Category: Commercial

Crowd Funding – The Tipping Point to Increase the Chances for Successful Fund Raising

iPledg - Logo - Low-ResolutionCurrently, the international statistics for successfully executed crowd funding campaigns on “all or nothing” sites sits at around 45%. Should a funding campaign fall short of the target, the pledges merely dissolve, and the project creator is then left to ponder where they went wrong, and perhaps have another go with greater effort, better rewards, or a more realistic target. The implementation of the “tipping point” by progressive crowd funding platforms gives project creators a greater chance to get it right the first time, by offering an alternative, more modest target, and giving themselves a greater chance of success.

“All or nothing” has proven to be the fairest format for crowd funding, as project supporters are offered the comfort of the project actually going ahead due to the minimum funding requirement having been met. Sites that offer “get whatever’s pledged” seem to attract negative feedback from project supporters who (knowingly) pledge money to a campaign, but are bound to go through with their pledge despite the target having fallen well short and the project having no reasonable way of proceeding in any format. The question remains – “what happens to their money?” Does it end up just being a kind donation to the project creator who applies these funds to a totally different cause (or even just spending on themselves)? The “all or nothing” model ensures that the money transacts only when the project can proceed in some format, giving project supporters a sense that their pledge is going towards the project for which it was intended.

But project creators are ambitious group. Most have visions of grandeur which must be tempered. Sure, it is wonderful to think big and to dream, but reality and sensibility must prevail. The introduction of a tipping point into campaigns allows project creators to span both – the ambitious target, as well as the more moderate and realistic expectation. Let’s use the example of a project creator wanting to build a most magnificent statue. In their grand view, they see that it must be built out of gold, and the funding target to do so might be $10,000. If they meet or exceed the target, then all is good and the gold statue comes to life. If they fall short, the project does not happen in any way. By introducing a tipping point of 30%, the default position may be to build the statue, but out of something less extravagant like brass rather than gold. OK, the statue may not gleam in the sun as much, but at least the project supporters are still able to support the project into life in some format. In this case a tipping point of 30% or $3,000 means that only 30% of the main $10,000 target needs to be reached and the project creator will see their passion funded in some form.

The tipping point provides a great reality check, allowing project creators and their dreams to truly be judged (and supported) by the public. It is a true form of the democratisation of funding, with the public deciding whether they believe in and want the project to happen at the full target, or if they feel that the lesser, more modest default position is sufficient. The project creator receives the ultimate in feedback, underwritten by the pledges of the project supporters who will tell him whether his initial plans are reasonable or a more realistic target is preferred.

If there was any doubt as to whether a tipping point increases the project creators chance of success, one only has to look as far as iPledg for proof. Since introducing the tipping point concept to their crowd funding platform, iPledg has more than tripled the rate of successful campaigns. The feedback from project creators is that it gives them a second bite of the cherry, and reinforces that the project may need to be scaled down without compromising the result or integrity. Overall, the tipping point concept has been well received.

Posted on August 14, 2013 By iPledg With 0 comments

Crowd Funding – Supporting Community Consciousness

iPledg - Logo - Low-ResolutionIn our travels, we often find terrific community programs that have been halted, primarily for the common reason of lack of funds. Despite passion and the greatest of intentions, community programs often don’t have the legs (financially) to see through the work they were set up to do. Crowd funding, if properly embraced, now gives community programs the chance to not only raise the required funding to undertake projects and continue providing the services they offer, but to engage the very communities they serve.

The types of community projects to which crowd funding can add benefit are endless. There are the programs aimed to help youth, the aged, the homeless, animals, sporting clubs, and environmental causes. Projects for these types of causes are flourishing as the economy tightens and the need for community assistance increases. Governments are increasingly under resourced and underfunded to fully support the sectors of the community that truly require their assistance. In addition, there may be political implications for supporting one cause over another, so governments are tending to err on the side of caution, and ironically opt to focus their budgets into areas other than community service (I say “ironically” as it was the community who voted them into government in the first place!). It is falling back into the hands of the community themselves to implement and fund the necessary activities required for a healthy and balanced society.

Community projects are never short of fans or supporters, and those who can pledge their support to a campaign. Many will make their pledge based around the benefit derived by the outcome of good community projects. Others need some further inducement to tender their cash toward such campaigns. It is in putting these rewards together that community projects can further engage with their “crowd”. Supportive businesses can offer to project owners some of the rewards that can be offered as incentives for people to pledge support to a campaign. In doing so, project owners are able to leverage greater returns than the actual cost of contribution (that is, the amount pledged is far greater than the cost to the business to donate the reward). In addition there are the underlying economic benefits to the community as businesses contribute rewards to a campaign – local businesses are promoted, money is kept within the community, the local economy is boosted, and each addition to local business benefits local employment in some way.

But it is in the area of spreading the word that the people really start to come together. Communities start to embrace a feeling of oneness as a community-based campaign can bring people together. A sense of ownership and of localised benefit can really create “buy in’, and get the word spreading quite quickly. Communities start to work together and get quite creative in publicising a campaign. Local media supporting local people tend to get involved quickly to showcase positive action by local residents, and help build initial momentum by regularly promoting the benefits to locals that the project will deliver. This creates a groundswell, a movement, that eventually gathers momentum and a life of its own, making success almost guaranteed.

Posted on August 7, 2013 By iPledg With 0 comments

Crowd Funding – The Tricks of the Trade

iPledg - Logo - Low-ResolutionLast week, one project raised over $3mil in its first twenty four hours. This raises the question as to why some projects succeed, exceeding their targets by many multiples, while others don’t get off the ground. With 21% of projects not raising a single cent, the question must be asked as to the keys to success, and where aspiring project creators can get the information they need to make their projects fly. Some of the more supportive platforms are now embarking on workshops to educate users of crowd funding, and it seems the knowledge is making a difference.

It is one of the world’s great wonders why, despite being the fastest growing form of e-commerce on the planet, the majority of people have still not heard of crowd funding. There remains a job to educate them of its very existence, as well as the benefits that it can offer to their creative, commercial, charitable, and community projects. Many people are still unaware of crowd funding and how it has emerged, where it is headed, how it works, and the way it can be used to finance their initiatives.

Once people are made aware of the existence of crowd funding, they feel as if a whole new dimension has  opened up to them, finding a new way of getting funding that breaks with conventional thinking of taking on loans or surrendering equity in their idea or organisation. What needs to be done before a campaign begins, how do I put together the perfect campaign, and how do I get the word out there are the typically asked questions of aspiring project creators. They need to know what makes an engaging project description, how to shoot a video that will captivate prospective pledgers, and how to put together rewards that will entice people to part with their hard earned cash.

Some of the more astute crowd funding platforms as well as those close to the inner circle of the industry have started to conduct crowd funding seminars and workshops in which those who are curious about the sector can learn more about this wonderful art form. Sites like iPledg are conducting day-long workshops in which delegates will learn all about crowd funding for the first half of the day, and then all about how to make a campaign really fly in the afternoon “Crowd Funding Toolbox” session. (Click here for more details). This travelling road show aims to educate as many people as possible about crowd funding, and does so in a very interactive, hands on and personal manner.

But for those in remote areas, those that are unable to get to the venues where workshops are conducted, and those who cannot work with the scheduled timeframes, many crowd funding sites are offering regular webinars, further using technology to teach about other technologies like crowd funding. Whilst not as personal as a workshop, these webinars allow people to learn about crowd funding at times that are more flexible, and with the comfort of not having to leave home.

And for those that are time poor, or need to know it all now (and cannot wait for a workshop or webinar) there is a lot of good information posted on the internet, explaining in everyday terms all about crowd funding, how to plan a project, how to post a project, and how to get the best results for a campaign. Some of the better sites will also take into consideration the perspective of the project supporter, and have guides on how best to pledge support for a campaign.

With all the information available on crowd funding, what it is and how to make it work for you, we will continue to see the massive growth of the sector, and increasing successes for those who embark on raising their required cash through crowd funding.

 

Posted on August 7, 2013 By iPledg With 0 comments

Crowd Funding – Investment Crowd Funding Takes a Significant Move Forward

iPledg - Logo - Low-ResolutionFor most of 2012, the international crowd funding community had their eyes focused on the USA as President Obama signed the JOBs act, and lit the fuse which heralded a change to conventional funding. The law makers and regulators were energized into activity to have the parameters ready for a brave new world that was to come into being from the New Year. But January 1 came and went without the structure being ready, and since then investment crowd funding has seemingly marked time. This all then changed on July 10 with the lifting of the general solicitation ban.

The lifting of the ban will allow companies, hedge funds, and other asset managers to advertise private security offerings to pre-qualified accredited investors – something that had (until now) not been lawful in the USA. The rule still needs to pass through the Federal Register to become law, and this historically takes 60 days, but many say this is just a formality to adapt the wording of the law to fit the Federal Register. With this in mind, general solicitation should be allowed from mid September onward.

The primary consideration since the JOBs Act was signed in April 2012 was to protect the prospective investors from fraudulent activity. In an attempt to bolster the framework set up by the SEC over the past year since they started putting together the laws around crowd funding, they ruled on two other items at the same time as lifting the general solicitation ban:-

  • The “bad actor” rule which disqualifies securities offerings involving “felons and other ‘bad actors’.
  • The second aims to change the current proposal for issuers to lodge details of their offering (Form D) with the SEC after they first sell shares, to now requiring them to lodge these details 15 days in advance of advertising such shares.

The issues around Form D have seen much debate around adding further complexity and timeframe versus increased levels of probity and consumer protection. The issue is more for those requiring seed capital rather than those in subsequent rounds of fund raising, and will remain the biggest discussion point during the next 60 days.

In the interim, accredited investors are starting to marshal behind the starting blocks. At this stage, accredited investors need to satisfy the following criteria:-

  • They must be a US resident
  • They can only commit a maximum of 5% of their annual income to a (maximum of $2,000) to crowd fund investing projects if their annual income is under $100,000, or 10% of their annual income (up to a maximum of $100,000) if their income / nett worth is greater than $100,000
    • Their investments do not have to be apportioned to one singular investment, and can be spread across a number of ventures

This new statute does not take over from the previous rule under which private fund managers previously offered private fund interests. The previous regulations allowed private fund managers to continue to refrain from a general solicitation and issue private fund interests to an unlimited number of accredited investors and no more than 35 “sophisticated” non-accredited investors. Moving forward, fund managers will need to nominate Form D as to under which rule they will be making their offering.

