Dec 20

Crowd Funding – Bringing Your New Year’s Resolution to Reality

final logo new small-01It is well documented that most New Year’s resolutions never come to fruition. A high percentage of the best of intentions dissolve by the end of January, and seldom do any make it all the way through the 12 months. The key reasons for New Year’s resolutions not coming to light are a lack of planning, inadequate support or commitment, and a lack of funding to make the plans actually happen. For many, crowd funding may well be the key to a range of plans for the New Year actually being achieved.

Any quality crowd funding campaign will have been well thought through. The viability of the project and outcome will have been considered and researched. Benchmarks and quotations, obstacles and solutions – all will have been scoped out to ensure that the plan is logical and viable. It is this planning discipline that is lacking from many New Year’s resolutions, which are little more than whimsical hopes and aspirations. The planning and articulation of such strategies are what adds meat to the bones, and makes the desired outcomes more tangible and conceivable.

Running a marathon is not easy without a support crew. The runner’s team keeps them focused, enthused, and committed to achieving their goal, all the way to the end of the race. Should the runner’s mind wander or should they hit “the wall”, their team will be there to pick them up, and refocus them on the task at hand. The same can be said of crowd funding. It is very easy to give up when it’s just you, but when you have the support of your crowd, it is harder to give up and just drop the project. You also have the additional benefit of them getting behind you, cheering you on, and pushing you to achieving your goal. It is often said that a task shared is a task halved. This is very much the case with crowd funding, and a key way as to how crowd funding your New Year’s resolution can keep your supported and focused.

So many plans never come to pass due to insufficient funding. Set your funding goal to reflect an outcome that has been well costed. If you can, also set up a tipping point, a compromise where you might reach a lesser but more achievable goal should the crowd only support you to that level (it also gives you a second bite at the cherry to make your dream happen). Offer great, sought-after rewards and spread the word to your crowd, asking them to engage by supporting you as well as by getting the word out to their networks. Continue to drive your campaign from before your launch right to the very last day, even if you hit your target along the way (remember, you can very well over-fund your campaign, giving your dreams and resolutions far greater scope).

Now is the time to be considering your resolutions for the New Year. Perhaps this year, crowd fund your passion, and build your campaign and your team around your goals. Plan it well and articulate your project description to reflect a considered approach. Engage your crowd and your team early. Have your supporters ready to keep you on track, starting strong and focused on running a race with benchmarks and well thought out milestones. Make it clear to them as to how they can support you and what role they each need to play in helping you exceed what you have resolved to do. And with all of this in place, fund your plans with a well executed campaign. And if you have done this correctly, you will find your New Year’s resolution becoming reality, in far greater ways than you ever planned.

Merry Christmas from all at iPledg and here is to a happy and prosperous New Year that sees you fund and achieve your passion in 2015.

Dec 04

Crowd Funding – How You Start Determines How You Finish

final logo new small-01Preparation is the key to successful crowd funding, whether employing the pledge model or capital raising through equity crowd funding. Many experts can quickly assess whether the campaign will reach its goal, just by looking at the campaign and asking the project creator a few simple questions. In most cases, success is determined not by what happens during the campaign, but by the work done in the prelaunch. Research and work done in the lead up to going live will not only give your campaign the best chance of success, but often determine whether the funding goal will be met.

Recently, I stumbled upon perhaps the best template for successful raises that I have ever seen. I am not one to usually promote other sites and businesses related to Crowd Funding, but I can’t sing the praises highly enough for the highly respected Eli Regalado, Chief of Madness at Mad Hatter Agency, who has raised over $1,000,000 and has now put his hints and tips into the Udemy course – “The $400k Crowdfunding Launch Formula” (He obviously wrote the course before raising even more funds!).

His course emphasizes the need for 8 – 12 weeks of preparation prelaunch to really understand the product, the market, and the crowd. “Family And Friends Raises” raise small amounts of money, and rarely even have the audience to do that much. Following Eli’s tips helps to really position yourself well at the starting line of your campaign, so you can cruise to the finish line (OK, there still is a fair amount of work between the start and the finish, but preparation is the key).

The first step is to build your team with specific roles and tasks. Set up a register where you can communicate amongst one another, and have a clear record of what needs to be done by whom, by when, and how. Plan your work and work your plan.

Once your team is in place, start to gain intelligence on the project, the space, and the crowd. Eli gives some great tips on how to “Search like a Ninja” and use simple Google searches in ways far more effective than I ever knew possible (and I thought I was pretty good at searching topics on the ‘net). Searching and researching with tools like www.Netvibes.com will assist in understanding who is talking about your sector and what they are saying.

