Crowdfunding for Businesses

1. Crowdfunding for Businesses Launch, Expand or Revitalize Presented By – Dennis Carpenter Director of Marketing Services, Stamats Communications Download: https://www.thrivewhere.com/crowdfunding-business/ @thrivewheredennis@thrivewhere.com

2. Disclaimer • The presenter or the organization hosting this event implies no warranty, express or implied, including warranties of merchantability and fitness for a particular purpose, or assume any legal liability for the accuracy, completeness, or usefulness of any information from this presentation

3. Getting Started - Two Basic Premises • Crowdfunding Is revolutionizing the way businesses grow. • Crowdfunding draws on all of the newer forms of marketing into a new inbound paradigm.

4. What you will learn • Definition of Crowdfunding • The problem that is being solved • Benefits of Crowdfunding • Types of Crowdfunding • A brief history and main players • Examples of success and failure • How Crowdfunding can help your business • Essential steps in launching a Crowdfunding campaign • What are the risk? • What is the ROI of Crowdfunding?

5. Defining the terms used in Crowdfunding • Crowd·fund·ing • “The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.” • Project – a cause, a business or a project that has a defined goal. Projects have - • Creators – the owner of a crowdfunding project • Backers – a person who supports a project by contributing financial support in exchange for a reward

6. The Problems Getting Solved? • Many projects don’t qualify for traditional sources of funding • Crowdfunding can overcome the “trust problem” that keeps capital out of the economy. • Project progress can be monitored • Backers can see which of their peers have participated • An idea can be tested for acceptance long before money is spent • A creator can live anywhere and still get noticed • Success is no longer just for the chosen few living in the large cities

7. Types of Crowdfunding • Reward Based: Investors receive a tangible item or service in return for their funds. (You invest in Pebble, and get a first edition watch. Pebble raised $10.3 M) • Donation Based: Contributions go towards a charitable cause. (You paid for 50 children in Africa to receive watches) • Lending Based: Investors are repaid for their investment over a period of time. (You invest in Pebble, and get your money paid back over time) • Equity Based: Investors receive a stake in the company. (If Pebble goes big, you get a percentage of the prize)

8. Benefits of Reward Based Crowdfunding • Access to capital – without giving up equity • Hedges risk - an entrepreneur can gain market validation before taking a product concept to market • Is a marketing tool – using social sharing tools and a way to introduce your brand to new backers • Provides proof of concept – if there are no backers then the idea has no support. • Allows crowdsourcing of brainstorming – via feedback • Anyone can qualify – no long bank forms • Free PR – you benefit from the buzz • Opportunity of pre-selling – a good way to gauge user reaction and analyze the market in order to decide whether to pursue or pivot on a given concept • No or low upfront cost – most platforms get paid by retaining a percentage of the funds raised

9. Shortlist of main players • Kickstarter - creative products, like an art installation, to a cool watch, to pre-selling a music album. It’s not for businesses, causes, charities, or personal financing needs. • Indiegogo - approves donation-based fundraising campaigns for most anything • GoFundMe - mostly around personal projects (medical bills, travel costs, etc) and altruistic donations to other people • Fundable - works on both reward-based and equity-based platforms • RocketHub- The majority of the projects on RocketHub are not entrepreneurial or startup related, although some exist

10. Examples of success Revitalize • Changing Hands Book Store. • Campaign name – Frank 'N Moby Build a Bookstore • https://www.indiegogo.com/projects/frank-n-moby-build-a-bookstore • $91,030 USD RAISED OF $80,000 GOAL = 114%

11. Examples of success Launch • Filmscene • Campaign name – Build a Downtown Iowa City Cinema • https://www.indiegogo.com/projects/filmscene-make-a-scene-build-a-downtown-iowa-city-cinema#home • Several PR efforts. • $91,000 USD RAISED OF $75,000 GOAL= 121%

12. Examples of hidden success Revitalize • Ashtanga Yoga of Toronto • https://www.indiegogo.com/projects/ashtanga-yoga-centre-of-toronto#home • $37,145 CAD RAISED OF $60,000 GOAL = 62% • Social network: Twitter 0, Facebook 1,776