By employing a combination of the old rule and the new iteration, it is hoped to open up investment crowd funding to a vast number of accredited investors without affecting the essence of the whole concept by removing the crowd from the equation.

In addition to ensuring that investors meet the accreditation criteria, fund managers need to ensure compliance in the following key areas:

  • Before engaging in a general solicitation, private fund managers should consider any  Commodities Futures Trading Commission (CFTC) Exemptions
  • Despite the new regulations in the US, certain foreign countries may consider a general solicitation conducted within or from the United States (including information on a private fund manager’s unrestricted website) to be in violation of their private placement regulations.
  • Compliance to The SEC’s current and proposed amendments to Regulation D and Form D, requiring private fund managers offering private fund interests under New Rule 506(c) to, among other things, (i) file a Form D no later than 15 days prior to the commencement of the offering, (ii) include additional disclosures in the private fund’s general solicitation materials and (iii) submit the private fund’s general solicitation materials to the SEC for review.
  • While new federal rules are being established, consideration should be given to state legislatures or securities authorities who may amend their applicable statutes and rules in order to address state-specific investor protection concerns.
  • Private fund managers must take “reasonable steps” to verify the accredited investor status of each investor and generally will not be able to rely solely on the representations made by an investor in its subscription documents.

The July 10 lifting of the general solicitation ban represents a major step forward to democratizing finance for entrepreneurs in the United States. Not only everyone in the USA but everyone involved in the world of crowd funding will be holding their breath for the next 60 days as we await the official green light enabling investment crowd funding to get underway in the world’s biggest economy.

Posted on July 21, 2013 By iPledg With 0 comments

Crowd Funding – The Key for Local Governments to Unlock Funding.

final logo new small-01When the government of the City of Rotterdam turned to crowd funding to finance their wooden walkway, the campaign was not only about a physical bridge linking the city, but a bridge between a conventional problem facing governments and an innovative way of thinking. Initiated to raise over €400,000 by offering residents and businesses the chance by one of 17,000 planks, the success of this project became the template for Rotterdam to fund many civil-minded projects, as well as an example to local governments everywhere as to how crowd funding can offer a much needed solution to their fiscal woes.

Local governments are themselves governed and funded by state and federal governments. They too are finding that the funding pipeline is no longer flowing as freely as in previous times, putting the onus back on local governments to better balance the books, and to self finance. This is not such a simple exercise in a time when constituents are struggling financially themselves, so taxing more heavily is not the answer. Stopping the implementation of new civil-natured projects is not a solution, and the demands of the communities they serve do not dry up at the same rate that funding does.

Undeterred by a lack of funding, the City of Rotterdam not only succeeded in crowd funding their “Luchtsingel footbridge” project, they set up crowd funding as the vehicle that would fund many of their civil project such as rooftop gardens, playgrounds, and an array of beautification, community, aid, and environmental programs. Governments around the world then started to adopt this manner of financing, some offering to match funds pledged by the community, thus leveraging government finances whilst allowing the community to determine which projects would proceed and in what manner.

Crowd funding undertaken by local councils is not simply a tip jar for governments, but a way to put the decisions back to the people. It is becoming a true democratisation of funding whereby people vote with their money. In times when governments are struggling to meet the funding needs of the local community, crowd funding allows local residents and businesses to really have a say in what projects they want to proceed. Put simply, the crowd funding campaigns that receive the most support are the ones that proceed, and those that receive a lack of support by way of pledges are the ones that they leave on the back burner.

At a time when trust in governments is at an all time low, crowd funding allows smart governments a chance to engage and build trust. Crowd funding allows for clear and transparent fund raising and allocation of spending through true democratisation of funding.

And with the “tipping point” format such as that offered by iPledg, constituents decide how far projects will be funded and in what manner the project will be delivered. For example, the local government can look to run a campaign with a funding target of $100,000 for beach restoration, including beautification and the establishment of parklands, but set a tipping point of 30% which sees just the bare restoration work without the “bells and whistles”. If community pledged funds reach $30,000, the campaign is then “live”. If the campaign only raises $30,000, then the people have spoken and the basic restoration work goes ahead. If they are totally passionate about getting the project delivered in full, they will drive the campaign, and the $100,000 will surely be reached for the full project to be implemented.

The motivators for people to pledge come in various forms. Some are simply driven by a passion to see the project implemented and the outcome delivered. If we speak of the beach restoration project, those who want to see their beaches preserved will pledge their support simply to ensure that the place where they enjoy their free time is cared for. Others will be motivated by a “reward”, whether that be to have their name immortalised in some way (like they did in Rotterdam where the government offered personalised engraved planks in the walkway for each person or business who pledged), or to receive rewards that may be offered by local businesses. Such rewards not only get people and corporates pledging, but also serve to stimulate the economy – a further win for local government.

Crowd funding offers astute governments a real chance to not only stretch their coffers, but to better engage and build trust with their constituents. It becomes a vehicle to give the power back to the people they serve, and who put them there in the first place. And correctly implemented, crowd funding can serve to stimulate local economies. It is no wonder that crowd funding is being considered by more governments at all levels around the world, as it takes the focus and pressure off them and their declining budgets, and allows for more sustainable funding channels.

Posted on July 17, 2013 By iPledg With 0 comments

Crowd Funding – A Self Perpetuating Prophecy

final logo new small-01When Ryan Wardell set up crowd funding platform, Project Powerup, he demonstrated the proof was definitely in the pudding by using his own crowd funding platform to raise the funding required to complete his platform. Whilst it sounds like a loop, Ryan not only raised the bridge funding on his own platform to take it to Beta version, he proved that crowd funding platforms can initiate fund raising themselves to build on the greater good. Today, the opportunity also exists to not only look inward, but to for platform operators to use their own platform for the greater community good.

iPledg, leading broad based crowd funding platform assisting those with creative, commercial, charitable and community projects are now following suit by using their own platform to deliver greater benefit to the community. The owners of iPledg are now not only platform operators but project creators as they and their team initiate projects aimed to deliver a benefit to the broader community. Initially, the projects will be low-level targets, aimed at bringing their crowd funding workshops to cities across Australia. Not only will these projects cover the out-of-pocket expenses in conducting the workshops, they will be (for many) the first time they get a taste of the whole exercise of crowd funding.

The format of these campaigns is simple. The funding target will be just a few hundred dollars to cover the cost of venue, teas and coffees, and some nibblies for attendees. Prospective project supporters will be invited to pledge their support in return for a ticket to either the morning session (all about crowd funding) or the afternoon session (the Crowd Funding Toolbox, aimed at teaching attendees how to make their campaigns really sing!). As an added sweetener, project supporters can make a pledge that allows them to come to both sessions at an even further discounted rate.

This is the first foray into iPledg utilising their own platform to bring benefit to the community. The next step will be to periodically choose one cause and run a project for the benefit of that charity or community initiative. iPledg will run it as one of their own, and engage the broader iPledg community, their databases and networks to benefit a particular person or institution who will receive the funds raised.

This then becomes the first building blacks of the soon-to-be-commenced “iPledg Foundation”. Touted for launch early in 2014, iPledg Foundation will see reinvestment of company revenues into supporting artistic, business, charitable and community projects to give even more people the ability to fund their passion.

Given the recent rise in the number of crowd funding platforms over the past year, the potential exists for this form of e-commerce to really demonstrate its true intention when it comes to being a tool to build better communities. With over 500 platforms globally, and over $6billion dollars projected to be raised by platforms this year, surely there would be a considerable impact to communities globally if platform owners not only reinvested their revenue into assisting those in need, but to use their platforms and their skills to lead aid initiatives in some form. Perhaps this is the challenge that awaits platform owners in the months and years to come.

Posted on July 7, 2013 By iPledg With 0 comments

Crowd Funding – Harmonising With Musicians

final logo new small-01Crowd Funding is successfully being used for artistic, commercial, charitable and community projects across the globe. Whilst crowd funding is universally suitable for those with projects who wish to raise money from their family, friends, fans and beyond, it seems the musicians are a group that best resonates with crowd funding and have repeatedly engaged with their audiences to raise the funds they need to initiate the projects that represent their art.

Musicians nearly always have projects that are well defined and easily appreciated by their loyal fan base. This makes crowd funding easy as there is an understanding between the intent of the artist and their crowd. If it is to buy new equipment, to record their music, to go on tour, print t-shirts, or to undertake a promotional campaign, the project is usually simple to convey and easy to understand. Unlike projects that are initiated by inventors who dream up new-to-world concepts, most of the projects that musicians undertake have been done before in some similar format or another. This makes it easy for the crowd to connect, and to quickly embrace the initiative being undertaken.

Established musicians will have a fan base of some sort. This fan base makes for the beginnings of the musician’s “crowd” and gives a crowd funding campaign a good starting point when it comes to the “first followers” – those who not only make the first cash pledges, but those who assist the campaign by spreading the word to the next level of followers beyond that known immediately by the musician themselves. And the fact that a musician is used to getting up in front of crowds makes it easier for them to convey their message and let the world know of their campaign. By simply grabbing the “mic” between songs, or making an announcement between sets, musicians are able to let their audience know about their campaign, and given that the audience changes with each performance, the “reach” can be quite broad and the results quite quick.

People pledge their support for one or more of 4 key reasons. They know and like you, they are passionate about the project and outcome, they are after one of the cool rewards on offer, or they crave the social kudos offered in return for their support. Fans tend to reverberate with all of these reasons like a well struck chord. They are often at the performance because they know and like the musician or band. They seemingly love the music, and given that they stay to the end of each performance, it could reasonably be assumed that they want more, so a new recording, more equipment to assist with that new sound, or marketing paraphernalia would be something of which the fan base should be supportive. The very nature of the music being performed makes for great rewards. A pledge might be rewarded with a CD, a T-shirt, tickets to a gig, acknowledgements on the CD sleeve, or even a private concert or performance if the pledge is big enough. And a pledge (especially from a corporate or small business) may be recognised by a public shout out during a performance, on social media, or on the performer’s website – there is nothing quite like the feeling of being publicly recognised. Given the fact that fans relate to most (if not all) of the reasons why people typically give to crowd funding campaigns, raising funds should be a mere matter of course for such projects.