Identifying and getting on the right side of influencers and advocates will help increase your audience and your bandwith, as well as add considerable clout to your message. It is not enough to find influencers with a few thousand followers – using Eli’s tips will help you find influencers with tens of thousands, if not hundreds of thousands or even millions of followers. “The $400k Crowdfunding Launch Formula” doesn’t only introduce you to tools like www.socialbro.com and www.twitonomy.com but will show you how to use them to engage. From there, you can also get bloggers blogging your message, and turning into advocates for your campaign, way before it even begins. And best of all, you can ask for what you need from well connected, key influencers.

Once your crowd is starting to grow and buzz, you get to the building phase, at which point you start creating content and digital assets. Tools like www.kickspy.com will allow you to see what for what has worked before in your sector or for your product. The shortest distance between you and the point of success is not a straight line, but by following the most well worn and successful paths of those who have gone before you.

Then it is a matter of continuing to work your crowd until your campaign goes live. Be authentic in how you choose people and build some rapport first. Take time to do this and your influencers and ambassadors will not only help with your campaign, but they will also help you long term. The beauty of the internet is knowing that if you make a trusted and sincere connection to key influencers and work with them, the reach can be quite extraordinary.

Put quite simply, crowd funding is work – team work! Build your team and work with them. As the founder, drive your vision, but ensure you involve people and listen to them. Build and engage your crowd, and use the experience of those who have done it in the past to build a solid campaign. And remember that the money comes after you build your community. If you don’t, it is like trying to sell Amway on the street corner.

Nov 09

Crowd Funding – the Basics of Capital Raising

final logo new small-01Capital raising, whether it is by way of equity or by pledge, all starts with a great business or concept. Built it and they will come – as long as “it” is attractive, functional, and relevant. From that, the journey of where you have come from and where you plan to go needs to be cobbled into a good story, and then delivered as a compelling sell to an engaged, supportive and enthused crowd. Get these right, with each of these steps seamlessly integrating into the next, and you have the formula for a successful funding campaign.

Getting the product, service or business model right is like having a solid footing on which to build a house. A less than solid footing may allow you to make some progress, but it will eventually crumble under the weight of scrutiny and market pressure. “Pivoting” – making changes as you develop your concept in response to market feedback and new findings – will allow you to better fashion your concept before you go to market. Doing your homework will ensure you know what the market wants, and that your product, service or company will satisfy or solve that need. Understanding your market allows you to fine tune your concept so that you deliver the market what they want or need, in a way that they can easily uptake your offering. And ensuring you present the pathway forward in a well considered and articulated manner will allow you to take the concept to market.

Once you are confident that you have the right product that people will want, and you are able to demonstrate that your assumptions are substantiated, you will need to start to prepare and build your “crowd”. Start to engage them, not only in your capital raising, but in the product or business itself. Again, if they like what you are doing and you can build enough excitement, you won’t need to ask for investment or pledges – your crowd will be beating down your door to be part of your venture! The internet has made it easy to find like-minded individuals and organisations with whom you can communicate about what you are doing, and to build these followers in to tribes that will not only come on board, but endorse or advocate your efforts, business, and product.

Once you have built your tribe, you need to maintain engagement as well as continue adding to your crowd. Communication is the key. Let them know of your progress. Keep them engaged by telling them of your successes, milestones reached, and the goals you have kicked. Don’t whisper, but shout it from the roof tops and let your crowd hear it. And don’t just talk at them – invite them to get involved and start a conversation. Again, do it publicly so other members of your crowd feel comfortable to get involved, and those outside feel compelled to join in on not just the discussion but to become part of the group.

Your ultimate success is highly dependent on you. 21% of all funding campaigns raise nothing, not a single dollar. This is due the issuer or the project owner failing to engage his first tier or those who know and love them the most. It cannot simply be left for the platform or someone else to bring on funders. Initial momentum for any campaign must be driven by the issue or campaign owner. Before any funding campaign begins, the project creator or issuer needs to have investors or supporters ready to support from the get-go. A movement is created by momentum, and momentum needs to be created early. Many funding campaigns run out of steam because support is too slow in coming. Get supporters and investors on board early, and let the world see they you have something about which they should take note.

Once momentum has begun, keep it going, and recognise there are now a number of priorities to support the main goal of achieving your funding target. You need to motivate your initial supporters or investors to invite their friends and contacts on board, telling them about the great thing they have done in supporting your business, product, or venture. As each of your crowd will have a crowd of their own, this “second tier” represents a much larger audience than you will have reached by yourself. Then there is also the constant task of keeping your total supporter base engaged, as well as growing the number of members of your tribe. Keep your follower numbers growing, keep your tribe focused and involved, and ask your supporters to become advocates for you.

