A social history of crowdfunding. Many refer to crowdfunding as a “new phenomenon” (or – at worst – the “new bubble”). However, it is not as new as we may think; as a concept, it has been around for some centuries already. The novelty lies in the technologies and the mindset that are giving it a new momentum, technologies and mindset that we will consider in this chronological record of the main events leading to what we now refer to as crowdfunding. We should mention in passing both Jonathan Swift’s Irish Loan Fund, and Dr. Yunus’ project and Grameen Bank, as ancestors and pioneers of the microfinance phenomenon, each of which have histories of their own but which go beyond the scope of this blog’s subject. We will instead consider crowdfunding strictly in its connection with the web, and as a sequence of developments parallel to the growth of the social web.
Late ‘90s – 2000: Internet campaigning and Charity fundraising Mid 2000: Kiva, Microlending platforms, and Peer-to-peer (P2P) Lending. A Guide to Crowdfunding Success. Brandon Mendelson is the project coordinator for A Million High Fives, the largest electronic supply and volunteer drive in America. You can follow @BJMendelson for details. It seems as though everyone is crowdfunding or backing a crowdfunded project. Tim Ferriss, author of the popular "4 Hour Work Week", backs Litliberation, which he claims "out fundraised Stephen Colbert by a 3:1 margin", and you can't go an hour on Twitter without hearing about the latest Twitter fundraising initiative.
But until now, there has not been a clear guide on how to get started, and so here's what you need to know before diving into a crowdfunding program (and how to succeed.) What's this ... crowdfunding you speak of? Ever borrow money from your friends? Take a walk on the legal side Joshua King, VP of Business Development and General Counsel at Avvo has great news for individuals looking to get started: So what should your first step be? Defining success through crowdfunding Ever read "Made To Stick"? Crowdfunding. Intermediary Platforms Research & Development platforms Innocentive – open innovation problem solvingIdeaConnection – idea marketplace and problem solvingYet2.com – IP market placePRESANS (beta) – connect and solve R&D problemsHypios – online problem solvingInnoget – research intermediary platformOne Billion Minds – online (social) challengesNineSigma – technology problem solvingIdeaken – collaborative crowdsourcingInnovation-community.de – Community of innovators & creators.
Marketing, Design & Idea platforms Collective Intelligence & Prediction platforms Lumenogic – collective intelligence marketsUshahidi – crowdsourcing crisis informationKaggle – data mining and forecastingWe Are Hunted – the online music chartGoogle Image Labeler – crowdsourced image labeling HR & Freelancers platforms TopCoder – competition-based software crowdsourcingSpudaroo – crowdsourcing copywritingClickworker – small online task solvingAmazon Mechanical Turk – low-cost crowdsourcing Open innovation software 478Shares.
Fundraising seminars & training from The Fundraising Coach, Marc A. Pitman. Tips and Tricks for a Successful Crowdfunding Campaign. Components Of A Good Crowdfunding Campaign. Like everything, there is no secret recipe for a successful crowdfunding campaign. From our previous posts it should be clear that there are lots of options, motivations, possibilities and tools behind every single crowdfunding project and similarly there is no single approach to creating a successful campaign. However, we have used our experience and analysis of crowdfunding to come up with a bit of general advice that should be useful to anyone wishing to start a crowdfunding campaign. 1. Clarify objectives, targets and time frame It might sound obvious but it is important to clarify early on exactly what it is that you are seeking to achieve and share it amongst the team tasked with delivering the project.
This is an important step because it should encourage you to come to an agreed position and also help bound the scope of your aims. If you are planning on selling equity, establish how much and what value it is, and get the right legal advice before proceeding. 2. 3. 4. 5. 6. 7. 8. Blog Post - The 3Cs of Crowdfunding. Posted: Mon, 16 January 2012 by Michelle Create: You’ve got an idea. It might be for a startup, a student business, a new product, a community or social venture, but you have an idea. You created that idea. To turn it into reality you need to create a compelling campaign, to tell your story in such an engaging way the people not only want to help you, but they will ask their friends and family to help you too. Be creative with your project, create a must-see video (it doesn’t have to cost a lot of money), something that people will watch and share, and create a series of must-have rewards, from a spectacular public thank you to an all-singing all-dancing first off the line product that they helped fund.
Look at every aspect of your crowdfunding campaign and ask yourself if it’s the most creative, most exciting, most rewarding, most inspirational, most desirable, most memorable you can possibly make it. How to Crowdfund to Raise Money. Crowdfunding Bible: Top Book on Crowd Funding, Kickstarter. 10 Secrets of Successful Crowdfunding - From Scott Steinberg. With the recent passage of the JOBS Act, crowdfunding is about to get even hotter. Serial tech entrepreneur, speaker and consultant Scott Steinberg, author of The Crowdfunding Bible, explains how to make crowdfunding work for your startup.