In an interesting development of late, performers from buskers through to bands playing on stage or in pubs are embracing technology that not only comes in the form of crowd funding, but by way of associated technologies that help crowds become aware of the campaigns, engage, and contribute. QR codes are being used on guitar cases, on drum kits, speakers, and even on t-shirts to channel audiences directly to the campaign page for a musician’s crowd funding campaign. This ensures that the audience can use their smart phone and scan the QR code, taking them directly to the portal on which they can support the campaign, and not have any “leakage” caused by people forgetting the address of the platform, losing the details that they have taken down in one way or another, or mistakenly visiting and supporting the wrong campaign.

The internet has long been well suited to the music industry, not just as a medium for transferring and distributing the work of the artist, but for spreading the word and assisting with the initiatives of the musician. Now, through crowd funding, the internet is becoming a tool for musicians to engage and activate their crowd to not only support campaigns, but to help spread the word to an awaiting worldwide audience.

Posted on June 30, 2013 By iPledg With 0 comments

Crowd Funding – One Small Step for Man, One Giant Leap For Business

final logo new small-01All businesses started with a concept. The first thought was the seed that needed fertile ground on which to germinate, and an environment of conditions just right to help it to grow and continue growing in a mighty corporate oak. But it is the small things – the drop of water or the small bed of soil – that allowed business to start the change from concept to action. And it is now crowd funding that allows ideas and passions to take the first steps to actualisation by providing the seed funding to germinate and start to develop and grow.

In the pipeline through which businesses usually pass, the catalyst is a concept or a dream. It has often been said that it is not the money that starts the idea, but the idea that starts the money. But once the idea has been conceived, the next (early) step usually involves some form of funding to give it the necessary inertia to bring concept to reality.

Prototyping is often the reason for inventors to engage with crowd funding. The cost of building the first models or making tangible versions of the concept is frequently beyond the reach of the project initiator. Crowd funding offers project creators a quick and relevant way in which to not only raise the funding, but to build the band of “first followers” in the long journey to commercialization.

Crowd funding can also be used successfully to engage the necessary expertise to take the idea to fruition. Most inventors do not have the full complement of skills or experience required to take their product or idea to the next step, let alone move to full scale operation and commercialization. Accessing skills and knowledge from an industry, technical, productisation, or commercialization perspective allows the model to be further fleshed out and developed to a working reality. Again, this sort of advice and expertise costs money – not large sums of funding, but capital that stands between pipe dreams and achieving success. Banks and traditional sources of funding are becoming increasingly risk-averse and less likely to support such initiatives, leaving crowd funding as the best option for those who (until recently) only had close friends and family to approach (cap in hand) for funding.

In an interesting trend of late, the traditional formula of “concept – define – build – market” is now moving toward “concept – define – market – build”. The astute realize that building first then going back to the drawing board is costly, especially when the exercise has to be repeated time and time again as market feedback rolls in. Getting assistance to define early, then to market before productisation becomes a far more efficient option, as the market will guide the inventor before he starts to “cut wood”.  However, even with this “lean startup” model, funding is required, and again it is crowd funding that is leading the way as the primary source of funding in this area.

With the requirement to fund the move from concept to mass production, crowd funding is again perfectly placed as the option of choice. Smart project creators have cottoned on the realization that offering the product (once production is achieved and products start rolling off the production line) as rewards is a great way to entice potential project supporters into pledging their support for the campaign and the venture. Through the reach of the internet and social media, project creators with great ideas and the ability to articulate these well, in addition to their ability to offer sought-after rewards can potentially experience global reach for their campaign. With this sort of exposure, funding is virtually inevitable.

Posted on June 26, 2013 By iPledg With 0 comments

Crowd Funding – Let’s Not Lose the Essence

final logo new small-01If you were to Google the term “Crowd Funding”, or visit some of the more credible sites that act as a hub for the industry, you will see that proliferation of Crowd Fund Investment sites, and the domination of news around the growth of this form of e-commerce. In all the noise around investment crowd funding, it is easy for us to lose sight of the very nature of what a great breakthrough the true form of “Crowd” “Funding” has been and how it continues to offer us all a game changing way of funding our passion.

When the emergence of the internet collided with microfinance in the timely environment of the GFC, Crowd Funding represented disruptive technology, the likes of which had never been seen before. Conventional thinking taught us that you traditionally gave money in return for goods or services, and crowd funding went against everything we had previously known. All of a sudden, people were pledging their support based on them knowing or liking the project creator, or due to passion for seeing the project come to life. Convention had been thrown out the window, and we now had a brand new paradigm.

With the introduction of crowd funding, communities now had a tool for building and engagement. This tool was one that helped to share their passion to people who sought to be involved rather than in exchange for a financial return or a slice of the action. It was all about being part of a movement, a shared zeal for what they believed to be right or what was needed rather than receiving a tangible reward. This was commerce based on “the greater good” rather than an exchange of cash for goods and services.

Crowd funding is built on passion and shared enthusiasm. It is about building tribes, and bringing people together based on their belief in a cause or an outcome. Logic does not necessarily come into it, and just like passionate sporting fans united in supporting their team, crowd funding unites those with common interests and beliefs. Their unification builds momentum, euphoria, and (most importantly) delivers results because it is collaboration based on beliefs rather than the only thing uniting them being the fact that they are co-investors or just another customer of a venture.

Philanthropy, charities, and the whole “art of giving” were given a new realm and dimension with the birth of crowd funding. All of a sudden, their message could be carried further than their simple “shoe leather” activities could ever deliver. Resources could be better utilised and maximised by the power and reach of the internet. Philanthropists were able to give money anytime, day or night, and in a manner that was so much easier than having to make bank transfers, post a cheque, or hand deliver their contribution to the charity.

Crowd funding is not just about making pre-sales, but about engaging loyal customer following. People not only buy the product of the project creator, but they share in his story. They don’t invest, but are invested in the movement, and become advocates for the evolution and progress of the company or concept. Investment is singular in dimension – crowd funding is multifaceted and delivers a deeper, stronger, and longer lasting tie between the project creator and their crowd.

Let us not allow crowd funding to totally shift to being a vehicle just for investment. Crowd funding has brought us a great instrument for building communities and for funding passion. The true essence of crowd funding in the form that has been so popular in recent years has been built on need rather than greed, and it is the purity of true crowd funding that has seen so many projects succeed for all the right reasons. Sure, equity crowd funding has a wonderful role to play in society moving forward, but let us never let the light dim on the pledge model of crowd funding that exists and thrives today for all the right reasons.

Posted on June 19, 2013 By iPledg With 0 comments

Crowd Funding – Community Funding From the Eighties

final logo new small-01Many attribute the formation of Crowd Funding to the British rock band, Marillion, around the year 1997. But theirs was not the first foray into what would become what we now know as the most dynamic form of e-commerce on the planet. Early forms of crowd funding pre-date the efforts of 1997, with a wonderful example laying quietly in the woods of Hereford in south-west England.

The Queenswood Café was once the Essex Arms in Wildemarsh Street in Hereford, and the adjoining Hereford Countryside Centre was once the Tannery Building on the banks of the Tenwater in Leominster. Both were shifted to their current site in Hereford in 1990, and all of the work was funded through an early form of crowd funding.

A public appeal was launched by Lord Lieutenant of Hereford and Worcester, Captain T.R. Dunne on October 30, 1987. Back then the internet was not what it is now, so the word had to be spread manually, the old fashioned way, using telephone, door knocking, and a lot of shoe leather. But the word did spread, and the funds quickly came rolling in.

The concept of having a community centre on the edge of the woodlands was appealing to the locals, and the project was enticing enough for businesses, individuals, and neighbourhood organisations to want to support the cause. The people that were out collecting pledges for the campaign told of their vision with passion, and the same applies today in modern crowd funding – a good story told well will always get the attention of the crowd.

And then there were the rewards – the inducements for people to pledge their support. Many of those who supported did so purely out of a passion to achieve the goal of a community centre. However, as added incentive, the project owners offered those who contributed a chance of immortality. No, not by way of endless life, but to have their names inscribed forever on the main wall of the café.

photo (19)

Visitors to the centre are greeted by a huge painting of a wonderfully colourful oak tree. The tree is a picture of autumn, with leave of many colours and hues, and small animals foraging for nuts and shelter. Upon closer inspection, it is evident that the leaves, the animals, the ribbons on the tree, and virtually every item in the picture represent a contribution or pledge by some member of the local community.

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The key is subtly found at the bottom of the tree. Red leaves with the contributor’s name in black represent a £50 contribution, while red leaves with yellow writing represent a pledge of £300. Green leaves indicate a contribution of £25, and an acorn signifies support of £500. For those who were particularly generous, there are small animals and birdlife that commemorate contributions of £1,000 or ribbons that signify a £2,000 pledge. Overall, the quilt of contributions shows a tree of many colours and many components that all come together to form a magnificent and vibrant tree, somewhat symbolic of the community that enabled the project to come together.

This successful campaign demonstrates not only the early forms of crowd funding, but the ability for project creators to go out and share their passion with their crowd (in this case, a very local community), and engage their support. It showed that rewards are not essential, and that they do not need to be of great material value to entice people to contribute to the campaign. The rewards in this case cost virtually nothing, but were priceless in the eyes of those who gave money to the cause.

And the very same principles apply today. A great story told well and communicated broadly to the crowd, with relevant rewards, all driven with enthusiasm remain the keys to crowd funding success.

Posted on June 12, 2013 By iPledg With 0 comments

Crowd Funding – When “Near Enough” IS Good Enough

final logo new small-01We all have dreams. Many of us like to dream big, and reality can bite hard, causing our dreams to dissolve infront of our eyes if we fall short in any way. The same can be said for the “all or nothing” form of crowd funding, when the stretch-targets we set ourselves are slightly out of reach of the potential of our crowd – Fall a few dollars short and you get nothing. But now with the Tipping Point-method, project creators are able to still fund their passion if the money they raise falls just short of their ultimate goal.

The Tipping Point method is simple – Project creators set their funding goal just like they would in conventional crowd funding. The project description is the same (a bit about the team, the project and what will be done if the funding target is met or exceeded). And the rewards are set out as inducements as per normal. The difference is in the setting of a tipping point, almost like a safety net. A tipping point is merely a lesser funding target that allows the project to still go ahead, albeit in a lesser grandiose format, or to a lesser specification.

