video for Commercial Projects.

final logo new small-01Whether the project in question is seeking funds from a pledge-model crowd funding platform or through the investment route, a pitch video doubles the likelihood of achieving the funding target. Not only does it let viewers see your authenticity, personality and passion, it allows the project creator or issuer to convey the message and to get buy in from potential backers. With the average drop off time being 40 seconds, it is critical to engage the viewer by then, and make the 2 – 4 minute video as effective as possible. These are the elements for a successful pitch video.

Many successful campaign videos employ the simple IDEA principle – Interest, Desire, Enthusiasm, Action. This is the formula used by infomercials and whist they are criticised for being an interruption to pleasant television viewing, one cannot dispute that they are highly effective in engaging viewers and turning them into customers. They create interest by highlighting the problem faced by consumers, and then solve the problem with the solution they have created, building desire and enthusiasm in just 30 seconds. They then close with the call to action – “call now”, and the urgency to act now or miss out – a simple strategy evoking complex psychological triggers. Therefore, it is essential that a good campaign video starts with the problem which exists and then provides the solution that the project creator has devised.

The Elevator Pitch

The elevator pitch then makes for the body of the pitch video. A simple formula for this is to explain who the product is for, and the market alternative or gap in the market with which they are currently dissatisfied. The next step is to explain in just a few words what the product is (for which the support or investment is being sought), and the problem solving capability of the product. To underscore and further emphasise the problem solving capability, comparison should be drawn to the current product alternative that does not deliver the same result. The final step is to summarise what it is that the project will provide by stating the key whole product with features. This should all be captured in a sentence or two which forms the elevator pitch.

For example – For time poor people who are dissatisfied with the way in which widgets simply break under the slightest pressure at the worst possible time, our Super Widget product will not break as soon as you exert force on it. Unlike Cheapo Widgets, Super Widgets are indestructible and will provide you with a lifetime of worry-free use.

Keep in mind, when writing your elevator pitch and explaining the benefits, consumers only ever seek one or more of the six psychological buyer benefits – Safety, Performance, Appearance, Comfort, Economy, and Durability. Understand your market and realise which of these six benefits your product delivers, and you will have more success in connecting with your market.

Your Team

A pitch video is a great visual medium for introducing your team. Tell the viewer all about the qualifications and achievements of each member of your team, emphasising those that relate to your project. People invest in teams even more than in an idea, product or concept, so ensuring that you build the viewer’s confidence in the team’s capacity to execute is key to securing investment or support. If you have an advisory board or external team members, introduce them to supplement the skills of your team, and again build the story around how your (extended) team has the ability and experience to deliver the product as well as the return for which the viewer could potentially invest.

Milestones

In addition to the achievements of the team, people like to see that the company is advancing, and progressing from the initial idea. Any milestones achieved by the company should be articulated, stepping through from concept to prototype to production, commercialisation, revenue and profit, obviously stating those that are appropriate, and being very accurate and truthful as to where the company or product is up to. And contracts that have been won, or nominations or awards received are also noteworthy, as is any publicity or mentions in the media.

The Need for Funding

A high percentage of pitch videos do a wonderful job of explaining the company, the product or the service that is on offer, but fail to address the issue for which the video is actually being made, and that is what the funding will be required for. Be sure to give viewers an overview as to what the capital will achieve, and why the company is raising the funds. Explaining what will be achieved by the support of the viewer will help engage them, and make them want to be part of the journey.

The Investment Opportunity

Most project supporters and investors listen to just one radio station – WII-FM. This stands for “What’s In It For Me”. Be sure to spell out the investment opportunity or return they could enjoy, or at least let them know where they can find your offer document to learn more. Understand that investors are motivated by the return on offer, how it fits with their risk profile, and how they can get their money back out. Explain it to them, or at least tell them where they can find out more, and you have a good chance to secure their support if the opportunity aligns with what they are looking for.

