Crowdfunding & Crowdsourcing Primer

1. Crowdfunding & Crowdsourcing Primer Paul Dombowsky

2. Welcome Paul Dombowsky Founder and CEO – Ideavibes Founder of Fundchange (www.fundchange.com - one of Canada’s first crowdfunding sites for charities and non-profits. 2

3. What is Crowdfunding? • So many definitions … • According to Wikipedia – crowdfunding 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. Crowd funding occurs for any variety of purposes,[1] from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company, movie [2] or small business[3] or creating free software. 3

4. So what is Crowdsourcing? Defined An engagement process whereby organizations seek input from either open or closed communities of people, either homogenous or not, to contribute ideas, solutions, or support in an open process whereby the elements of creativity, competition and campaigning are reinforced through social media to come up with more powerful ideas or solutions than could be obtained through other means. Why Bother? Organizations have a difficult time engaging with their communities to strengthen their relationship and be citizen/crowd focused. Internal or external, the community has ideas that can be harnessed that come from diverse backgrounds, experiences and education. 4

5. Types of Crowdfunding 5

6. Crowdfunding Worldwide US$1.5BN 2011 –raised through crowdfunding globally 452 04/2012 – Number of Crowdfunding Platforms 6

7. Crowdfunding in Canada 7

8. Why? • There was a gap for funding ‘change’ and the market filled the need with a new channel • The gap was for a new way to fund change • Innovation - products • Creative endeavors • Startups • Charities – new channels • Reflection of the dissatisfaction with current channels for funding • Control maintained by the creators/founders • Funders aren’t looking for control – they just want to participate / belong / connect 8

9. Motivation to Fund – Not only about the payback • Rewards: • early access to music or film • First run of a product • Supporting people in their social network • Support creators and causes – personal connection • Engage and contribute to a trusting & creative community • Hyper Local Connection – support endeavors close to where you live • Making change happen in your community • Impact outside of local community • Return on investment (small % of motivating factors) 9

10. Who is your crowd? The crowd you know The crowd you don’t know Social Media Makes the Connection 10

11. Crowdfunding - What do you need? • A crowd • Business challenge / problem / question you want answered – ideas • A process and tool for engagement • Trust and commitment in your crowd to take action • Key performance indicators – what does success look like? • Proof of action – your crowd wants to see what happened 11

12. Motivations for Seeking Funding • Its not just about the money but – but that is primary. • Other motivations: • Establish Relationships • Validate ideas – endeavors • Replicate successful experience of others • Expand awareness of work through social media Crowdfunding: Why People Are Motivated to Post and Fund Projects on Crowdfunding Platforms by Elizabeth M. Gerber, Julie S. Hui, Pei-Yi Kuo at Northwestern University - 2012 12

13. Projects or Doable Asks • Easier for most people to wrap their head around a smaller project as opposed to a ‘cure’ or a ‘hospital wing’ • Examples: • Piece of medical equipment • Stream revitalization • Education program • Conference attendance • Sports equipment for a couple kids 13

14. Benefits & Challenges • It’s social – the crowd promotes projects it likes • It’s social – the crowd won’t promote projects that aren’t shareable • Success comes to those that actively build a crowd • A challenge for organizations new to social media • It’s the free market at work • It’s the free market at work • Build stickiness to the project • Need to pay attention to write-up to inspire funders 14

15. ie: Fundchange – Donation Based Focused on Charity and Non-Profit Projects Not ‘all or nothing’ – after 21 days a project can be removed Costs: $99 + hst to join includes 2 postings 3.9% processing fee 15

16. Ie: Crowdrise – Donation Based 16

17. Ie: Impact Trader – Impact Investing Impact Bonds and Stocks Goals generate Impact Points Approach is similar to traditional ‘trading account’ Complex but interesting for more sophisticated funders 17

18. Ie: Greenunite – Reward Based 18

19. ie: Rock the Post (US) – Equity/Royalty Based 19

20. Recent Survey on Crowdfunding Attitudes Ideavibes and CATA Recently carried out a survey focused on the start=up community on their attitudes towards crowdfunding. Results can be found in this infographic: http://www.ideavibes.com/pdf/Ideavibes_CATA_Infographic_hr.pdf 20

21. Integrating Crowdfunding into Your Organization • Things to keep in mind: • Crowdfunding success comes quickest to organizations that are social –media-aware and engaged. If your organization is not yet social media-enabled, it will take time and human and financial resources to do so. • Because your efforts are only as good as the crowd you are able to mobilize to your cause, it makes sense that your organization strategically manages and promotes its brand online. • Make sure your target audience is online and will give online • If you opt to post your projects on established crowdfundingsites, do your homework – be careful of the company you keep. 21

22. Making the Pitch • What are people looking for… • Projects that will have impact • Projects with a beginning – middle and end • Tell a story with what you plan for the funds • Articulate what success looks like • Video is important tool – pillar for success on Kickstarter • Show social benefit and link to past successes 22

23. Eliminate the Risk • Be open and transparent • Make yourself available for questions • Communicate progress with funders • Build confidence in your processes with regard to reporting, etc. 23

24. Will Rogers famously said that “Everybody is ignorant, just on different subjects.” One of the lessons of modern social media is that the reverse is also true: everyone is knowledgeable, just on different subjects. Social media and crowdsourcing provide unique ways to tap into that knowledge. Bittle, Haller and Kadlec – Promising Practices in Online Engagement, Australia 23