Let’s say your project is to build a statue out of gold, and your target was $5,000 to enable you to do so. You put the word out to your crowd, and they respond by pledging their support and by spreading the word to their networks and beyond. It all starts off very nicely and the dollars come rolling in. During the funding campaign, you lose some momentum, and the flow slows a little, so you give it a final push in the last days of your funding timeframe. You get to the end of the campaign, and you have raised 98% of your funding target. The net result in traditional “All or nothing” crowd funding would be that you get nothing. We would consider this a tragedy given all the hard work and good intention of the project creator and the crowd.

But with the Tipping Point method, you could still set the campaign up as above, but with one major difference – you could set a tipping point at a lesser amount than your original $5,000 target, and this would be a compromise position for your project. In this case, you could perhaps set a tipping point of $3,000 (60% of the ultimate target) and build the statue out of silver if the ultimate target was not reached. If the $3,000 target was met, you would still have time for your campaign to meet the $5,000 ultimate goal, but if you fell short of the ultimate target at the end of the funding timeframe, you would still get the funds raised by the campaign, and the project could still proceed (making the statue out of silver rather than gold). A win for the project creator, the crowd, and for crowd funding in general!

In the real world, there was recently a classic case demonstrating the benefit of having a tipping point. On iPledg, there was a recent project involving the saving of the Sumatran species of elephant. The funding target of $5,000 was almost met, but funds raised fell 2% short of the ultimate target in the funding timeframe. Under the conditions of traditional ‘all or nothing” crowd funding, the project would have dissolved and whilst no one would have parted with any money (because the money in such a model would not transact unless the target was met or exceeded), the project creator would not have received a cent of the funds raised. Fortunately, in this case, there was a tipping point of 60% of the ultimate target (i.e. $3,000) so whilst the campaign fell short of its ultimate target, it did succeed and did transact because it did meet (and exceed) the tipping point.

So the project, whilst falling a shade short of the target, did go ahead. Interestingly enough, even though they did not quite raise the money to fund their ultimate goal, they did well exceed their tipping point. From that time, the project was live and the cause for which they were raising funds was set to benefit in one way or another. Even more interestingly, given that “the crowd” saw that the campaign had gone so close to reaching the ultimate target, the balance of funds did come in shortly after the campaign ended. In such cases, it is also not uncommon for the providers of the items for which the funds are being raised to discount the goods by the few percent to allow the project to go ahead anyway. It is just another way in which the good intent of the crowd is harnessed by crowd funding.

The tipping point model with iPledg is ensuring that more projects can go ahead. It provides a safety net for project creators to maximise the chance of their project proceeding in one form or another, and (at the same time) is a reality check for over ambitious targets. Ultimately the crowd will decide the projects that will proceed and which ones will not, and combined with a tipping point that offers the crowd a choice as to how the project will proceed, the Tipping Point Model provides the most pure form of democratisation of funding.

Posted on June 4, 2013 By iPledg With 0 comments

Crowd Funding – Modern Technology Preserving History

final logo new small-01In 1746, the battle of Culloden was fought between the Jacobites and the Duke of Cumberland’s best. In less than an hour, over a thousand lay in the fields having been brutally defeated by the latest in (what was at the time) modern warfare. Fast forward over 200 years, and modern technology now sits on the precipice of being the key to preserving the memory of the events and those who fell on that fateful day.

Today, on those windy battlefields, there stand the flags to commemorate where the two sides lined up, poised for attack. Headstones mark where the clans fell, and in the visitors centre one is able to follow the stories of both sides as they led up to the battle, their motivations and their journey. And it is this visitors’ centre that one can see the power of crowd funding and how it has been used to keep alive the memory of those who fell on that day back in 1746.

Wander in, out of the blustery conditions, and after being hugged by the warmth that greets you inside the building, you will be met by a scroll on the ceiling that seems to extend for almost as far as the battlefield itself. The first question you find yourself posing is “Are these the names of the fallen?” A small plaque on the wall then makes it clear – the surroundings are all made possible through the power of crowd funding.

The owners of each of the names on the ceiling have been offered their position on the honour roll in exchange for their contribution of at least £50. This “reward” is a simple yet sufficient inducement for hundreds of individuals, families and companies to have reached into their pockets to support the “campaign” which is to ensure that the centre is maintained so that visitors to Culloden can hear about one of the most fascinating events in English and Scottish history. The “story’ is told well – through pictures, interactive exhibits, videos and the display of artefacts from the day.

To date, the campaign has been run “manually”, as it has only been communicated through the onsite signage visible to those who visit the centre. Effective as it has been, imagine if the campaign, the story, and the offer of the rewards had been taken online, and spread out to a far broader, global crowd. If tens of thousands of pounds has been raised from the thousands of people coming through their doors, surely there is potential to raise far greater sums from the millions of people who could potential visit a crowd funding page if one were set up for the cause.

Culloden not only signifies and commemorates history and those who died in battle back in 1746, but today shows the power of the crowd to support a passionate story, told well, with sought-after rewards (which cost the project creator very little), and all communicated to a motivated band of supporters.

As you pass through the fields, you cannot help but being reminded of history and wonder how the future generations will continue to relive the memories, if not through the power of crowd funding.

Posted on May 28, 2013 By iPledg With 0 comments

Crowd Funding – the Alternatives Don’t Stack Up

“Money never starts an idea. It is always the idea that starts the money”. But when the money hasn’t started rolling in or when it is required more quickly to get the idea off the ground, there are a number of external sources from where capital can be obtained. The traditional way was to go to the bank, and win over the bank manager. Over the years, more creative methods came into being. With the greatest requirement for funding being small tranches, crowd funding is leading the way as the fastest growing form of e-commerce on the planet.

At the top of the funding ladder is the stock exchange. Reserved primarily for “the big boys”, an average listing will cost you around $500,000, not to mention the surrender of equity you have to face in raising capital this way. One needs to consider the handover of control to the investment bankers, lawyers and accountants from the time you even consider putting together a prospectus. Furthermore, start-up companies must demonstrate the potential to develop into profitable enterprises that will deliver significant annual increases in sales and earnings.

Step down a couple of rungs on the funding ladder, and we have the traditional custodians of cash – the banks. Capital raising by way of obtaining a loan from banks has been successfully accomplished for many years. However it is the need to meet the criteria for acceptable risk so that you can obtain the loan, as well as the additional (hidden) charges, the cost of interest, and the cashflow impacts from the need to make regular repayments that have seen traditional bank lending being overlooked in preference for crowd funding.

The counter-side to loans is to give away equity in your initiative, idea, or business. Venture Capital from institutional funds is available, but post-GFC times have seen an evaporation of much of this funding and the bar considerably raised by the risk-adverse funders. Should you be successful in securing funds from a venture capital institution, there is the need to surrender some of the control and the profit, and to ensure that you serve more masters than just satisfying your own goals and desires.

Whilst less stringent or demanding than seeking the venture capital solution, angel investors do also offer an alternative source of funding. Angel investors can also offer the additional benefit of their personal involvement to the evolution and commercialisation of your concept, idea, product or business. However, there remains the need to give away equity and some control, meaning a need to give away some of what you have worked so hard for, not to mention the requirement to ultimately pay back the capital at some time.

Grants offer yet another form of funding to various forms of initiative. Assessment criteria are usually quite high, and there are stringent performance criteria and reporting requirements to be completed along the way, which can consume productive time. There is also the suitability of the grants on offer. Case in point was when, in early 2012, there were 8 schemes available on one particular government website (that of a government department set up to help small business), 5 of which had closed, and of the remainder, the smallest amount on offer was $10mil. Given the fact that 99% of businesses are small business, and most requirements are for small packages of funding, this case highlighted the disconnect between available grant funding and the needs of the market to whom such funding is aimed.

Until the advent of crowd funding, there were (and still remain) many options available at the top of the funding ladder. However, crowd funding now not only offers a sustainable and relevant solution to fill this gap, but a fresh, new and highly workable answer to the funding requirements for creative, commercial, charitable and community initiatives all around the world – a solution that does not involve loans that need to be repaid or the surrender of equity in the idea, product, or service. Is it any wonder that the providers of the traditional forms of funding are more than a little concerned at the global rise and rise of Crowd Funding?

Posted on May 20, 2013 By iPledg With 0 comments

Crowd Funding – The Ultimate Proof of Concept

final logo new small-01For any startup or business with a new to world idea, the biggest challenge is to create a rock solid proof of concept trial. If executed successfully, it is valuable collateral for any business, giving the idea credibility and gravitas in the eyes of potential customers, investors, suppliers, and partners. But proof of concept trials can be costly in both financial terms and in the time and resources required to implement, monitor, and collate the outcomes. Crowd funding is now proving to be the game changer in the way proof of concept around new ideas is worked up.

Proof of concept, as the name suggests, is real world verification that the idea works and does what it is intended to do, or that the market anticipated for the proposal actually exists and is desirous of the product or service. Proof of concept can be achieved in trials that show that the widget not only could perform in the manner expected, but does in reality do what is expected (or more!). It can also show that the customers, when offered the widget and a chance to buy it at the proposed price or through the proposed distribution channels are willing to purchase. Proof of concept trials traditionally cost money to fund testing of the widget against real world conditions or real market expectations.

Social proof is, by many, being considered as the newest iteration of proof of concept. Proving the widget does what it purported to do is one thing, but commercial viability is, for many, the real evidence required for the project to go ahead. When the makers of the Tick Tock watch crowd funded their campaign to go into full scale production, it wasn’t so much the $941,000 that they raised that saw the project take off, but the 13,000 people that put their hands into their pockets and pre-purchased the watch that saw the greater public sit up and take note, and it was then that the investors, potential partners, and wholesale suppliers and customers came flooding in. Whilst the money raised was nothing short of phenomenal, the real benefit came in the form of the social proof that demonstrated the tremendous commercial viability around the product.

For many, the pre-sales and test marketing that crowd funding offers can be a greater outcome than the money raised. Much like social proof, the test marketing provides confirmation or validation that there is a need or a want “out there” for the product for which the crowd funding campaign is being conducted. Crowd funding can be the first foray into sales for new ideas and products. A successful campaign in which the reward or inducement is an attractive offer to pre-purchase the product may very well be the best way to prove the supposition behind the concept.