Endorsements

Pitching for support or investment is all about familiarity and trust. The same can be said for when major companies seek consumer support or loyalty, and that is why they use high profile individuals to add character and credibility to their brand, service or product. In a pitch video, issuers and project creators can do the same if they can obtain an endorsement from a high profile person that will support and enhance your brand. To have them appearing in the video and saying just a few words backing the company or product will immediately advance your position in the mind of the potential investor or supporter.

Call to action

The purpose of the video is not simply to make everyone feel good or to just let them know more about your company or project, but to seek investment or support from the viewer. Once you stepped through the stages above to generate interest, desire, and enthusiasm, the viewer then needs to be shepherded into the final stage which is action. What is it that you wish them to do? How do they do that? You need to clearly spell out how they can find out more or how they can pledge their support. It is all about helping them get to the destination where you wish them to arrive, and that is to provide you the funds you need to proceed.

And Remember….

There is a lot of information in the steps above, and the challenge is to put all of it into a short, concise and precise video. It does not have to be a Steven Spielberg production – it is all about quality not quantity. The pitch video should not be too long, remembering that you must engage them within the first 40 seconds or they will drop off. People are viewing it on the internet, so any longer than 3 – 4 minutes and you will have little chance of them viewing it to the end. Sesame Street’s success was based on changing the scene every 8 seconds to keep the viewer engaged, and this has shaped many of our viewing habits. Comprehensive, yet not too detailed, and without becoming disjointed – that is the key to a great pitch video.

Author, Bryan Vadas, is co-founder of iPledg as well as director of Time Masters (Australia) who are accredited capital raising sponsors with ASSOB. Contact him now if you are interested in either, or if you wish to deal with a single point of contact to take you from pledge-model through to investment crowd funding. This is the only place that can transition you through the whole process.

Mar 19

Crowd Funding – the Future Face

final logo new small-01A recent article in CrowdFundBeat by Paul Niederer of ASSOB took a look of what crowd funding might be like by 2020, both from an investment and pledge-model perspective. As with any good futurist’s work, the projections don’t say how it will be for sure, but raise some discussion points around how, from a church spire view of current proceedings, the landscape may look given the emerging trends and developments in technology. From how individuals refer to crowd funding to how corporations will use it, we see that the sector will be in great but markedly different shape by 2020.

The first big change will be that the word “crowdfunding” will have virtually disappeared as peer to peer transactions will have become the norm. The same thing will have happened with the term “social networking” as that’s just the way most people communicate now and few call it “social networking” – even fewer will do so over time.

One of the big differences between equity crowd funding and the pledge-model is the latter’s offer of instant gratification to those who support campaigns. In most cases, project supporters are sent something tangible immediately at the end of the campaign in return for their pledge, but in the case of the investment model, the investor holds hope until the business eventually turns a profit or the company is sold and a capital gain is realized. The future will see a shift to more instant gratification for investors in equity crowd funding models, with royalty or dividend based crowd funding becoming easier as costly and complex transactions will become quicker and cheaper to handle as the processes are automated.

There is forecast to be a shift from the initial adopters of crowd funding, moving from just startups or small business, over to large corporations who will quarantine regular and long term shareholders from the risk associated with R&D, and these will be crowd funded in separate issues or tranches. Funding R&D and marketing initiatives in this way would be particularly attractive to companies involved in pharmaceutical, green tech, clean tech, and food processing sectors.

Perhaps one of the greatest bonuses that will come over time will be the increased security and the reduced risk with online transactions and the general issue of shares on the internet. Improvements in facial recognition technology enabling authentication of parties relative to their internet history, or other forms of identity management such as those which include biometrics will make potential investors more able to find out all relevant details about the issuer, giving more comfort around the process of investing. Similarly whistle blowing, which is currently the norm in the world of crowd funding, will play a greater role as sites centralise known data.

The biggest leap in thinking from what we currently understand crowd funding to be will come with changes to how rewards are created or offered. In the future, rewards will be able to be contrived by the pledger / investor rather than being specified at the beginning of the campaign. This two way negotiation, once built into platforms, will take the relationship between project creator / issue and supporter / investor to a whole new level and a market for rewards may develop.