Capital raising in any form involves work – teamwork. You need to sustain energy to maintain focus on building and driving our team towards your funding goal. If your product is largely built to truly satisfy the requirements of the market, and you have done your homework correctly, then you will not have to spend much time on your product as you do your capital raising. Build your immediate followers (your “first tier”) and get some early runs on the board. From there, communicate your successes and ask your first tier to engage their contacts (the second tier). Create noise, momentum, and give people a reason to want to have a look at what you are doing – at your business as well as your capital raising efforts. For the duration of the campaign, never give up, keen going, and remain fast, flexible, and fashionable until your goals are achieved.

Oct 27

Crowd Funding – The Discovery Session

final logo new small-01Before you start your crowd funding campaign, it is essential to define your target market. Not for your product or service, but to work out who represents the pool of potential supporters who might assist you with your fund raising. Prior to going live with your campaign, you should make a comprehensive list of potential supporters who you can approach, so that the fund raising process starts quickly and accelerates rapidly, attracting the attention of broader and broader networks of supporters. This is known as the Third Tier Principle.

Most crowd funding platforms are there to guide you through the fund raising process, as well as to host your campaign. Whilst their sole purpose is not to attract supporters, they will do this if you start to engage the First Tier, namely those that are closest to you (your friends, family, workmates, etc). Once you have engaged the First Tier, these supporters will start to do some of the work for you, engaging the Second Tier, or “friends of friends”, as the early adopters start to tell their friends what they have done, and inviting them to do the same.

Once the Second Tier starts to support your campaign, you will have established a movement or sufficient momentum for the Third Tier to start to take note. These are a broadest pool of supporters, and what is termed “The Smart Money”. The First Tier supported out of emotional motivation – they know you and love you, but the Third Tier do so out of logical reasoning. They see movement and want to jump on board.

third tier

You need to liken it to the days of your childhood when you stood with your friends at the edge of the swimming pool. Initially, there was the constant elbowing and comments of “you jump in”, to which your friends replied “no, you jump in first”. This continued back and forward until the first, braver few jumped in, then a few more, and then more until it was no longer “cool” to be left standing on the edge.

The same is the case for fund raising. Engage your First Tier. Get them to jump in and then others will follow suit.

To establish your first tier, you should run a Discovery Session to identify who might make up that group.  A Discovery Session simply allows you to make a list of potential candidates for the First Tier so that you have a target group to approach. The broader you make this, the more chance you have of establishing the initial momentum and getting underway to reaching your funding target.

Below are listed some areas to consider when making the list of your potential first supporters:-

  • Family – Ask your family members if they would like to support your campaign. Often family members are reluctant to support because they never really know what they are getting into, but your project description makes it simple, clear and well structured as to what they are supporting.
  • Friends – Same as for your family, ask those who know you and love you the most to consider supporting you.
  • Neighbours – Who are the people that live in your community that ask you with some interest what you are up to? Surely there are people in your local area that may make good potential supporters.
  • Workmates – The clearly defined structure of a crowd funding campaign makes it easy for the people you work with to support you.
  • Clubmates – Are you the member of a sporting club, social club, or a group like Lions or Rotary? Are there members there that you could introduce to your campaign? Remember, you don’t have to directly ask them to support you – if you have set up your project description in a way that is attractive, they will feel compelled to support without you asking. You just need to tell them about what you are doing and invite them to take a look.
  • Social media contacts – Do you have friends on Facebook, Followers on Twitter, or Connections on Linkedin? Prior to a crowd funding campaign, build up your contacts on social media, and once your campaign is live, be sure to invite your connections to have a look at your profile page. Marketing this way is a game of numbers, and the more connections you have on social media, the better chance you will have of reaching your funding target, so be sure to build up your connections before your campaign goes live
  • Interest groups on social media – Not only is it wise to start building up your followers on social media, but start to seek out groups and individuals with an affinity for what your campaign is about. By connecting with likeminded individuals and seeking out groups on social media, you greatly increase your pool of potential supporters. A simple search for search terms associated with your product or service will connect you to a whole new groups of potential supporters.
  • Everyone in your Sent box, Inbox, and Deleted emails – they are all email contacts and a great place to start a database. Everyone who has sent you and email in the past or everyone to whom you have sent an email is captured on your computer. Fish out these email addresses and start to build a list of them (a simple database). You can then email them all about what you are doing with a simple link to your campaign once it is live.
  • Local media – Start to build a list of local media contacts so you can let them know about what you are doing. On the nightly news you will see many of the reporters have their twitter handle (jot them down and send them a direct message). Many of the journalists in the local paper have their email address listed at the end of articles they have written – add them to your database. Contact the local radio stations and tell them about what you are doing. The local media are always on the hunt for interesting local stories, so feed them your news.
  • Blogs – Ever considered writing a blog? It is a great way to get your thoughts out there and engage likeminded people and those interested in your product or service. And if you struggle with writing a blog, you can do a video blog (face to cam) or even use sites to create a cartoon blog to get you message and thoughts out there. As well as creating your own blog, do as we have suggested above and search for blogs related to your product or service, and join them to engage with people who may become potential supporters.
  • Suppliers – Those who supply you, whether it be the components for your product or service, or anything from the cleaning products your use in your business to your stationery supplies, all make potential supporters. They always keen to strengthen ties to their customers, and may make for potential supporters. There is one way to find out – add them to your list and invite them to have a look at your campaign.