Whether the campaign is successful or whether it falls short of its target, crowd funding can provide the necessary real world feedback to go back and “tweek” the product or the offering. Candid honest feedback is always hard to come by when the concept is kept “in house”. Family and friends are always full of praise, but the harshest critics, the ones who will give you the most honest feedback, are your potential market. They will tell you if your concept or product is too big, too small, the wrong shape or colour, or perhaps even too dear. This priceless information allows you to go back to the drawing board with the necessary guidance to make the changes required to satisfy the buying public.

If nothing else, your crowd funding campaign will assist in getting your story out there. The more people to whom you can expose your idea, concept or product, the greater the awareness you generate. Crowd funding is an effective platform on which you can build an awareness campaign, and if you can get others to “share the love” and distribute the campaign to their networks, the more awareness you generate, the more feedback you receive, the greater the volume of test marketing you can do, and the bigger the proof of concept you will achieve.

Whilst crowd funding is indeed the ultimate proof of concept trial, project creators must be aware of protecting their IP, and ensuring they do not push their idea too deeply into the public domain and losing their patentable position. The best advice here is to consult with a suitably qualified patent attorney who will guide you in how to put your product “out there” and crowd fund its birth while achieving your proof of concept trial without giving the game away.

Crowd funding – offering you not only funding, but social proof and collateral to seek buy-in from future funders, investors, suppliers, and strategic partners. It can offer you exposure to the crowd and to your future customers who will give you honest feedback, allowing you to go back and refine your product or offering. Traditionally, proof of concept trials cost the project initiator considerable time, money and resources, but through the wonders of crowd funding, project creators can prove up their offering while raising the funds to get them into monetizing their passion.

Posted on May 13, 2013 By iPledg With 0 comments

Crowd Funding – the Complexity of Taxation

final logo new small-01It has often been said “Money never starts an idea. It is always the idea that starts the money” But once the money actually starts, and continues to come in, the one thing you can be sure of is that the question of taxes will be asked. The answer will vary all around the globe, and the way in which it is assessed and countless complex external considerations need to be factored in. Wading through all of this requires a knowledge of local tax laws, as well as an intimate understanding of the project creators personal circumstance.

The first consideration must be that of the nature of the incoming funds. Depending on how the campaign has been structured will affect the manner in which the contributions are assessed. If the campaign is put together in a manner that makes the revenue appear as “income”, it will be viewed in a very different manner to a case in which the monies raised are considered as “capital contributions”, as both have very different regulations around how both are taxed.

And it is not only the structure of the campaign and the resulting nature of the contributions that need to be considered. The structure of the project creator should also be understood, as the income will be assessed very differently if the project creator is an individual as opposed to if they are a business or corporation of any sort. The scenario changes quite considerably again if the entity is a Deductible Gift Recipient (DGR) or a registered charity to whom donations are tax deductible.

There are also views around how the activities of the project creator are factored in to their regular income generating activities. If the project for which they are crowd funding is a hobby, it may put yet another slant on the assessment of the revenue generated. Are they doing it as a one off, or will this be an ongoing activity, and how does it tie in to the primary income of the project creator?

Many countries have a Goods and Services tax (GST) or a Value Added Tax (VAT) or any similar form of consumption tax. Different campaigns and different situations in different countries will cause the income generated by a crowd funding campaign to be assessed in different ways as to whether the consumption tax in payable and whether this proportion of the funds raised needs to be bundled up and sent off to the government. If there is a consumption tax component payable on funds raised, the good news is that input credits, or the consumption tax paid by the project creators on items purchased and costs associated with the manufacture, provision and delivery of the project outcome, can be deducted from the money owed to the government for consumption taxes collected.

And the other good bit of advice for those whose campaign funds are liable under local tax laws is that many of the costs of good, raw materials, and expenses are tax deductible. This means any costs you incur as a project creator could possibly be taken off the amount you have raised, and tax is only payable on the net balance once you have taken your costs off the total raised (and not on the total raised itself).

Confused? Scared off?? Feeling a headache coming on???

Relax. There is one overarching piece of advice that can help clarify things simply and easily for each person in every scenario and in every case. And the advice is this – Please ensure you discuss your campaign with your accountant, tax advisor or financial consultant before you embark. They will know your own particular circumstance, and marry this to their understanding of local tax law, which should give you comfort around your liabilities and responsibilities to the taxman.

Crowd Funding – the Complexity of Taxation

Posted on May 6, 2013 By iPledg With 0 comments

Crowd Funding – “Six Degrees of Kevin Bacon” Lights the Way

final logo new small-01Kevin Bacon, the star of Footloose, Animal House, A Few Good Men, and Apollo 13 was also at the centre of the Kevin Bacon Game back in the mid nineties – a game that illuminated the way for the possibilities of Crowd Funding which was to follow a few years later. It showed the way in which we are all inter-connected, and how, through the powers of the Six Degrees of Separation, we can spread messages to far away networks that reach around the globe and back again. Harnessing this power is at the very epicentre of crowd funding success.

In 1994 in a magazine interview, Kevin Bacon claimed that he had worked with everyone in Hollywood or at least someone who has worked with them. This throw-away comment spawned the headlines “Kevin Bacon is the Centre of the Universe”. These headlines moved a group of local university students to create The Kevin Bacon Game. This game started with a simple exercise of having friends suggest names of Hollywood stars, and they would demonstrate how each one of them was connected to Kevin Bacon. The game concept saw a book written, and then an actual board game was created.

Behind the fun and the silliness, a deeper scientific formula and social experiment lay brewing. The concept of a “Bacon Number” came into being, based on the Erdos Number theory. Kevin Bacon was given the number of 0. Those who worked directly with him were given a Bacon Number of 1 (as an example, we will call this guy “Bob”). Then those who didn’t work directly with Kevin Bacon but did work directly with “Bob” were given a Bacon Number of 2, and so on as the network extended outward.

88% of all actors in Hollywood achieved a Bacon Number, and the largest number was a 9. That is, there were 9 degrees of separation between Kevin Bacon and 88% of all actors in the entire Hollywood community. This was based on who had worked with who, and when the experiment was carried out using the presumption of who knew who, the ultimate Bacon Number was far less.

Since this experiment was conducted, similar concepts have been trialled. In one of them, six people in remote locations around the world were given a (controlled) parcel to send to the President of the United States. The only rule was they could only send it to someone they knew personally, someone with whom they share a relationship on a first-name basis, or with whom they had had some form of personal interaction. Each of these parcels made it to their destination, proving the power of the six degrees of separation.

So how does all this relate back to crowd funding?

Quite simply.

If we are to start a crowd funding campaign, it is of utmost importance that the project creator gets the message out to their “first degree”, asking them not just to pledge their support, but asking them to pass the message on to their networks and so on. If we assume that everyone on the planet knows 100 people, the first degree network of the project creator is 100. If each of those people in turn knows 100 people and they let each of them know about the campaign, the second tier network amounts to 10,000 (that is, 100 x 100 people). Assuming each person in each tier (or degree of separation) passes news of the campaign on to the 100 people they know and so on, the message can go viral, with potentially over 1 trillion people hearing of the campaign by the time it reaches the sixth degree of separation (yeah, we know it signifies more than the total population of the earth, but it shows the potential of getting the message moving and amplified through the extended networks).

In 1993, Will Smith and Stockard Channing starred in a movie called, Six degrees of Separation.   Stockard Channing’s character says in the movie, “I read somewhere that everybody on this planet is separated by only six other people. Six degrees of separation between us and everyone else on this planet. Everyone is a new door opening into other worlds. Six degrees of separation between us and everyone else on this planet.   But, to find the right six people…

This so well encapsulates the essence of crowd funding. Through the power of the internet, campaigns have the chance to viral, to spread, to be heard and supported by millions, billions, and potentially trillions of people. The key is to get the campaign out, and to do so often, so the news is heard by the “right people” who will pledge their support and continue to spread news of the campaign to their networks and beyond.

And it is this that is at the epicenter of crowd funding success!

(Just for the record, Kevin Bacon has been proven not to be the centre of the universe – the centre of the universe is Dennis Hopper!)

Posted on April 28, 2013 By iPledg With 0 comments

Investment Crowd Funding – The Rules and Regulations Already Exist

final logo new small-01One must continually question government stance on over-regulation and inconsistent policies protecting the crowd from self-harm. Currently, anyone can take their hard-earned life savings to any casino and place it all on red, and the government seems happy to allow one to do so. But try to invest $1,000 in a start-up – a venture that has the potential to create employment, generate sustainable returns, and bring a new product or service into being – and the government will stop you so that you don’t naively place yourself at risk of losing your cash. How and why are we in this situation?

For well over a year, the US government has promised to take a proactive stance on bringing sensibility into play through the implementation of the JOBS act. 2013 was held up to be the “Year of the Entrepreneur” with over $300bil of community funding coming on stream to assist start-ups and small business. All of this funding was going to be made available without a single cent coming from government, thus reducing fiscal pressure and potentially assisting to balance the country’s books by energising commercial activity which would generate taxes and spending.

Daunted by the Fiscal Cliff which the US economy faced as Christmas fell at the end of 2012, focus was taken off the implementation of the JOBS Act which was to pave the way for investment crowd funding to become part of the economic landscape. Momentum was taken out of the sails, and we slipped past the critical dates without the fanfare that was to welcome in new legislation. Since that deadline, we have seen the devil getting well and truly tangled up in the detail, and little clarity exists on how the tangle will become unraveled.

Much of the worldwide economic community continues to mark time as we watch the US attempt to unscramble the egg, and sort out to painfully minute detail as to how they will protect investors from any form of self harm by potential lost investment. It seems that the main thing that has been lost is the fact that investment, by its very definition, involves risk. Astute investors mitigate risk by research, assessment, and hedging their outlay. The US government continues “paralysis by analysis”, and dares not make a move for which they could possibly held accountable. Governments that are watching the US and who plan to move based on the US experience (like the Australian federal government) continue to be content to stand in the queue and not move, being satisfied to maintain the status quo.