Not unlike the Olympic motto of “Faster, Higher, Stronger”, crowd funding will become faster, more efficient, easier, and increasingly cost effective as computers will do more of the work around investor matching and documentation. Automation will be the key, especially with investment crowd funding where driving out cost and improving the speed of capital raising will be realised through computer-generated processes.

And this all leads to a better, safer, more engaging, and successful experience for all concerned. As in Paul Niederer’s words – “A glimpse at the future … and it is all good!”

Mar 12

Crowd Funding – The Ingredients of the Perfect Campaign.

final logo new small-01Whether it is an equity crowd funding campaign or the pledge model, the core ingredients that make for a successful campaign are rather similar. A good story told well, good rewards (or attractive realistic projected profits in the case of equity crowd funding), a solid team with broad skills and a history of success, and the ability to communicate this to your audience are the key components to obtaining the goal you have in mind. Understanding the essence of these, preparing your campaign before launch, and making them work for you are the difference between successful funding and missing out.

Your project description or outline needs to generate supporter interest, and make them desirous of wanting to be part of the action, or at least to want to have a slice of the pie. It should inspire enthusiasm, and end with a call to action. A good project description or offer document shows how the offering is relevant, and how you will satisfy a market need or demand. It needs to be transparent in its outline of the project creators, the team, and mostly about what will be done with the funds raised. The project description needs to detail the desired outcome or (in the case of equity crowd funding) projected earnings, explaining what will be achieved if the funding target is met or exceeded. A project creator also needs to outline what will be done with the minimum subscription or if only the tipping point is reached instead of the desired funding target. It is also essential to tell potential investors or supporters about who you are, your relevance to the project, and about the expertise of your team.

Supporters and investors not only back a great idea, they finance individuals if they believe in them. Spelling out your expertise, as well as your ability to deliver your intended outcome is paramount to achieving support, especially in the case of equity crowd funding. A project creator needs to demonstrate and build confidence that they have the ability to deliver, or have at least surrounded themselves with the right people to offer the breadth of skills to successfully commericalise and monetise their concept. Gaining the confidence of investors is the key. Imagine if you had Richard Branson or Warren Buffet on your team. Visualise what a great impact that would have on investor confidence. OK, you may not be able to get guys of this calibre, but the more capable people you can get on board, the more chance you have of securing the funds you need.

When it comes to pledge model crowd funding, good rewards can often be the inducement that drives a campaign. Noone really wants another t-shirt, coffee mug, or bumper sticker, unless they are truly unique or collectors items, so steer away from offering these as your rewards to those who support the campaign. Thought needs to be given to the types of rewards that will be sought after by the audience to whom you are pitching. Limited edition rewards, those that are unique and different, will always attract a premium pledge. And rewards don’t need to have a high cost or perceived value. Public recognition and naming rights, as well as invitation to an event or interaction with the project team are attractive rewards to many potential supporters, but cost a project creator very little. Often, the product itself makes for the best reward while providing the project creator with a form of pre-sales, and achieving market validation and powerful social proof should the campaign succeed.

But the best description, strongest team, and most wonderful rewards or projected return mean for nothing if the project creator does not communicate the offer to the world. A project creator must connect with their first tier early in the campaign, and get the support from those to whom they are closest. Only then will the second tier (friends of friends) and the third tier buy in. It is important to run a discovery session with the team, and really identify who you know, personally, through social media, through related or industry contacts, as well as who you have in your email database. Many identify at this point that work needs to be done to bolster the size of their audience, and a commitment needs to be made to growing the “crowd” before launching. The crowd then needs to be constantly worked in the lead up as well as during the campaign for pledges of support or investment, and regularly asked to help spread the word to their networks and beyond.

Mar 04

Crowd Funding – Assisting With the Delivery of No Interest Loans Schemes

final logo new small-01There is some wonderful work being done in our community, with not for profit organisations providing No Interest Loan Schemes (NILS) to those that struggle at times to make ends meet. Such programs provide solutions to those in need, at the same time allowing recipients of NILS grants to maintain dignity and integrity. Many such organisations are provided seed funding by philanthropic organisations, but their ongoing presence needs to be funded by community engagement and continued fund raising. This then sets up a perfect fit with the benefits that crowd funding can provide, both in the short and longer term.

