More Related Content
Similar to Introduction to Crowd funding (20)
Introduction to Crowd funding
- 1. Crowdfunding Presented By :Israel Fitsum Mukhtar Saeed
- 3. What is Crowdfunding? ➔ Crowdfunding is a method of raising money online through the support of many different donors. ➔ Crowdfunding is often the platform of choice for small business start-ups, artistic projects and charitable endeavors looking to reach a global audience.
- 5. Crowdfunding is converting social capital into actual capital through the internet. There are more than 450 crowdfunding platforms currently in existence and a World Bank report stating that revenue from this method could reach $96 billion by 2025. Many people (“the crowd”) contribute or invest a relatively small amount of money ($10, $100, $500, …) that collectively totals large sums.
- 6. This funding method offers big benefits to Startups that can raise capital while expanding their base of supporters who now have a vested interest in the company’s success. They may also benefit from the feedback of early fans to refine solutions, strategy or messaging.
- 7. Those who contribute or invest in these campaigns may also see big benefits while getting to support a great cause or invest early in an idea they believe will make it big. (Ever wished you could have invested in Facebook when it was a Startup? We have, too.)
- 8. Crowdfunding History ● Crowdfunding has a long history with several roots. ● Books have been crowdfunded for centuries: authors and publishers would advertise book projects in prenumeration or subscription schemes. ● The book would be written and published if enough subscribers signaled their readiness to buy the book once it was out.
- 9. Crowdfunding and the Internet ● Crowdfunding on the internet first gained popular and mainstream use in the arts and music communities. ● The first noteworthy instance of online crowdfunding in the music industry was in 1997, when fans of the British rock band Marillion raised US$60,000 in donations by means of an Internet campaign to underwrite an entire U.S. tour.
- 11. Successful campaigns take at least 3 months of pre-launching activities before they launch their project. There are 9 stages of crowdfunding : ★ Business Planning ★ Intellectual Property ★ Social Media ★ Public Relations ★ Campaign Strategy ★ Networking ★ Team Building ★ Website Development ★ Profile & Video
- 12. Types of crowdfunding platforms There are four (4) types of crowdfunding platforms that are generally categorized by what the backers get in return for their money. 1. Reward-based crowdfunding - in return for their money backers will get some sort of reward.
- 13. ... It could be a book with a personal dedication in a crowdfunding campaign to publish a book or tickets to the premiere in a crowdfunding campaign for a movie production. Kickstarter, Patreon (and Patreon alternatives) and Indiegogo are well-known reward-based crowdfunding platforms.
- 15. ❏ Kickstarter is one of the biggest names when it comes to crowdfunding, known for helping tech and creative entrepreneurs fund their projects before getting a loan or raising money for venture capital. The company has raised over $5 billion with more than 189,000 (as per October 2020) projects funded since its inception in 2009.
- 16. 2. Donation-based crowdfunding - people who back these kinds of campaigns are more donors than backers. They do it for the cause, to raise money for a sick person, or to save animals. This is crowdfunding for nonprofits. Most donation-based campaigns are flexible campaigns. You’ll find such campaigns on platforms like GoFundMe and Indiegogo which also offers the flexible model.
- 18. GoFundMe a crowdfunding platform designed for individuals and personal causes. No all or nothing requirement and reasonable fees. This site is a good option if your fundraiser goes towards a service-based cause, such as medical needs or emergency relief.
- 19. 3. Equity-based crowdfunding - this type of crowdfunding enables businesses to raise money from the public in return for equity in the company. The backers get shares. Republic, Seedinvest, Crowdcube, and Wefunder are a few examples of such platforms.
- 21. Wefunder Wefunder is one of the few equity crowdfunding platforms that open up the world of investing to anybody seeking to invest in a startup company. Wefunder collects 7.5% of what you raise if your campaign is successful.
- 22. 4. Lending-based (Debt) crowdfunding - this type of crowdfunding is different from all the above. People can get loans from the public instead of banks in return for interest. LendingClub is an example of such platforms.
- 24. LendingClub LendingClub is a giant in the peer-to-peer lending community. Since it was founded in 2007, it has issued $50 billion in loans and connected more than three million borrowers with investors. LendingClub is reportedly open to working with borrowers who have fair credit scores (starting at 600 and up).
- 25. So to recap… 1. In rewards-based crowdfunding, backers give a small amount of money in exchange for a reward. 2. In donation-based crowdfunding, donors donate a small amount of money in exchange for gratitude and the feeling of supporting a cause they believe in. 3. In equity crowdfunding, investors invest large amounts of money in a company in exchange for a small piece of equity in the company. 4. And in debt crowdfunding, lenders make a loan with the expectation to make back their principal plus interest.
- 27. Advantages and disadvantages of crowdfunding There are a number of factors that you might want to consider. Advantages ● it can be a fast way to raise finance with no upfront fees ● pitching a project or business through the online platform can be a valuable form of marketing and result in media attention
- 28. ● Sharing your idea, you can often get feedback and expert guidance on how to improve it. ● It is a good way to test the public's reaction to your product/idea - if people are keen to invest it is a good sign that the your idea could work well in the market ● investors can track your progress - this may help you to promote your brand through their networks
- 29. ● ideas that may not appeal to conventional investors can often get financed more easily ● your investors can often become your most loyal customers through the financing process ● it's an alternative finance option if you have struggled to get bank loans or traditional funding
- 30. Disadvantages ● it will not necessarily be an easier process to go through compared to the more traditional ways of raising finance ● when you are on your chosen platform, you need to do a lot of work in building up interest before the project launches - significant resources (money and/or time) may be required
- 31. ● if you don't reach your funding target, any finance that has been pledged will usually be returned to your investors and you will receive nothing ● failed projects risk damage to the reputation of your business and people who have pledged money to you
- 32. ● if you haven't protected your business idea with a patent or copyright, someone may see it on a crowdfunding site and steal your concept ● getting the rewards or returns wrong can mean giving away too much of the business to investors