13. Examples of failures Expand – add products • Buff Bakery – A bakery for the fitNewport Beach, CA • https://www.kickstarter.com/projects/buffbake/buff-bake-a-bakery-for-the-fit • $1,300 US RAISED OF $15,000 GOAL = 8% • Social : Twitter 0, Facebook 134, Instagram 4,834

14. Examples of failures Launch New Product • Player in My Day • https://www.kickstarter.com/projects/449139291/player-in-my-daytm-a-sporting-gear-apparel-brand • $4,015 US RAISED OF $25,000 GOAL = 16% • Social : Twitter 50, Facebook 22

15. Interview Of Kent Mihlbauer • Set goal to high • Didn’t build enough trust • Didn’t allow enough time to build social media • Hard time building enthusiasm • His product wasn’t different, no fashion uniqueness • He possibly priced to high • Essential to have a quick start 30-50% in first 48 hours • Planning and campaign will take 3-4 months • Make the campaign your full time job for 2 months • He wanted to go big or go home • Lower expectations

16. How Crowdfunding can help a business • Avoid debt • It hedges risk • It serves as a marketing focus • Activate a fan base of your best supporters or customers that has been cultivated over a long period of time • Create an email list and then an email outreach • Create and engage your social media channels • Forces you to engage your network and detail your plans for growth • Proof of concept can be verified before going to market • It provides the opportunity of pre-selling • It’s free PR

17. Tips in launching a campaign • Regardless of your crowdfunding platform, the funding goal should be one that you’re confident you can reach and exceed. • People love to back a winner.  Aim to surpass your funding goal by 100 percent in the early days of your campaign. This will help attract additional backers. • The most effective crowdfunding campaigns are those that solve a real problem

18. Essential steps in launching a campaign • Set a Realistic Goal - don’t confuse how much money you’d like to raise with how much you need • Set the Right Goal Deadline – Min 30 days • Chose the Right Crowdfunding Type • Write a Compelling Crowdfunding Pitch - Your pitch is your first chance to win – or lose a supporter • Produce a Killer Pitch Video • Offer Cool Perks That People Want • Organize Your Team • Have Your Core Supporters on Standby to Contribute • Prepare a plan for delivering the rewards offered

19. Which major platform? • Indiegogo takes 4 percent of your earnings if you reach your goal and 9 percent if you don’t. • Kickstarteris all or nothing. If you don’t reach your goal, no money is exchanged, but if you do reach your goal, you get the full amount minus 5 percent. • Personally, I don’t like to see clients "almost there" and lose it all on Kickstarter. Unless you have a committed “gap funder” in place, in case you don’t reach your funding goal, I recommend keep what you raise, but the choice is yours.

20. What are the risk? • The negative perception of your brand if your campaign fails. • If its campaign is successful, will you have enough cash to meet its stated rewards?

21. What is the ROI of Crowdfunding? • Does Crowdfunding produce sales? (Forbes study) Yes. Tremendously. 24% across all methods (rewards, debt and equity) • Does Crowdfunding create jobs? 39% of respondents hired an average of 2.2 new people • Deter follow-on investment? According to the report, it does not. 43% were in talks with institutional investors. • Every hour invested in a crowdfund campaign returned $813 *Forbes, 1/21/2014

22. Trends • CROWDFUNDING IS BECOMING SPECIALIZED • It is an opportunity to isolate and reach a very specific audience • CROWDFUNDING IS BECOMING LOCAL • Why? Because local circumstances really matter • CROWDFUNDING IS BECOMING INSTITUTIONA • Foundations, corporations and governments have a lot of experience of and need for fundraising, and now they’re starting to engage with crowdfunding.

23. In conclusion - Two things to remember • Crowdfunding is revolutionizing the way businesses grow. • Crowdfunding combines all of the newer forms of marketing into a new inbound paradigm.

24. Crowdfunding for Businesses Launch, Expand or Revitalize Dennis Carpenter Director of Marketing Services, Stamats Communications Head Thriver at Thrive Where! @thrivewhere dennis@thrivewhere.com