Your Discovery Session will have flushed out at least a couple of hundred (if not many more) names of potential supporters who you now need to get on and contact. Start to email, telephone, sms, or visit them and let them know about your campaign. Keep in mind that people will need a couple of reminders during the period of your campaign. Contacting them is not a one-hit-wonder, and the “constant contact” strategy works best, from sending an email a week right up to social media announcements that will need to be made daily.

Oct 08

Crowd Funding – No Small Change When It Comes to Social Funding

final logo new small-01Mention the word “Entrepreneur” and people immediately think of words like profit, performance, return and dividend. But when it comes to social entrepreneurship, we move into new ground, that of broader cultural, social, and environmental outcomes. Profit may still be associated with such ventures, but profit is a mechanism to sustainability rather than the main focus which instead is aimed toward the greater good. And those supporting such initiatives do so not out of greed (what’s in it for me), but out of a shared passion for the cause or the outcome it will deliver.

Social entrepreneurship operates on a focus shifted from maximising profits for shareholder returns, to the pursuit of solving social problems. Typically there are four key categories of social entrepreneurship:- community-based enterprises, socially responsible enterprises, social services industry professionals, and socio-economic enterprises.

Community-based enterprises bring together a community, and focus its culture and resources to drive toward their desired outcome. Socially responsible enterprises aim to create legacy projects, that offer sustainable development directed mostly on societal gains. Social service industry professionals are those who work specifically in the sector of social services to develop and build on the social capital of their chosen individual, community, or organisation.  Socio-economic enterprises refers to companies with an awareness of their Triple Bottom Line, and direct some of their revenue and profits towards implementing social change, be it empowering change-makers, mentoring, strengthening existing projects and assisting with further capital raising.

The concept is not something new to the social or economic landscape. Back in the mid 1800s, Florence Nightingale demonstrated the concept when she not only documented the need for change in hospitals where high death rates were occurring, she drafted the change plan, and organised numerous fund raisers to source the capital to implement her recommendations. She engaged the nursing community by reassigning tasks to the most capable and passionate supporters of the cause, uniting them and focussing them as a community to deliver a beneficial outcome to the cause about which they felt so strongly.

In recent years, initiatives of a social entrepreneurial nature have been significantly assisted by the reach of the internet and the emergence of crowd funding which, in the words of Wikipedia, allows for “the collective cooperation, attention and trust by people who pool their money and other resources together, usually by the internet, to support efforts initiated by other people or organisations”. In effect, social entrepreneurs are now able to embrace a greater following and raise the required funding through crowd funding.

Once such example was the project Tackling Child Labour on Indian Stone Quarries Through the Construction of Residential Schools. Having identified that children living on stone quarries belonged to one of the most disadvantaged groups in India, the initiators of this project recognised the approval given by the Indian Government to Santulan to develop residential schools, and decided to crowd fund the additional costs needed to cover basic furnishings such as study desks, chairs, beds and linen. In appreciation of the selfless work Santulan does in pursuit of social justice for some of the most marginalised communities in Indian society, this group sought to raise $15,000 on crowd funding platform, iPledg. Their 90 day campaign exceeded their $15,000 target, with the campaign raising $26,790, all of which was allocated to the works of Santulan.

The benefits of social entrepreneurism are obvious, but the devil lurks in the inevitable detail. Whilst most social entrepreneurs are well meaning, their skills may be questionable, especially in the areas of sustainability, engagement, and scaling. In addition, both the skilled and less adept initiator will come up against the policymakers who often do not fully understand social initiatives, which can lead to the project stagnating or stalling completely. Policymakers often do not share the same passion as the social entrepreneur, with their priorities being more around mitigating risk and avoiding political repercussions, so the meeting of the two minds requires some highly skilled massaging of the differing agendas. And once underway, longer term sustainability of projects can be compromised by the entrepreneur confusing “not for profit” with “not profitable”, thus running out of funding requiring to maintain momentum or retain knowledge and resources.