Steinberg, CEO of TechSavvy Global, answered ReadWriteWeb’s most pressing questions with these 10 insights into successful crowdsourcing: ReadWriteWeb: Are particular types of tech startups better suited for crowdfunding than others, and why is that so? Scott Steinberg: It’s best for [startups] with a strong consumer focus that can easily communicate their value proposition. Crowdfunding works for creative projects - apps, consumer products, software - that resonate with average, everyday people. What crowdfunding is not typically best for is something very technological in nature or B-to-B oriented. RWW: How do you know whether crowdfunding is a better approach for your startup than seeking traditional forms of financing?
SS: Talk to your backers. 6 Mistakes We Made In Our Crowdfunding Campaign. Guest post by Erik Peterson (@hifidelics) of Hifidelics from Flexi of the Month. A lot of you have been curious as to why we were unable to reach our funding goal in order to begin our flexi-disc singles club. Admittedly, I wasn’t 100% sure either, but after some research and 20/20 hindsight I believe I have found the culprits. Actually it was I who was the culprit, but looking back I can see the mistakes that were made. In sharing this with you my hopes that you can use this information for your own campaign. We didn’t start with a pitch video: Actually, I did make/publish a pitch video; however it wasn’t until approximately two months after the campaign began. I’m a little ashamed that this wasn’t one of the first tasks that was completed. Overall this project was a great learning experience, although it was a huge bummer that we weren’t able to get it off the ground.
Many Kickstarter-Funded Films Played at the Sundance Film Festival. Chris Pizzello/Associated PressA poster for the documentary “Ai Weiwei: Never Sorry,” which was among 17 Kickstarter-sponsored films that played at Sundance. One night last week there was a late-night party at Sundance — one of many — this one hosted by an outfit that had helped finance 10 percent of the festival’s slate, 17 movies in all, including four that were in competition. Yancey Strickler, one of the founders of Kickstarter, made the rounds at the party, slapping filmmakers on the back and entertaining questions from journalists about some of the company’s films. Funny thing about that. Kickstarter didn’t greenlight the movies; the people did.
Kickstarter, a three-year-old Web site that hosts crowd-sourced fund-raising for creative projects, has become a significant and now very visible player in independent film, in part because cinematic hopefuls are able to take their case right to the people. “I think the all-or-nothing formula is part of what makes it work,” Mr. Mr. Crowdfunding Site Indiegogo Closes $15 million Series A Funding Round. Crowdfunding Set to Explode with Passage of Entrepreneur Access to Capital Act. Crowdfund in 30 Seconds: The New Wave “Elevator Pitch” Over the past 5+ years, ambitioning creatives and entrepreneurs have sought funding through a historically different platform. In 2008, TimeMagazine titled the method ‘crowdfunding.’ Being that it’s not a new development, floods of campaigners have cast their nets widely and indiscriminately. Unfortunately this creates glut, distracting backers from finding serious projects worthy of contribution.
So how does one grab attention quickly and effectively? It happens in the first 30 seconds. Kissmetrics presents an infographic detailing the importance of a well-crafted video. The first 30 seconds of any video set the tone and answer the question, “Why should I keep watching this? ‘Net surfers lack the patience for long, drawn out introductions and pitch feeds. 1. Some of the crowdfunding sites out there are: Kickstarter, IndieGoGo, Kiva, Peerbackers, ChipIn, Sellaband, and Pledgemusic, to name a few. 2. 3. The newness of the platform does not negate the need for quality and detail.
Sen. Crowdfunding Nation: The Rise and Evolution of Collaborative Funding. When Kickstarter was launched in 2009, it seemed like a unlikely proposition: fund your passion projects with money donated by eager supporters? Get strangers to fund your dreams with only an idea and a good pitch? While there were precedents, such as the microfinance service Kiva, Kickstarter projects thrived on the goodwill of the crowd while the world economy was in the midst of the global recession. Yancey Strickler, one of Kickstarter’s founders, had his own reservations before starting the company, noting in a New York Times interview that his initial response to co-founder Perry Chen was, “I’m not so sure about this...If you let people vote for what they want — that’s ‘American Idol,’ that doesn’t produce great art.”