But the detail is not a “new to world” science. Organisations like the Australian Small Scale Offerings Board (or ASSOB) have years of experience in investment crowd funding. For almost a decade, ASSOB has operated its platform to permit the issue of securities to be made to certain types of investors without a disclosure statement and regulated promotion securities offers. Under the 20/12 rule, companies on the ASSOB platform are able to raise up to $2mil from 20 or fewer persons in any rolling 12 month period. With no frauds in this time, and having facilitated the raising of over AUD $130mil to date, surely this experience must be a consideration on which governments can amend policy to allow broader range investment crowd funding. The experience and the rules of the game are tried and (successfully) tested. Surely there must be grounds there for governments to make a start and allow investment crowd funding to assist in areas to which government budgets just won’t stretch.

Whilst ASSOB has the longest history in investment crowd funding, they are not alone in this space. Employing quite a different model to ASSOB, Crowd Cube in the UK have successfully funded £6mil in start-up, early stage and growth businesses. Their experience extends across sectors including retail, professional services, technology, tourism, IT, education, and oil and gas. Interestingly, and perhaps the greatest testimony to the way in which investors feel suitably comfortable and protected is that 18% of investors have invested multiple times.

Investment crowd funding does not need governments to reinvent the wheel. The experience is there in a number of models, and the overall experience seems to be fair and good, with players from both sides completely aware of what they are entering in to, and with full understanding of the risks and rewards on offer. Governments can access the template by simply engaging with the operators who have proven success under their belts. Then it will be up to them not to draft the game rules (for they are all written), but to define the extent of the rules, to govern prudent investment crowd funding activity, and enjoy robust economies supported by community funding.

Posted on April 21, 2013 By iPledg With 0 comments

Crowd Funding – The Emotional and the Rational Supporter

final logo new small-01Regardless of the type of campaign, and whether it be on a “pledge-model” platform or one that facilitates investment, crowd funding initiatives must straddle the emotional and rational motivators to attract people to support a campaign. And there is a clearly defined link between where the supporters come from and their motivation to support a crowd funding campaign. It is the ability to incorporate science (what we know or the logical motivators) with art (what we feel and how we are motivated emotionally) that brings about crowd funding success.

In the raising of capital or support for a campaign by way of pledges, the “ground floor” is occupied by the project creators, founders, shareholders, directors, management, and trusted advisors. It is the inner core that creates the basis for the movement to begin and the spread of support to commence. All inertia begins here based on what they have created, what they use to attract their followers, and how they go about communicating their funding efforts to “the crowd”. It is the inner core’s ability to understand the need to put forward emotional and logical drivers that will largely determine to what extent the call for funding will extend.

Beyond the “inner core” is what is termed “the first tier”. This tier is inhabited by those people closest to the inner core, largely friends, family, fans and followers of the project creators. The “Four Fs” usually have a strong personal tie to the project initiators or to the niche associated with the project, and therefore are primarily motivated by emotional drivers. It is essential that the project creator quickly engages followers from the first tier to give the campaign credibility and to signify to the broader community that it is alright to follow and pledge their support. They validate the campaign and make it OK for others to follow. This is where the movement is created or lost.

The second tier is then the friends of friends. This is where “tribes” are formed, and their engagement is largely dependent upon an introduction or specific link from people in the first tier. As such, there is less of a direct link to the project creator, so the emotional motivators to support the campaign are not as strong, and logical reasons start to come in to play. There is usually a tangible and traceable pathway from the second tier back through involvement from the first tier and then back to the project. Often members of the second tier will have an affinity with the sector or the nature of the project, e.g. they will support a technology-based campaign when introduced to it if they have an affinity with technology.

It is engagement with the third tier where the real money comes in. It is the connection with “smart money” or angel investors, VCs, private investors, or sophisticated accredited professionals that really starts large volumes of cash being invested or pledged to the project. At this stage there is little in the way of a personal connection to the project originators, and the want to invest or support is largely financially motivated. In the case of “pledge-model” campaigns and platforms, the case is the same in that the motivator for the third tier to get involved is more of a logical reason than the emotional reason that drove the initial support from tier one.

The most successful crowd funding campaigns motivate both the emotional and rational supporter through a skilful balance of science and art. The closer the supporter is to the first tier, the more emotional the motivator needs to be. The further you move from the project originators means the inducement needs to change from the emotional to the rational and logical. The project initiators must quickly engage the Four Fs to get on board for the emotional reasons (“If you really love me, you’ll pledge your support”), and this initial support will give credibility to the campaign and give others comfort that it is OK for them too to jump in and support the campaign. Once inertia starts and if the first tier can be reminded to spread the word to the second tier and so on, word will reach the cash-rich third tier, and it is engagement with this group of funders that will ultimately lead to crowd funding success.

Footnote:

1. Thanks to Paul Neiderer of ASSOB for his discussion and debate that drove much of the content of this blog

2. Whilst investment crowd funding is not available or heavily governed under legislation in many parts of the world, I have referred to it here as examples only, and such references should be taken to demonstrate the way in which campaigns can be supported in any manner – investment, pledge, or otherwise. It does not indicate that investment crowd funding is available or lawful in your part of the world, and guidance should be sought from a suitably qualified professional before embarking on such a project.

Posted on April 14, 2013 By iPledg With 0 comments

Crowd Funding – Creating a Crowd

final logo new small-01The old philosophical thought of If a tree falls in a forest and no one is around to hear it, does it make a sound?” could very well have been written about crowd funding. You could have the best project, a wonderful outline, killer rewards and captivating media, but if no one gets to hear about it, does it really make a sound? In effect, it is the engagement with the crowd that is the most crucial component of crowd funding, so the first step in any campaign must be the have a crowd to whom you speak.

So how do you build the crowd?

The advent of crowd funding is perfectly timed. With the existence of the internet and social media, the crowd exists just a few mouse clicks away, and anyone can build a crowd if they use the right tools applied in the correct manner. Facebook is the greatest supplier of traffic to crowd funding campaigns, so how do we create a following there? Start with the people you know – family, friends, neighbours, workmates, and anyone who you meet face to face. Then use the Find Friends button to suggest even more people you can approach, and your numbers will start to grow. Make sure you put a link to your facebook page in the signature line of your emails, and watch people start to follow you as you routinely go about sending emails (and while you’re sending emails, do an email blast to let people know you’re after Facebook followers). Use every opportunity to refer people to your Facebook page, like on your business cards or by putting a Facebook “LIKE box” on any blogs you might write.

Twitter also represents a great, simple, and fast was to reach and build a crowd. Start to search out and follow people who share similar interests to you and what your campaign is about. Check out their followers and follow them as well. There are various websites and tools that can help you find people to follow and to make the whole process of connecting that much easier. A simple Google or You Tube search will help you find these, and then it’s a matter of using these to help you increase your reach. A word of advice – make yourself aware of the rules of Twitter, as to how many people you can follow, etc so you don’t go upsetting people or putting your page at risk of being barred or banned.

Building a crowd on a number of social media platforms will expose you to different groups and allow you to speak to a number of different audiences. Google Plus is fresh and growing exponentially so is a good one to get on to. You Tube is technically not a social media platform, but is the second most used search engine on the ‘net, so it’s well worth starting to be part of it with a simple video. Linkedin can be especially useful for commercial projects as it tends to have a greater following amongst businesspeople and professionals.

The key to building and retaining a following is to engage and not just communicate. Don’t just stand on your soapbox and address the crowd. Step down, walk amongst the crowd, and start a dialogue. Asking questions and posting pictures are powerful tools for building crowd engagement. And be sure not to just ask for cash – your social media activity should not always be about the money. The central theme of your social media program should be your campaign, and what your project will deliver. Remember, this is the crowd that will not only fund your campaign, but who will spread the word, and be loyal fans for the life of your project and well beyond.

The importance of building a crowd before you start your campaign cannot be understated. As a general rule, 10% of your total crowd (that is 10% of the total of all your followers on all forms of social media, less any double-up) will pledge an average of $50. If the total of all your social media followers is 1,000 and 10% of these (100 people) each give $50, you are well placed to raise $5,000. You could easily raise more if the word goes viral or if you get support from traditional forms of media, but it is the size and calibre of your initial crowd that will largely govern the basis for your success.

Your crowd funding campaign does not start on the day your project goes live on the site or even when you submit it to the platform for their consideration. Your campaign must start days, weeks, or even months beforehand as you build the crowd and get their engagement primed well before you expose your campaign to the world. Get this right, and you have laid the foundations on which to build a solid

Crowd Funding – Creating a Crowd

Posted on April 9, 2013 By iPledg With 0 comments

Crowd Funding – Local Governments and Civil-Natured Projects

final logo new small-01At a time of low trust in governments, crowd funding of civil-natured projects is reducing the chance of projects being selected for purely political reasons. Governments are turning to crowd funding to allow their constituents to truly participate in their democracy, and to vote with their money. Whilst original views were that funds raised in such a manner were simply a “tip jar” for governments, the crowd is now realising that this is the best way to have their say in what projects go ahead, with projects that don’t make it over the line falling back into traditional government processes.

With traditional crowd funding campaigns offering material rewards to entice project supporters to pledge their support, governments are successfully offering public recognition and kudos as the incentive for people to get behind the campaign. Whilst most people are pledging their cash purely out of a desire to see the project come to life, many are motivated by naming rights for part or all of the project, recognition on honour boards or the like, and an array of rewards that do not encroach on the funds raised but give the supporter their 15 minutes (or more) of fame.

Perhaps the best known example of a civil-natured government project that has been crowd funded is in the city of Rotterdam, where the government conducted a campaign to build a pedestrian bridge funded by the public who were relied upon to purchase individual planks for its construction.  The wooden pedestrian bridge was to span 350 meters and require 17,000 planks. Citizens were invited to pledge their support with pledges of anywhere between EUR 25 for one plank and EUR 1,250 for an entire bridge section. In return for their support, the public were able to inscribe their section with their name or any other text of their choice.

Other governments are engaging their community and crowd funding to leverage limited government funds. They are asking project creators to crowd fund for the capital they require, with set criteria to be met in order to receive matched funding for any successful campaigns. In such a way, the government is able to drive more funds to certain sectors without having to fund it in its entirety. Screen West in Western Australia (WA) introduced a “Matched Funding” initiative on a crowd funding platform, giving 27 WA filmmakers the chance to receive $3 for every $1 they raised through their campaigns. Over $100,000 was pledged by the public in less than 24 hours, and seven film projects received matched funding from the available pool of $250,000.