Sep 21

Crowd Funding – Leveraging for Big Business

final logo new small-01The pages of the worldwide web abound with testimonies of successful crowd funding, of projects requiring a few hundred dollars to many thousands and even millions of dollars to become commercial reality. Creative artists, charitable organisations, and community groups have all benefited, but grass roots commercial success has been achieved through crowd funding in what was previously a gap at the bottom of the funding ladder. And now it is big business that is starting to explore and benefit from crowd funding as they embrace the fastest growing form of e-commerce on the planet.

Traditionally the domain of those wanting to raise $1,000 to $30,000, the commonly held perception of crowd funding started to change when the inventors of the Tik Tok watch turned to crowd funding to raise $15,000 for commercialisation. With worldwide crowd engagement, they changed conventional thinking when in just 30 days they raised $962,000 from over 13,000 supporters. All of a sudden, crowd funding was transforming from a tool for start-ups to a mechanism for bigger business to partake and fund their aspirations. Further reinforcement of this thinking came when the Evolution Dock became the first campaign to raise over $1mil by crowd funding, and then quickly the video game Double Fine Adventure raised over $3mil. When the Pebble Watch successfully raised over $10mil (the first $1mil coming within the first 24 hours of the campaign), big business started to explore how they could apply crowd funding to their own needs and stakeholder aspirations.

So what actually is Crowd Funding? Wikipedia perhaps describes it most clearly – “Crowd Funding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the internet, to support efforts initiated by other people or organizations.” Or put more simply, crowd funding allows for people to put their projects up onto the internet, and solicit many small pledges for which they might offer rewards or inducements to achieve an overall funding target.

Crowd funding is not a recent invention. Back in 1885, Joseph Pulitzer (the editor of New York World) used his publication to raise funds for the pedestal of the Statue of Liberty which had recently been gifted to his city by the French. Over $100,000 (big money back in those days) was raised from the community, with the average pledge being just $1, to fund the pedestal on which the Statue was placed and proudly sits today. The inducement offered to those who pledged was the inscription of their name in the pedestal.

The most notable modern iteration of crowd funding came about in the late 1990s when British rock band, Merillion, wanted to tour the USA but did not have the finances. They were supported by fans who gave £10, £20, £50 and more to assist the band achieve its dreams. Over £60,000 was raised, and the band conducted a successful tour of the USA. On their return to the UK, they offered the fans who had supported them small rewards aligned to the pledges of support they had made – albums, tour jackets, posters, and the like.

Today, crowd funding is here to stay. Many say it is the next iteration of social media. Until around 2006, you could “like” other people, organisations and their initiatives. Simply click the icon, and you could become a supporter, very emphatically and very publicly. Crowd funding took this to the next level when you could reach into your pocket and like them to a whole new level, which involved your cold hard cash. And it was the perfect storm where micro-finance met the internet in the post GFC environment that saw crowd funding really take hold. All of a sudden, people could transfer money quickly and cheaply, and spread the word through social media, at a time when the requirement for cash was at its highest in history.

With the continued successes in the pledge model of crowd funding growing exponentially for around 10 years, much of the world started to consider the application of crowd funding in the investment space. To date, much of the world had not considered or permitted investment crowd funding, opting to protect mum and dad investors from losing their money in potentially bad crowd funding offerings. As a result, equity and financial returns were not permitted to be offered by crowd funding campaigns in many of the countries that allowed pledge model crowd funding to exist in an unregulated environment.

One notable exception to this was in Australia where, while broad scale equity crowd funding remained impossible due to legislation, small scale crowd funding was permitted. The Australian Small Scale Offerings Board (ASSOB) successfully sought exemptions and concessions under the law to be able to facilitate capital raising using crowd funding, limited to a maximum raise of $5mil from up to 20 investors in any 12 month period. Through this unique combination of exemptions and concessions, the world’s first form of investment crowd funding was born.

In 2013, President Obama signed the JOBS Act, part of which included changes to the legislation which would allow businesses to raise capital through the issue of equity via crowd funding. It was estimated that once the new laws passed into being, that there would be an injection of over USD $300bil into small business and start-ups, none of which would need to come from government coffers. Crowd funding was seen to be the solution which would democratise funding, and shift the need for governments to fund the early stage ecosystem, to the community (or “the crowd”) now funding new business as well as business transformation in the case of big businesses. While the USA was forming and shaping the legislative framework, the UK, regarded by many as the leading nation for investment crowd funding, was making it happen.

While many nations still are to permit investment crowd funding to be conducted as a broad scale vehicle for raising capital, many larger companies are positioning to be able to leverage off crowd funding to raise the capital they require. Pharmaceutical companies are already promoting their intention to crowd fund R&D into new drugs. Similarly, mining and exploration have expressed their intention to use this form of capital raising and share the upside with those willing to take the risk in supporting such speculative projects. Big business recognises crowd funding as a way to fund these high risk ventures without having to approach the risk-averse traditional funding sources, thus opening up the opportunity to undertake a broader range of exploratory business streams.