Organisations like Good Shepherd Microfinance offer people on low incomes loans and other people-centred financial programs across Australia. They enable people to define and then to realise their own economic well-being and to feel valued and in control of their finances and lives. Clients will approach them looking for a loan for such things as washing machines, fridges, school fees, etc. To be eligible they must be on some form of Health Care card, government pension or be a low income earner. They are interviewed by one of the loans officers who help them fill out a budget to make sure that they can afford the item and avoid putting any further financial stress onto them. Once approved, the maximum lend is $1,200.

Initially, organisations like this are funded by larger, commercial entities, government grants or philanthropists who often provide the cash required to set up the opening loan pool. Whilst this allows the NILS program to get started, there are ongoing costs. Many such organisation run on part time staff members, supported by volunteers. Then there is the challenge to find the money for wages and admin costs (rent, phone bills, stationary etc). Without the budget being topped up occasionally, many would be at risk of having to close down.

Crowd funding offers a real, effective and comparatively fast way of funding the costs of running such schemes. Organisations can now set up a campaign in a matter of minutes and start to send out news of the campaign through the internet and social media. Many people are unaware of the existence of such schemes, so it is something to which people are receptive, and it is a story that makes great reading. Also, the mechanism of most crowd funding platforms makes pledging support or donating far simpler, easier, and less cumbersome than the current (old fashioned) online forms that many organisations are still guilty of using. With the added benefit of the project creator being able to embed the project badge onto their website, raising funds is even easier, in that visitors to the site can simply click through to the campaign and make their pledges straight away, and these are then reflected on the project badge in real time.

And with the availability of the Tipping Point functionality with sites like iPledg, campaigns can be set up with their funding target (e.g. $30,000) but with a tipping point of around 10%, meaning that if the campaign hits just 10% of the target, then any funds raised will pass on to the organisation. Most campaigns on crowd funding sites are “all or nothing”, meaning that the funds raised pass to the project creator at the end of the campaign but only if the funding target has been met or exceeded, but in the case of the Tipping Point, charitable organisations are able to collect the funds raised if they hit at least the low, pre-set tipping point.

Rewards are always an inducement for people to pledge, but in the case of such wonderful community work, the need to give a tangible reward is replaced in the main by offering simple recognition to project supporters. Offering people the reward of having their name put on an honour roll, sending out photos and letters of thanks from the program recipients, issuing certificates and naming rights are just some of the rewards that can be offered. There is also the ability to offer a tax deduction should the charity have Deductable Gift Recipient (DGR) status. In such cases, care should be taken to not offer tangible rewards in return for pledges, as this may jeopardise the organisation’s DGR status.

Once the story is well articulated and the rewards sorted, it is a matter of having a plan for getting the message out to the community and to the world. Whilst social media is the ultimate medium for spreading the word, more traditional methods of communication should not be overlooked. One should consider communication to the network of the philanthropists who initially assisted with the set up of the orgainsation, as well as local councils who are usually very supportive of such programs. Approaching local television, print media and radio with a great community-based story as well as the unique way they are raising funding through crowd funding is usually well received and coverage almost always given.

With programs like iPledg’s Heart On Our Sleeve campaign, the time is perfect for organisations delivering NILS programs and microfinance to try crowd funding for themselves. iPledg are currently waiving their success fees for projects that meet or exceed their funding target, so not only does it cost nothing to put a project up on iPledg, project creators can apply to have the regular 5.5% success fee wiped. The only fees associated with fund raising in this way are the third party transaction fees of a couple of percent. With a view to help further, iPledg is also doing what they can to spread the word about community projects through social media, their newsletter, and their extensive database.