Perhaps the greatest innovation is the implementation of a Tipping Point, which acts as a regulator to still allow projects to proceed if the initial target is an overly ambitious one, but if a lesser version of the original project will suffice or is more desirable by the community. A campaign to raise $30,000 for bbqs and seating around the perimeter of a lake might set $9,000 as a tipping point for which bbqs will be provided without the seating, This gives the public the chance to get to the tipping point, but to pledge no more if they wish for only the small part of the overall campaign to go ahead (and then they can bring their own seating).

Crowd funding is increasing be utilised by astute governments to not only provide more to the community than government coffers will allow, but to engage with the communities they serve, who put them into power in the first place, and who will determine their security of tenure.

Posted on March 31, 2013 By iPledg With 0 comments

Crowd Funding – Success Through Competition

final logo new small-01The space race in the sixties saw opposing camps fighting tooth and nail to get ahead of each other to go further than any man had ever gone before. Through the spirit of healthy competition, the winner was not only the first person to set foot on the moon, but the entire industry which benefited from collective learnings and a focus to do better than had ever been done before. The same can be said for crowd funding, which is now fostering healthy competition amongst industry groups to help entire sectors obtain funding previously unavailable to them.

iPledg is leading the charge with an initiative that calls for industry groups, for example the sporting community, to promote to their members to pitch for the chance to win success-fee-free campaigns, supported by regular expert advice from their own sector as well as from authorities on crowd funding. The offer is a simple yet effective one – the industry group announces to their members a competition that offers a fully supported crowd funding campaign. Hopeful applicants are asked to submit their entry by outlining their project in 100 words or less, and why they would like to use crowd funding to generate the funds they need. From all the entries, a select number receive weekly support in the setting up of their campaign, the launch, and ongoing assistance for the life of the campaign to help the project creator achieve the greatest degree of success. Additional promotion through iPledg’s extensive social media presence, newsletters, press releases, and blogging are also on offer as part of the prize, as is the benefit of being coached by experts in the field of crowd funding, combined with instruction from the industry body themselves.

Through such competition, crowd funding is taken to a whole new level. Individual project creators challenge themselves to pitch their campaign in the best way possible, leading to a better campaign. Competition between members of the community or industry group to win one of the fee-free, fully supported campaigns leads to better project descriptions, more creative rewards, and fantastic media as project creators produce entertaining and engaging short videos and photos to support their fund raising efforts. And the industry body or community themselves benefit. They have more successful members with projects that are funded without any impost on the community, they show their members a way of raising required funds through crowd funding, they have great newsworthy stories to share with their members, and they have successes off which they can breed more success.

The first group to introduce such a competition in Australia is Sports Community, whose membership is made up primarily of sporting clubs, from the very small to those at the highest levels in national competition. Sports Community have promoted the competition to their database, not only leading their community into the brave new world of crowd funding, but creating some interest and excitement within their ranks. Working closely with iPledg, Sports Community will support the campaign winners in the lead up to the start of the campaign, and throughout the life of the campaign to give the project creators the best chance possible to succeed. But the winners are not just those who win one of the 5 fee-free, supported campaigns. All members of Sports Community can follow the progress of the campaigns each week, and learn more about crowd funding to give them a host of hints and pointers on how to run their own crowd funding campaign. As such, the community as a whole benefits.

And it is not just with the Sporting Community that this form of competition can work. It is about to be tried in the IP arena, the entrepreneurial space, to assist start-ups, and with creative and artistic groups. Charities too are welcome to try, and have their members benefit from friendly competition and a chance to win a fee-free, supported package. Community groups such as Rotary and large institutions like Universities also are well suited to enjoying success through crowd funding in this way.

Fitter, faster, higher, stronger – not just an Olympic credo, but the benefits that can be offered to members of community groups and industry bodies that opt to try creative crowd funding competitions like that offered and supported by iPledg

** If you are interested to have iPledg partner your group, university or community in such a competition, please contact us through www.ipledg.com

Posted on March 26, 2013 By iPledg With 0 comments

Crowd Funding – The Tipping Point Offers a True Reality Check

final logo new small-01Many projects that fall short of reaching their funding target do so because the project creator has just been too ambitious with their funding goal. But with a tipping point like that on iPledg, funding campaigns have a built in mechanism to allow a reality check to come into play, allowing the crowd to have even more say if a project should be successfully funded, albeit in a simpler format than the project creator had originally envisioned. And, since introducing the concept of the tipping point, more projects than ever before have transformed from dream to reality.

A tipping point is a simple concept. In traditional crowd funding, project creators are faced with an “all or nothing” scenario. Fall a dollar short of your funding target and (in theory) you get nothing. Then it’s back to the drawing board to see if you can either use the momentum of your first campaign and try again, or trim your project back a little to a lesser funding amount and have another go. A tipping point overcomes this problem by allowing the project creator to set up their campaign in the usual manner, but they can nominate at the outset what they could do if only a percentage of the target funding was raised.

Let’s take for example the case of an author who uses crowd funding to raise the money they need to publish their recently written masterpiece. The funding target may be $10,000 which will allow them to print their works in hardback. But at the outset the aspiring author nominates that it they achieve $3,000 (or 30% of their ultimate target), they can e-publish their book. OK, not their preferred option, but it still sees their book becoming a reality, and available to the world in soft-copy. Once the campaign hits the tipping point, it is considered “live”, and any funds that are raised will be paid to the project creator at the completion of the campaign. So if their target of $10,000 is not met, but they exceed their tipping point of $3,000, the money is collected, and the (lesser) project of publishing their e-book is now a reality.

A tipping point is not unlike the reserve price at an auction. Whilst the seller of a property wants to get as much as they can and dreams of the vast sums that their property can achieve, they set a reserve at a minimum level that allows them to move on and achieve their goals moving forward. Similarly, a tipping point is the position at which the project creator accepts the ability to move forward with their project at the base level. The ability is still there to achieve far greater amounts, and to achieve (and exceed) their ultimate funding goal, but a tipping point allows for them to be “in the game” and achieve at least their base level of funding.

Often the crowd recognises the worth of a campaign. They will determine through their collective voice if a campaign should be funded. They will determine that a widget made of gold may not be worth the funding target of $5,000, but one made of wood is a great idea, and well worth the $2,000 (or 40%) tipping point. A tipping point gives the crowd a greater voice, and a greater say as to whether a project is successful, and in what format the project will go ahead.

In addition, project creators have a higher chance of achieving their funding goal in one way or another. Not only will the crowd provide them the funding they need, they will provide the project creator invaluable feedback, purely based on which of the options are funded. Where else can a project creator receive the funding they require, plus the feedback of an engaged and supportive market? The project creator opens their project up to achieve funding for the more realistic or the stretch goal depending on the collective opinion of the crowd.

Not only will commercial projects benefit in a manner that cannot be offered elsewhere than on a site with tipping point functionality, charities have the special ability to set an exceptionally low tipping point, almost assuring them of all funds raised, given that they put in enough effort to get to their low “reserve” or tipping point.

iPledg’s tipping point allows for even greater democratisation of funding, giving the crowd the chance to say yes to lesser ambitious goals, or to see the whole funding target reached if the crowd see fit. And with the project creator now having two bites of the cherry in the one funding campaign, they have a far greater chance of having their campaign funded, along with being told by the crowd as to which option is going to be better perceived by the market.

Posted on March 18, 2013 By iPledg With 0 comments

Crowd Funding – The Rise and Rise of Peer to Peer Finance

final logo new small-01In the post-GFC environment (or as some have termed “the New Reality”) most business leaders would welcome sustained revenue increases or market growth. Even for those new industries that have emerged since the GFC, there seems a quick flattening in their growth curve as maturity is reached after just two or three years. But as a “mature” 4 year old, crowd funding continues to enjoy exponential growth as the world continues to embrace this dynamic form of e-commerce, and technology makes it easier to reach out to a broader crowd.

In 1997 UK rock band Marillion funded their US tour through many small pledges from diehard fans, and then returned token gifts back to their loyal fans to say thanks for their contributions. They had (without knowing it) invented the modern day concept of crowd funding. Some would say that with seventeenth century initiatives of funding the printing books through asking the public for pledges in return for a mention on the title page, or Joseph Pulitzer’s 1884 program to have the US public pledge money to fund the pedestal on which the Statue of Liberty sits today, were the real roots of crowd funding, but Marillion’s campaign saw the introduction of the concept to our modern times. Fast forward to 2009, and we saw crowd funding lay down the footings on which the current surge of this concept was built.

In 2009 crowd funding worldwide represented a $1.6bil industry. In an age when other industries were contracting and in decline, crowd funding continued to grow at not just double-digit rates, but rates in excess of 50% each year. In 2012 alone, the industry grew by 91%, demonstrating continued exponential growth each year since its rebirth. As a sector, crowd funding is now well on track to now generate $6.2bil in global revenue during this calendar year. Many have been quick to jump on the crowd funding band wagon, with the number of platforms having grown in the past year from 452 sites to 536, an increase of 27%.

Kickstarter, the “Big Daddy” of all crowd funding sites, proudly boasts figures that surely have enticed many into the market, optimistically seeking to enjoy a share of such successes. In 2012, Kickstarter hosted 90,000 projects, received $516bil in pledges, and hosted 21 campaigns that each raised over $1mil. Not only did they lead the crowd funding pack, but by their successes alone, enticed many newcomers to the market to try their luck as platform operators.

Many question whether the current growth being enjoyed by crowd funding will be sustainable. The imminent introduction of Investment Crowd Funding won’t just see the continued incline in the curve, but a whole new step change, seeing a greater level of growth than ever witnessed before. With $300bil estimated to come on line for small business in the US in the first year of investment crowd funding, such unprecedented growth will continue as other countries mimic the US experience and similar legislation is subsequently brought into play in many countries around the world in the years to follow.

But why is it that crowd funding is enjoying such phenomenal growth in a time then other industries and entire economies are struggling to survive? Perhaps the answer is found within the question.