Big business is able to open up investment in specific parcels, divisions and income streams, and by using crowd funding as the vehicle to do so, further engage with the community in a manner that was previously unavailable to them. By offering the community a “slice of the action”, big business has found in crowd funding a way of bolstering their triple bottom line, and building strong sustainable bonds with local supporters. Without the high levels of compliance and paperwork but with more transparency and involvement, big business is able to utilise equity crowd funding to become faster, more flexible and increasingly fashionable in the eyes of retail investors, who will have the opportunity to speculate and invest using equity crowd funding.

Sep 08

Crowd Funding – Yum Yum!

final logo new small-01The recent spate of cooking shows on TV has us all gastronomically aware with our senses heightened to all things culinary. Everyone now strives to be a master chef, with even the time-poor among us seeking to eat better and more nutritiously. Overlay this with the amount of chefs, both proven and aspiring, that are out there seeking to make their stand in the world of food, and the environment is set for them to really utilise crowd funding to get a strong foothold on the funding they require, as well as to supply them with their first customers.

Aspiring chefs usually have a number of projects on the chalk board for which they require funding. Whether it be to build their dream website, or to promote their services or event hold their breakout event, crowd funding offers chefs the funding mechanism they require to help them get underway. Most other traditional forms of funding would not support such endeavours without secure collateral, so crow funding remains the best, fastest, and most flexible option, not only providing the required capital, but helping to build the loyal and supportive customer base who will be advocates for the chef, as well as providing repeat business to sustain the venture’s sustained health and growth.

The project description allows the chef to detail their experience and let their audience know the styles of cooking in which they excel, or the qualifications they have attained in this field. It also allows them to promote their point of difference – whether it be their service or the style of cooking they provide. Finally, it allows the chef to explain their aspirations and outline exactly what they are raising their funding for.

And the rewards remain the best part. Those who are familiar with crowd funding know that rewards are often the inducements to get the crowd on board and to pledge their support. The old adage “the way to a man’s (or woman’s) heart is through their stomach” plays perfectly into the premise of crowd funding a chef’s aspirations. They can offer packaged meals (whether they be one off or an entire eating plan), or perhaps to cater for a dinner party for a nominated number of people. Pledges for lesser amounts or entry level pledges may include a small box of baked treats or sweet goods which may be sent through the post.

One of the common problems with speaking with chefs about such a campaign is that their rewards are often originally geographically bound, meaning that they offer rewards that can only be delivered to their local market. The key to increasing the potential market for the chef’s crowd funding campaign is to offer rewards that can be sent further afield. Perhaps the chef could offer writing a custom menu for those who pledge support, or they may have other more famous chef friends that might sign cook books for them – such rewards in limited supply can fetch a handsome amount from potential project supporters. Campaigns can also be thrown open to a global market, by offering personal cooking classes on Skype, especially when offered with some form of unique twist based on cuisine or cooking style.

So chefs – get cooking. The time has never been more perfect for you to start playing with the ingredients of a perfect campaign that will rise like a soufflé and provide you with the funding you need to achieve your projects and dreams.

Aug 28

Crowd Funding – Bridging the (Medical Benefits) Gap

final logo new small-01There has been a lot of noise in the press lately about the government tightening its purse-strings and the effect on public health care as the current fiscal policy contracts. The gap between the amounts that doctors and hospitals charge and the amount that the government will cover is big and getting bigger, with moves being made to further decrease the government’s contribution to health care. But there is an answer, as crowd funding proves to successfully finance medical payments for those really in need.

The first ever successful campaign on iPledg was Help Barry. Barry had cancer and sought to head over to Germany for treatment. His initial goal was to fund the cost of travel, but given the wonderful support he received from family and friends by way of not just pledges but by them spreading the word through social media and email, Barry’s campaign was over funded and saw him well on the way to cover a genostics test to further help with his diagnosis and treatment.

The Rays of sunshine for Ainslie campaign helped Ainslie, who had been diagnosed with a complex brain tumour, travel from Perth to Sydney to meet with renowned brain surgeon Charlie Teo to assess and hopefully operate. With the duration of the visit turning out to be longer than expected, and the cost of accommodation, travel and the expense of the operation being more than expected, friends of Ainslie banded together to crowd fund the costs.  With the funding raised by this campaign falling reasonably short of their initial target, iPledg’s Tipping Point functionality really assisted. The Tipping Point sees the ability for a lower default amount to flow through to the project owner if they hit a much lower (pre-set) target. This unique functionality has helped campaigns on iPledg achieve a higher degree of success, which is particularly important to such health-related campaigns.