Yet in the past two years, crowdfunding has exploded, thanks in part to the Kickstarter’s “all-or-nothing” model for funding. The momentum shows no signs of letting up. Kickstarter is the most visible of all the services, but far from the only one. Features: How-tos: The DeanBeat: Crowd-funding gives hope to mid-size game developers. Above: Brian Fargo Double Fine Productions turned video game funding practices upside down last week when it raised more than $1.75 million through the crowd-funding site Kickstarter in record time. That money will go toward the development of a new adventure game that would otherwise never have been made. Lack of funding has been putting a squeeze on a lot of mid-sized game development companies, but crowd-funding might turn that trend around.
“This could bring a wonderful dynamic change to our industry,” said Brian Fargo, chief executive of InXile Entertainment, in an interview. “It is a very exciting time to be a developer again.” Fargo has been making games since the 1980s, first at Electronic Arts, then at his own company Interplay Productions, and now at InXile. He owns a variety of properties that are beloved by gamers who grew up with titles such as The Bard’s Tale. “In almost every single interview I do, the game press asks me if I’ll ever do Wasteland again,” Fargo said. Crowdfunding: The Train to the Future Is Leaving—Get on Board. Tim Rowe3/12/12 It has been a whirlwind last few days in the crowd-funding world. For those of you who have not yet tuned in to this, there is legislation afoot, backed by the President and (so far) the House, that would enable, in effect, mini- IPOs as a way to fund startups.
Forget everything you know about the rules of equity financing for seed-stage startups. What’s coming: So long as you raise less than $1M, and individual investors don’t put in more than a small amount (somewhere between $1,000 and $10,000, depending on whose bill you are talking about), then you are A OK to go raise the money. You can do a general solicitation (e.g. Facebook blast). Most proposals call for the use of an intermediary organization, which would vet the startup to mitigate the chances of fraud. Would this really work? Some view crowd-funding as a great alternative to angel or VC capital, at least at the start, for new high- growth tech startups. But how big could this really be?
A social history of crowdfunding. Is CrowdFunding A Boon, Or A Disaster? Blog Archive The crowdfunding bubble of 2013. When President Obama signed the Jumpstart Our Business Startups (JOBS) Act on April 5th, the era of crowdfunding began as individual investors everywhere were promised an opportunity to gain access to venture investments previously limited to institutions, funds, and so-called qualified investors. Come January 1, 2013, we’re told, anyone can be a venture capitalist, but hardly any of these new VCs will know what they are doing. Spurred by the new law we will shortly see a surge of crowdfunding startups giving for the first time unqualified investors access to venture capital markets. And it will be a quagmire. Like disk drive startups in the 1980s each of these new crowdfunds will project 15 percent market share.
Ninety-five percent of these funds will fail from over-crowding, under-funding, mismanagement, lack of deal flow, being too late, being too early, or just plain bad luck. The next six months are going to be very busy in Washington, DC. Next, how not to do crowdfunding. Comparison of Crowdfunding Websites. Will social funding change small business finance? - Crowdfunding for small businesses. Rory Earley, CEO of Capital for Enterprise, investigates the emergence of a social funding marketplace for small companies.
Rory Earley, CEO of Capital for Enterprise, investigates the emergence of a social funding marketplace for small companies. One fascinating consequence of the ongoing financial crisis is the emergence of a new breed of finance providers - crowdfunders and/or peer-to-peer lenders and investors. They seem to be growing rapidly and are generating much press coverage as alternatives to banks and venture capital investors. “Crowdfunding”, where lots of individuals come together to finance a project, seems to have originated in the creative and charitable sectors and was largely philanthropic. The concept of crowdfunding If we ignore, for our purposes, the charitable sector, the theory of crowdfunding and peer-to-peer lending is pretty simple.
See also: Funding boost for small business Like everything in life however, it may not be quite that simple. Raising capital online: The new thundering herd. Doing Equity Crowd Funding Right. Kickstarter vs NEA with Real Numbers. Kickstarter vs NEA with Real Numbers Feb 27, 2012 Clay Johnson Kickstarter by the Numbers Yancey posted a response to my post about the NEA and Kickstarter, and in it he states my numbers are inaccurate.
First: they're not inaccurate for what it says they're representing. The design category does represent the largest portion of the top ten highly funded projects on Kickstarter.com. Yancey has the data though, of course. In the comments of the last post, Yancey stated that 70% of Kickstarter's disbursements happened last year. Also: while Yancey's data is clearly more accurate than mine, I wonder if it is representative. Things like the Elevation Dock for 1.5 Million dollars or the Hidden Radio & Bluetooth Speaker are not only new -- they represent people purchasing an item before the item's being released. The site's more popular.
That's the point: these things are not the same, and that things change. Sidenote: There's other interesting things in Yancey's numbers to share.