Feb 26

Crowd Funding – Keeping Investment, Equity, and IP On Shore

final logo new small-01By virtue of the fact that governments exist to protect their own, investment in high risk start ups often comes from foreign shores, where investors are not protected by the laws of the land from which the innovation originates. Whilst the government protects the retail investor, the entrepreneur and the local economy in general dies a little with each foreign investment made, with future profits moving off shore and little likelihood of reinvestment in the local economy. But as broad scale equity crowd funding becomes permissible, we will see retained knowledge, profit and investment in the country where innovation originates.

Put simply, for every percent of ownership that is currently sold off overseas, one dollar of every hundred of profit made seeps out of the economy, rather than being retained on shore to reinvest to fund jobs, further innovation, and to improve the greater economic health of the local financial system. If enough equity is sold off to foreign ownership, control can pass from the innovators and founders to overseas parties with little regard for or knowledge of local trade and industry.

The challenge facing many governments is how to open up local investment to the retail sector, broadening the pool of funds available to fund innovation and entrepreneurial ventures, but maintain a cap on the risk exposure to these same unsophisticated investors. At the same time as the governments ponder a solution to their dilemma, little stops investment in start-ups coming from overseas. Whilst it can be rightly argued that foreign investment does get businesses moving, the view is relatively short-term and narrow sighted, as the immediate benefits are quickly outweighed by medium to long term losses.

However, many governments have an option available to them that will see a sizable pool of local investment funding made available for innovation and start ups. Through the change in laws to allow equity crowd funding to be available to a far broader section of the community, governments will release potentially billions of dollars to get the economy moving and thriving from the grass roots levels and upward. The US government recognised two years ago that by making it permissible for equity crowd funding to be come into being, an estimated $300bil would be made available to small business in the first year alone. Whilst most other economies are nowhere as large as that of the USA, across the world governments have recognised relatively similar large pools of funding available to their own economies.

In a post GFC world, governments are increasingly under fiscal pressure to provide to the communities they serve, but in many cases they are required to do so with lesser revenues. With equity crowd funding, governments have a mechanism that takes the onus off them to provide funding for small business and start-ups, and provides them some relief to their balance of payments dilemmas. President Obama has often stated that the JOBS Act will provide funding into sectors to levels that the government could never commit to with any certainty or sustainability, and provide far reaching economic benefits that would have a profound impact on the broader fabric of the US community.

Governments around the world are realising that the best thing for their economic well being is to allow broad based equity crowd funding to become a practice allowed for under a change of laws. The USA is on the verge of giving the green light, with a rolling start well underway. In Australia, the Corporations and Markets Advisory Committee have called for input from industry to get buy in from the sector as to the best framework for equity crowd funding. Many other countries have either just initiated equity crowd funding or are doing the same as Australia and the US, and are preparing the legislation around how to best protect the market whilst not stifling innovation with compliance laws that are too onerous for many start-up ventures.

Broad based equity crowd funding will allow for the core of funding to come from local sources, to then be supplemented by foreign investment. This will see a turn-around in the current situation, and ensure the benefits of innovation remain firmly in the lands that put so much into the development of idea, product and ingenuity.

Feb 17

Crowd Funding – Free Campaigns in the True Essence of Community

final logo new small-01Crowd funding, in its purest form, is all about collaborative efforts of communities to support the efforts initiated by others. The entire premise has been built on the sense of coming together to support each other, whether it is for charitable, commercial, creative, artistic or community ventures, and to take away the traditionally regimented structure of funding, while giving the entire process some heart, thus democratizing the entire funding process. In keeping with this, one platform – iPledg – has launched its “Heart on Our Sleeve” crusade, offering success-fee-free campaigns to project creators.

Project creators are usually subject to two costs in running a successful crowd funding campaign – the costs of the payment gateways (credit card, PayPal, and the like), as well as the 4  – 10% charged by the platform itself as a success fee. It is the second of these, the success fee, that iPledg is offering to wipe for Australian projects and pledges from now until June 30, 2014.