Choice for MaiaBrisbane mum, Rebecca, raised money on behalf of her 18 year old daughter, Maia, who  was diagnosed at age 16 with a high grade angiosarcoma of the left breast. She had already had a mastectomy and underwent radiotherapy to the area when, about twelve months later, Maia was diagnosed with secondary angiosarcoma on the lungs. She has multiple sites of cancer on both lungs. She underwent further radiotherapy, and chemotherapy, and is currently receiving a daily oral dose of a new and relatively untested drug which is intended to stop any more cancers from growing, but not impact on the ones which are already there.  Funding was raised for this life prolonging treatment, as opposed to curative measures. This was their only option under the current model of conventional cancer care in Australia. The aim was to raise $6,000 to enable Maia to take advantage of the GENOSTICS diagnostic testing as part of her treatment for terminal cancer. Fortunately, through engagement of a supportive community, family and friends, they achieved more than double their funding target, significantly contributing to her health care

Andrea is a sole parent to a beautiful 10 year old girl. Just when life was looking good, she was diagnosed with stage 3 colorectal cancer. The treatment for this condition includes 7 weeks of chemotherapy and radiotherapy, and then surgery, more before post-op chemotherapy and further operations. The whole process was estimated to require two years, during which Andrea would need to pay for her treatment up front, as Medicare would only partially reimburse expenses once Andrea had paid. Close friends of Andrea ran the campaign- Andrea’s healing journey – which raised $9,000 and helped Andrea bridge these costs.

Funding the gap between government reimbursement and the actual cost of treatment and care is not the only benefit of crowd funding when it comes to this sector. Rehabilitation and recovery, both for the patient and their family can be covered by crowd funding, and this is often as important as the true medical costs themselves. In his book, Will to Live, quadruple amputee Matthew Ames tells of his cancelled plans for the family trip to Disneyland due to what started as a sore throat resulting in the loss of all four of his limbs. He had contracted streptococcal resulting in toxic shock and was never expected to survive. Crowd funding could well offer a vehicle to get patients such as Matthew, his wife and four small children to bond and heal together by allowing them to live out such dreams. All it takes is the will to want to do it, and the committed team of supporters to make it happen.

 

 

Jul 30

Crowd Funding – The Most Accessible Funding Option for Start-ups

final logo new small-01The term “Venture Capital” is a misnomer. The reality of it is that the providers of such capital rarely “venture” but prefer the prospective investment to have momentum and a track record. Perhaps it should be renamed “Development Capital”. Similarly, banks and services like trade finance and factoring all require high hurdles to be jumped before funding can be facilitated. If you have big resources and big successes under your belt, you can raise big dollars, but what for start-ups? Crowd funding is continuing to prove itself the funding option of choice for the start-up community.

Atop the funding ladder is the Stock exchange where IPOs can provide large sums of funding for rapidly expanding ventures. But with considerable cost and high levels of probity, listing on the stock exchange is a world away for many early stage start-ups. As you move down the funding ladder, you find at the lower tiers such options as Angel investments which are relatively guarded when it comes to risk, and who will take a sizeable slice of equity in recognition of their speculative support. Governments have been subject to tighter purse strings so grant programs are becoming less available, and requiring a greater number of conditions to be met.

So there has been an increasing gap at the bottom of the funding ladder. There needs to be a mechanism for those who require small amounts of money, up to (say) $30,000 for very early stage seed capital, especially in the early days when a business is high risk and very speculative, and does not require the entrepreneur risk their own collateral, or need them to jump through high hoops. It is Crowd Funding that is proving to be the perfect solution to this gap at the bottom of the funding ladder.

For those who have no cash to put towards raising more capital, crowd funding is the perfect option. In most cases, posting a campaign on a crowd funding site like iPledg will cost you nothing. Furthermore, not only does it cost you nothing to start a funding campaign, if you don’t meet your funding target, it has cost you nothing to at least give it your best shot (which still gives you experience, exposure and feedback). And even if you do meet or exceed your funding target, the funding costs of a successful campaign can be covered by your funding target, meaning that capital raising through crowd funding will not cause you to ever reach into your own pocket.

Given there are no prospectuses to prepare, no lengthy forms to fill in, and no protracted application process to complete, crowd funding represents a quick format of capital raising to get underway. Once the campaign description is written, a short video is made, the gallery of pictures is uploaded and a funding target and timeframe established, most campaigns can be underway in a matter of minutes – far quicker that any traditional form of capital raising.

Apart from simply providing you with the money that you need to get your venture underway, crowd funding can also provide benefits that traditional capital raising could never offer. Many project creators recognise that a crowd funding campaign is an excellent way of making presales, offering the very product that is being funded as the rewards to those who pledge their support. In effect, the initial production being funded can be sold to fund the start-up. Successful campaigns also act as a form of market validation.