25. Engagement Spectrum The shift to the right makes for happier stakeholders and drives innovation. 25

26. Crowdsourcing – Moving Left to Right Defined An engagement process whereby organizations seek input from either open or closed communities of people, either homogenous or not, to contribute ideas, solutions, or support in an open process whereby the elements of creativity, competition and campaigning are reinforced through social media to come up with more powerful ideas or solutions than could be obtained through other means. Why Bother? Organizations have a difficult time engaging with their communities to strengthen their relationship and be citizen/crowd focused. Internal or external, the community has ideas that can be harnessed that come from diverse backgrounds, experiences and education. 26

27. Citizen Engagement for Ottawa • There are many one way conversations happening: • Blogs • Apartment 613 • TransitOttawa • Sun & The City • West Side Action • URBSite • Tea Party of Ottawa • Spacing Ottawa • Podcasts • Inner City Podcast • Spacing Podcast • Make no mistake – your citizens want to be involved in transforming the City of today to City 2.0. • Where is the engagement? Where is the innovation happening? Driven by Social Media Platforms 27

28. ONLINE ENGAGEMENT Use Cases Levels of Engagement Lifecycle Identifying problems, opportunities or future issues Collaborate & Empower (Collaboration) Consult & Involve (Consultation) Policy Consultation Inform (Information) Listen & Identify (Audience Analysis) Customer Service and Service Delivery Communication and Promotion T O O L S Land Use and Development Programs and Initiatives 28

29. Who is your crowd? CITY Engagement Targets 29

30. Where Innovation / Crowdsourcing Fits 30

31. Applications of Crowdsourcing 31

32. Innovation: Crowdsourcing vs The Survey 32

33. The Appeal • Crowdsourcing surfaces new perspectives • Invites participation from nontraditional sources • Infuses real energy into the process of generating ideas and content • Empowers people when they feel their voice is being heard • Technology can enable participation by disenfranchised (ie. PCs in libraries/shelters with citizen engagement campaigns) • Builds engagement and relationships with new audiences 33

34. Things to Watch For • Excessive lobbying and promotion • Narrow crowds product narrow results • No follow-through causes creditability hit • If you say you are generating solutions for X, communicate what happened and why • Broad ideation campaign descriptions will result in less focused results BUT too narrow will restrict creativity • Dismissing ideas that seem far fetched • Ideation often requires refinement – understanding what your crowd is saying by ‘x’ 34

35. Example 1: Open Innovation with Citizens City of Ottawa Have a Say Sustainability Campaign 35

36. Example 2: Citizen Engagement in SF • San Francisco Engage4change Citizen Engagement Program • (2 weeks) • No. of Engagements = 2252 • Referrals = 64% from Twitter • Cost = 500 ice cream cones ($1,000) • HumphrySlocombe’s Crowd= 320,000 twitter followers and Facebook Friends 36

37. Example 3: Myscouts Innovation Launched in May of 2012 Designed to move ideas for improving Scouts and the web experience from email to an open innovation platform. 37

38. Example 4: State of Washington Budget • Ideas for cutting the state budget were generated with this online campaign: • 2,000 ideas posted • 130,000 votes cast • Problems: • Ideas not implemented – reasoning? • State said some ideas did not take into account the complex relationship between Federal and State Government • Most popular idea – end the ability of retired employees to double dip – collect pension and work as a contractor. Not implemented due to political nature of issue. • Citizens left wondering – is crowdsourcing a legitimate exercise, or only for public relations? 38

39. Example 5: Development Site in NY https://popularise.com/cities/1/neighborhoods/1/projects/1 39

40. Example 6: Product Development - Branded IdeaStorm was created to give a direct voice to Dell’s customers and an avenue to have online “brainstorm” sessions to allow them to share ideas and collaborate with one another and Dell. Their goal through IdeaStorm is to hear what new products or services you’d like to see Dell develop. In almost three years, IdeaStorm has crossed the 10,000 idea mark and implemented nearly 400 ideas! 40

41. Example 7: Product Development - Inventions Quirky is an all in one product development shop for inventors. 41

42. It all starts with a Question or Problem • Needs to be: • Clear and compelling • Not leading • Allow for open innovation • Encourage participation • Allow for outliers to feel comfortable 42

43. I have a challenge • Land use determination – who drives the agenda and the conversation? • Two approaches • Opportunity driven • Innovation driven • The difference lies in where the ideas come from • From the user or the customer • From the supplier 43

44. Ideavibes Citizen Engagement Platform • Easy to set-up and deploy • Able to run multiple campaigns at once • Can run Crowdsourcing and Crowdfunding Campaigns • Build stickiness and community around those that engage (sign-in and see past votes, comments, ideas) • Hosted solution (in Canada) • Able to be implemented on existing website or set-up in new, destination site • Social Media connected • Pay per campaign model – multiple campaignscan be run at once 44

45. Resources • “The Wisdom of Crowds” – book by James Sudwecki • “Crowdsourcing” – book by Jeff Howe • Blog: crowdsourcing.org • Blog: blog.ideavibes.com 45

46. Thank you Paul Dombowsky | 613.878.1681 | paul@ideavibes.com www.ideavibes.com |blog.ideavibes.com| www.fundchange.com