“Our entire reason for setting up iPledg” says Bryan Vadas, Marketing Director of the platform “was to provide a solution to the gap at the bottom of the funding ladder”. The founders of iPledg both enjoy good success in the commercial world, but constantly encountered start-ups (clients) struggling to get seed funding to turn their ideas into reality. They also recognised the same need extending to other sectors – creative, charitable, and community – in which they were involved. The founders of iPledg recognised crowd funding as the solution for all of these areas of the community, and so their platform was born.

And to show that this is a labour of love, Vadas and Tompkins have launcher their “Heart on Our Sleeve” crusade. Project creators simply need to sign up to iPledg, create a campaign, submit it, and then send an email to heart@ipledg.com asking to have the success fees wiped from their campaign. It’s as simple as that, and the success fees at the end of the campaign are wiped. Unfortunately, the third party transaction fees of a couple of percent still apply, but the regular success fees are removed, but only if the email is received by iPledg within the first 48 hours of the campaign.

Again, it is only applicable for campaigns run in Australia and for pledges made in Australia (iPledg can still take pledges and campaigns from outside Australia, but for these the usual success fees apply to cover the higher international transfer fees which iPledg will absorb as part of their regular fees).

“It is our way of showing the crowd funding community that we are sincere about wanting to help people fund their passion” says Vadas. “It is an ideal opportunity for project creators to fund their ideas and keep more of the money for themselves. A great way for us, too, to give something back, and really wear our heart on our sleeve”.

Feb 10

Crowd Funding – Removing Risk from Starting Your Own Platform

final logo new small-01The growth of crowd funding has attracted many, keen to jump in and make a quick buck. They see the attraction of the mega-bucks being raised by the industry as an allure to make some easy money. Sadly for many, the unexpected costs of set up and operation all get too much, and we see almost as many sites falling by the wayside as there are start-ups in the crowd funding space. But now there is a way to test the waters and get set up at a low cost, and with an income stream from day one.

The cost of establishing a crowd funding site is usually far greater than most people estimate before they venture into the project. It is where programming meets marketing meets project management meets design. Rarely are all of these talents available “in house”, which means there is cost associated with getting up and running if you are to do it properly. Sure, there are cheap alternatives for each of these, but as Confucius say – “good thing no cheap, cheap thing no good”. Many have tried the cheaper, off shore alternatives, but many would revisit that exercise, given the extra time, energy, and cost required to deliver a sustainable and stable result. And then there are the ancillary costs and activities like legals, finding a workable payment gateway, and many of the “unforseens” that must be considered and costed into the equation.

Not only is there the costs of getting up and running, there are the constant overheads of maintaining the system, administering the site, and tending to the countless technical queries associated with the back end.

Then one must consider not only the expense side of the ledger, but the revenue required to make the whole venture profitable. The margins are typically low (around 5% gross). If we consider that about 45% of campaigns meet their funding target, just $450,000 will be funded for every $1mil of campaigns that list. At 5%, that means $22,500 gross revenue for every $1mil that lists, assuming that the site achieves the industry standard from day one, and assuming that they can get to $1mil of listings in the first year. Even if this stretch goal is achieved, the $22,500 needs to fund hosting, operational costs, external skills, and a heap of other expenses before the platform owner draws their modest income.

But now there is an option, offering a low cost of entry, and no other out-of-pocket expenses. In fact, there is a positive income stream from day one….

iPledg now offers to partner various organisations to set up an income generating crowd funding platform. Most organisations should focus on their core business or activities, and this is the key to them achieving crowd funding success in partnership with the iPledg model. The concept is quite ingenious, and allows the organisation to concentrate on doing what they do best, as iPledg administers a customised platform to the benefit of the organisation.

iPledg charges a one-off, low cost fee, allowing the organisation to have set up for them a clone of the iPledg site, using the iPledg engine and functionality, but with the organisation’s own livery, wording and images. The organisation can then assist its members, and utlisize the reach and strength of their crowd to fund all sorts of campaigns within its scope. They need not worry about running the back end, allowing them to focus on interacting with their crowd, their members, and their regular audience, as iPledg continues to operate the site itself. The partner organisation simply feeds the front end by bringing projects to the site through its regular course of business. And the best part is, the organisation gets half of the gross revenue of the site!