But even more importantly, the social proof offered by successful campaigns can often be more valuable to the project creator than the funds being raised. By the mere fact of a large number of project supporters pledging their support to the campaign, a strong message is sent to potential financiers, suppliers, distributors, partners, etc that this is a sought after product or service. Strong social proof will attract interest from a number of parties that may help commercialise and monetise the product on a more broad scale.

And when you take the whole concept of crowd funding to its full extent, it is all about engaging with the crowd, building your tribe, your community and followers who will not only become customers but advocates for you and your project. No other form of funding provides a capital raising facility at the grass roots of business, as well as a form of engagement that links start-ups closer to their potential markets.

Jul 13

Crowd Funding – Pledge or Investment, Understanding your Target Market

final logo new small-01Business 101 dictates that for any form of financial success, one must firstly identify their target market, and then understand the motivators to get the market to part with their money for the product or service generated by the business. The same can be said for those who run a crowd funding campaign, whether it ulitizes the pledge model or if it is for investment. Understanding the motivators is paramount to structuring a successful campaign and driving it to achieving the funding target.

Firstly, the pledge model. In many countries broad scale investment crowd funding is yet to be made permissible, so pledge model crowd funding is how many business now see they can get the seed funding they require to get moving. The pledge model means project creators cannot offer financial returns, investment, or equity as inducements for funders to pledge, so they need to get creative with their rewards, many opting for pre-sales at very attractive prices. The key motivators for the pledge model of crowd funding are quite clear and simple, and successfully tapping into these is the key to reaching and exceeding the funding target sought:-

  1. They know you and like you – The importance of “the first tier” or the family, friends and those closest to the project creator cannot be understated. These are the people that must first be engaged to give the campaign the initial momentum it requires. Usually, it is those that know you and like you that will simply support out of a desire to help the project creator get a “leg up” with their campaign.
  2. They are after one of the cool rewards – In the words of 80’s star, Gordon Gecko – “Greed is good”. Tapping into consumer greed and offering really cool, sought after rewards at great prices (or in return for a pledge that represents great value) is a proven way of getting the market engaged. This becomes a more “logical” rather than “emotional” strategy for getting funders on board.
  3. They are passionate about your cause or the outcome – Not all funders want a tangible return for their pledge. Many are good citizens who recognise excellent work being done to help animals, the homeless, the sick, etc and simply wish to help, and to see the stated outcome (some form of assistance or improvement to the situation) delivered to the person or group who is suffering, disadvantaged or who will ultimately gain by the successful outcome of the campaign and project.
  4. Social Kudos – People love to see their name in lights, in print, or (as has now been facilitated in the digital age) online. Public online recognition is enough of a motivator to get some people to pledge, especially if they see the person or cause to who they make their pledge as being one who will say good things about the funder, and say it “loudly” on social media.

Given the above summarizes the motivators for supporters of the pledge model of crowd funding, those that with to invest in equity crowd funding have a totally different set of expectations and requirements for them to part with their money.

  1. Team  – Investors want to see a strong team, covering all areas of strategic and operational management and involving experienced and credible individuals. Any gaps should be filled with a strong Board of Directors or possibly even supported by a committed Advisory Board.
  2. “Must have” solution – Backers need to be shown market relevance of the product, service, or business being funded. They want to see that the project for which funds are being sought will deliver a solution to big market problems.
  3. Customer validation and market traction – The likelihood of raising capital sought is largely effected by the progress that has been made by the entrepreneur. As the idea progresses from concept to proof of concept through to making sales, generating revenue and then profit, the “investability” increases as the market validates the need for the product and the ability for the company to make money out of the venture.
  4. Financial model and capital plan – A clear demonstration of how (and when) the venture will make money, and how much money is required to get there is paramount to showing potential investors that the way ahead has been carefully considered. Usually, such a plan will incorporate some form of business plan or road map to success.
  5. An ability to scale – Investors do not typically invest in businesses that are bound, geographically or in any other way that may hold back scalability. They like to see revenue targets projected for 3 – 5 years, and how the business will scale to have a broader (and more profitable) footprint.
  6. Clear exit – Those who invest are not going into the relationship to be there forever. They want to see how they can get their money back out, achieving a significant multiple of the funds they originally put in. Those raising capital need to outline their plans for a trade sale, MBO or PE exit for prospective investors.

Understanding the motivators for pledging or investing positions the person raising funds or capital to be able to write a good story that will resonate with their potential market, and it is this story, told well, to a large audience and with the right motivators or inducements that will lead to crowd funding success.

Older posts «