Picture this – You have a sporting club, with many teams and a heap of members. For a small upfront fee, you could have a crowd funding site set up and for you. You then get your teams and community to list their projects on your site. You then promote the site to your members and fan base for them to support the projects, and you encourage your project creators to do the same. Nothing more to do, just keep engaging with the people you already deal with (and you’ll have more reason for them to deal with you!) – iPledg runs the site for you. Each month, you then get a payment for half of the gross revenue generated by the success fees. That’s right! The gross revenue, so iPledg absorbs all the costs of running the site for you.

So instead of now costing tens of thousands of dollars to get going properly, any organisation anywhere in the world can get into crowd funding for a nominal fee, and then start to enjoy profits from day one – no extra costs, no headaches, and no aggravation – they just keep talking to their crowd in the same ways that they did before (and iPledg will even give them some coaching). It is through such wonderful innovation as this that anyone anywhere in the world can embark on being a success in the area of crowd funding for their creative, commercial, charitable or community initiatives.

Feb 05

Crowd Funding – The Pathway from $1 to $1mil

final logo new small-01Whilst there have been some great successes in the world of crowd funding, the pledge model works best for those seeking up to $30,000. This is wonderful to kick start an idea, but in many cases this isn’t enough to allow the dream to fully blossom. Pledge model crowd funding provides the starting rungs on the funding ladder, but there still seems to be a gap between that and “the big money” – a gap hoped to be filled by equity crowd funding. There is now one place where project creators can get a seamless transition all the way through both.

iPledg was originally conceived by founders who are active in the commercial world. They recognised that there was a gaping hole at the bottom of the funding ladder when it came to small businesses and start-ups accessing funding to get their ideas going. They recognised the answer lay in crowd funding, and given that broad scale equity crowd funding is not yet available in Australia, they set up iPledg on the pledge based model. This then allowed project creators potential access to early stage seed capital without the need to take on loans or without giving away equity at the very early and highly speculative stage of the business life cycle.

Whilst it is not yet possible in Australia to raise funds from dozens of unsophisticated, retail, or “mum and dad” investors, equity crowd funding does exist and actually has existed in Australia in one form, longer than anywhere else in the world. The Australian Small Scale Offering Board (or ASSOB) has operated a cutting edge equity crowd funding platform for 8 years, having successfully raised over $137mil in that time. Whilst the laws are fairly stringent around how funds can be raised in this way, it does operate with sufficient bandwidth to allow a business to go from genesis to serious funding and get well advanced in the business lifecycle. ASSOB can take businesses from where pledge model crowd funding traditionally leaves off, and help them raise up to $5mil capital per year, as well as preparing the founders for IPO, both financially, as well as the disciplines and mindset.

So far, there has been no singular pathway straddling both pledge model crowd funding right through equity crowd funding and through to IPO. That is, until the founders of iPledg recently became recognised ASSOB sponsors, providing the market for the first time a single channel of capital raising from $1 right through to millions of dollars. Start-ups and small business can now do their pledge model crowd funding under the guidance of iPledg, and then go on to start equity crowd funding under the tutelage or the same people that were there from the start – surely a world first!

And even more exciting is the way in which an iPledg campaign, using pledge model crowd funding, can be used to raise the funding required to cover the cost of equity crowd funding. In effect, it is now possible to run a pledge model crowd funding campaign, giving away product, services, or anything to get people to pledge (perhaps even offering to do household chores if the founders had nothing else to give) to raise the funds to cover an ASSOB listing.

With the familiarity, trust and knowledge of the founders requirements, there is no longer the need start again when it comes to the more advanced process of capital raising through the issue of equity. The folks at iPledg simply switch hats and continue the founders on their journey, now using the ASSOB process of getting investor ready. The fundamentals remain the same throughout – a good story, told well, with a strong team, and delivered on a strategy on how to build crowd to whom to appeal, as well as the best avenues for approaching them to offer equity (as opposed to rewards as done in the early stages through pledge model funding).

With the founders of iPledg now having developed a strategic alliance with ASSOB, they are now accredited sponsors for the equity crowd funding process in Australia. The founders of iPledg are the only ones to have bridged the two worlds of pledge and equity crowd funding, and as such are able to take project creators by the hand and guide them through the process from raising their first dollar, to raising the millions they may require. A truly unique offering, and one that will deliver to start-ups and small business a seamless pathway of funding from commencement to larger commercial success.

** To find out more about how you can raise the capital you require through either pledge-model or equity crowd funding, send your enquiry to iPledg

Jan 28

Crowd Funding – Lessons Learned in 8 Years of Equity Crowd Funding

final logo new small-01As the equity crowd funding fraternity prepares to enter the starting blocks or (at best) begins emerging from them, there is one organisation which has years of experience under its belt, and from whom the rest of the equity crowd funding world can learn. Some say the shortest distance between two points is a straight line, but many would argue that the quickest route to any destination is a well worn path, as a straight line may include having to navigate some tricky and slow terrain. It is ASSOB (Australian Small Scale Offerings Board) from whom much can be learned.

ASSOB has been funding startups through equity investments since 2005. Deemed “Small Scale” due to issues being limited to only 20 unaccredited investors per year, offers are not limited when it comes to accredited and overseas investors. The relevant regulators strictly monitor all activity on the site, especially around the issuer and the way and the extent to which they accept investment from unaccredited investors. As such, issuers need to ensure they choose the 20 largest suitable applications to get the greatest leverage under the regulations.

This may not be entirely the same as the equity crowdfunding emerging in the U.S., but since 2005 when they decided to take an offline unaccredited and accredited capital raising business online, ASSOB has had eight years of experience which has seen over 300 raises with more than 2,500 investors having invested, and nearly $140 million has been raised to date. During this time, they have addressed many of the concerns that are only just now being considered by countries hoping to change their current legislation to allow for equity crowd funding.

ASSOB has set up internal probity measures such as legal monitoring for people, entities and offering compliance, appointing trained sponsors (like Time Masters Pty Ltd) to guide issuers through the capital raising process, and templated many of the processes to make it easier for capital raisers. In addition, they have helped shape the equity raising landscaping in Australia by lobbying and engaging with regulators to build an environment that allows for capital raising in a controlled yet not onerous environment.

Despite this, there have been some key learnings in all of those years, with all of the raises, and with all of the funds raised. Perhaps the biggest matters uncovered include not initially having oversight of the issuers share registry, originally thinking it could be all done online, and expecting issuers could manage large parts of the process themselves. Just as many companies currently starting to embark on running equity crowd funding platforms are finding out about these problems, ASSOB has had years of addressing these issues, and have developed workable, equitable solutions.

At present the average investment per investor on the ASSOB platform is around $30,000. Like many other countries, Australia is considering changing regulations to allow for broad scale equity crowd funding. With such proposed changes, it is hoped that the number of unaccredited investors per raise will move from around 20 to 100 or 200. This will allow platforms to scale and that is where the capital raising sector will change forever.

Already, some of the more astute platform operators around the world are realizing the benefit of experience in getting early and profitable traction in the equity crowd funding space as their governments allow it to come into being. ASSOB has already licensed the platform to Offerboard.com in the USA. They will be using the ASSOB capital raising engine, but their implementation will be different than ASSOB’s — understandably so. Each country’s legislation will vary slightly, so whilst the skeleton of the platform remains the same, the way it is fleshed out will need to be altered slightly in each case.

Despite the access to experience of operators like ASSOB, equity crowd funding will always carry some uncertainty and hope. The investor hopes that when they invest they will get their money back or better, but it is uncertain as to when this will happen. As with all investment, there is a degree of risk that needs to be recognized by all parties – regulators, issuers, investors and platform operators. But whilst such risk will never be completely eliminated, it is through recognizing and adopting the practical experience of organizations like ASSOB that risks can be mitigated and the equity crowd funding experience can be more successful and enjoyable for all.

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