Crowd funding offers a solution to the underlying need for funding in a time when there is a decreasing amount of ready capital. Banks are becoming increasingly risk averse, and governments are needing to tighten fiscal policy in line with efforts to balance their national budget. Social media has connected people like never before, making the world a smaller, more intimate place where everyone is connected to everyone else through the click of a mouse. Crowd funding offers the true democratisation of funding, allocating money to where the crowd feels it should best, rather than where review panels dictate or where governments allocate. Crowd funding may well be the next iteration of social media. To date people have been able to LIKE another person by giving them the thumbs up, but now they can like them with their wallets, and become true followers of the project creator and their endeavours.

Crowd funding continues to grow and to demonstrate that it is the right thing, at the right time, and delivered in the right way through the power of social media. May it long continue to ride the perfect storm of need, social awareness, and the power of the internet.

Posted on March 11, 2013 By iPledg With 0 comments

Crowd Funding – Revisiting Your Campaign with 20-20 Hindsight

final logo new small-01In crowd funding there are no losers. Sure, victory is sweet for those who meet (or exceed) their funding target first time around. But there are the spoils of war, even for those who have seemingly lost the battle. A campaign that does not meet its target comes with many lessons, and when these learnings are applied to the old adage of “If at first you don’t succeed….” the second bite of the cherry can be sweeter, and more rewarding, than the first attempt could have ever hoped to have been.

The holy trinity for the success of any crowd funding campaign is made up of rewards, project description, and promotion. Get one of these wrong or neglect to include one of these, and it has the same effect of omitting a key ingredient when making a cake – the result is pretty unpalatable. Often, a failed campaign is like a taste test, and a keen sense of taste will quickly identify what is the missing ingredient.

The most common piece of the puzzle that project creators get wrong is that of rewards. When creating the rewards, a project creator really needs to ask “would I be moved to pledge to get one of these? Are the rewards enticing? Are the rewards good value for money? Are there a number of rewards, catering for those that want to just pledge a little, through to those who might want to pledge a lot?” Well worded campaigns with a lot of promotion can be let down when they fail to underpin their efforts with very “soft” rewards like a hug or a certificate – these are great rewards for charitable campaigns, but don’t cause a commercial initiative to get the funding they need. The best campaigns offer a great buy, spectacular value for money, or an experience that the recipient will remember for a lifetime.

A cake made with the sweetest of sugar will still fall flat if the other ingredients are not added in the right ratio. A project description of a single paragraph does little to gain buy-in from the crowd. A project description is the skeleton around which your campaign is built. It defines your campaign, gives it substance, and engages (and motivates) the crowd. A video in your project description shows your passion to the crowd. The text then tells them in more detail about you, your team, and the goal you hope to fund. The inclusion of pictures will help build the emotion, and develop a greater bond with the reader (hopefully soon to be the supporter). And please don’t forget to include information about what you plan to do with the funds raised.

Imagine you knew the greatest news in the world. What news would it be if you told no one? The answer is, it wouldn’t be news at all – it would simply be a secret. Similarly, you could have the best campaign in the world, with wonderful rewards and a well worded outline with a really engaging short video. But if you don’t tell anyone about it, what value do you think your campaign holds? Often we see great campaigns that fail to raise the funding they need, simply because the project creator has done nothing (or very little) to tell the world of their quest. Most successful project creators never miss an opportunity to tell the world of their plans and efforts.

So when a project creator falls short the first time, it is usually because they have missed one (or more) of the key ingredients to crowd funding success. Reviewing, taking stock, and going again a second time often leads to greater levels of success than the first time around. You have already won the admiration of the crowd. You are able to make a new start with a crowd who you know will support you, who are familiar with you, and know all about crowd funding. Ask them why you may have missed out first time around (and this will further engage them), and ask your crowd funding platform as to their suggestions.

With a little experience and a lot of will to go again, crowd funding may often bare greater success second time around.

Posted on March 5, 2013 By iPledg With 0 comments

Crowd funding – Not Just a Matter of Pre-Sales like the Coupon Sites

final logo new small-01In raising funds for a project, making pre-sales or taking forward orders has been a way of getting in the money needed. In raising funds to make production runs, to start marketing campaigns, to bring in skills and knowledge to help monetise the concept, or to undertake any matter of commercialisation initiatives, coupon sites offer a quick hit but at a high cost given the discounts that must be offered as well as site fees. But now crowd funding not only offers a greater return, but a deeper and longer term relationship with a more engaged and supportive crowd.

Those who back crowd funding campaigns have been shown to be far more involved than those who simply pick up a bargain through coupon sites. They spread the word to their networks (and beyond), using social media and other methods to tell the world of the projects they have supported. They don’t just buy a bargain, but they by in to the venture or project, becoming advocates for the campaign. For them it is not a matter of making a simple purchase, but gaining a vested interest in the product, the project, and the project creator’s success.

Those that support crowd funding campaigns are not merely customers. They don’t walk away from the sale satisfied with simply having made a purchase as a one-off interaction with the project creator. They are believers, the first followers, and mavens for the campaign and the project. They are the ones who don’t just say they LIKE you with a thumbs-up symbol, but like you by reaching into their wallets. They are more than satisfied customers – they are enthusiastic advocates who buy in, body and soul. They haven’t just made a purchase from a early stage company, but actually played a part in helping it get started – a badge they were loudly and with pride.

For the project creator, crowd funding offers an option that doesn’t involve the level of discounting that they have to give away on coupon sites. With the huge discounts they need to give to punters on discount sites, as well as the high fees that must be paid to site operators, the project creator must sell huge volumes to raise the money they need to fund their projects. Crowd funding offers them a low cost of raising capital, putting much more directly back into their pocket.

With crowd funding campaigns typically running for anywhere from 30 to 120 days, there is a longer buy-in period for the crowd to get to know about the campaign. Coupon sites only give the public a matter of hours, or a couple of days to take advantage of a price pointed offer, but a crowd funding campaign lets the crowd build a real relationship which leads to far deeper and longer lasting engagement with the project creator.

A crowd funding campaign offers the project creator far greater control over their own destiny than a campaign on coupon sites. Through crowd funding, the project creator is able to establish a direct line of communication and have dialogue with their fan base, whereas coupon sites tend to become the face of the product. Coupon sites do not allow for any intimate connection between the project creator,   the product, and the fan base, and this is the main reason why campaigns on coupon sites offer little or no residual value to project creators.

Coupon sites offer little more than a short, sharp hit during which the project creator has no interaction with the audience, and for which they have to give away a lion’s share of the margin. Is it then any wonder why crowd funding is the world’s fastest growing form of e-commerce, offering the project creator not only a low cost method of raising the funds they require, but generating the most valuable asset of any project or start-up – an engaged audience to accompany them for the life of their journey.

Posted on February 24, 2013 By iPledg With 0 comments

Crowd Funding – Opening New Doors for Indigenous Causes

Indigenous communities around the world are faced with a greater number of challenges than ever before as governments globally struggle with funding in a post GFC environment. But, as ever, necessity continues to be the mother of all new initiatives, and the opportunity for indigenous causes to raise the dollars they so badly need may well lie in crowd funding.

As government coffers tighten and grant funding contracts, communities seek new and innovative methods to raise the capital they need to fund farming projects, employment programs, cultural initiatives, art studios, and infrastructure schemes. To be heard, fund raising programs need to be different, or communicated to the crowd in a manner unlike the traditional fund raising campaigns. Crowd funding, whilst being the fastest growing form of e-commerce on the planet, still represents a new and exciting way to stand out from the other organisations eagerly seeking community support and funding through more traditional methods.

Indigenous campaigns by their very nature usually have a story to tell, and a passion around their campaign, making for a great project description. This is the first ingredient of a robust funding campaign. The next is a short video or pictures, images that tell a story within themselves, and fascinate the reader or prospective project supporter. Finally, there are the rewards. They need to be creative and sought after, enticing people to get involved and pledge their support. A simple entry-level reward could be an emailed picture with a letter of thanks, stepping up to a sketch personally drawn for larger pledges. Small artwork can be used as medium tiers of support, with larger pieces or even artifacts used as a way of saying thanks for larger pledges. A recording of a performance with some personal touches recognising the project supporter would also be well received. Using the internet can also help get rewards out there, by way of a webinar-like performance or story-telling for selected audiences who have pledged their support. Rewards for really large pledges (from perhaps corporate sponsors) could be a performance of indigenous dance or music at a particular function.

Once the campaign has been established with a well worded description, a short video and some pictures, and some carefully selected rewards, it is a matter of going about and engaging a fascinated and willing broader community beyond that of the community who are actually seeking the funding. Social media and blogging are great ways to get the word out, not only by sending out information about the campaign, but asking others to spread the word. There is also the traditional media, hungry for stories about something new or different, and what could be more unique than an indigenous community using new technology like crowd funding to get the word out to a global community.

But perhaps the biggest benefit offered by crowd funding is the ability to engage the crowd, not just for a one-off donation, but for ongoing involvement and support. Crowd funding gets the audience to come along for the journey, and to become an ongoing part of the solution. It is a great way to build a community around the ongoing needs of the indigenous, and to assist with the development of sustainable programs to assist across a range of needs.

Posted on February 19, 2013 By iPledg With 0 comments

Crowd Funding – Real Governance of Disaster Assistance Handed Back to the Community

In times of flood, fire, tsunami and other natural and man-made disasters, the broader community is called upon to give to the relief effort. But much of the “effort” to be initiated is undefined, and the progress of fund raising for this effort is largely withheld from the public. Crowd funding now offers the crowd the ability to direct their funding to relief packages that they feel most passionate about, whether it be rescuing animals, addressing the personal human toll, or projects to fix infrastructure.

For many who support relief programs, they give generously, but they do not know how their money is allocated. If we take the recent Bundaberg Floods, there were numerous flood relief appeals run by government, charitable, and private organisations. Most of these were fairly generic in their approach, with the public asked to give to flood disaster relief rather than specific remediation projects. Would it not be more engaging to have projects with which the public could better relate? Surely if projects were broken down into categories that resonate with the passion of the giving public, the public would be more engaged to give and to become advocates for the campaign.

Crowd funding not only breaks down the relief effort into projects, but also allows the public to see how fund raising is going against the requirements to fund the specific initiative. Such transparency would allow people to see how fund raising is progressing to rehouse displaced families, or rebuild local schools. Their fervour could be piqued to push for the last few remaining dollars required to clean certain houses, o r buy the effected school the new books they need. The public is empowered and engaged to promote the funding campaign to their networks as the pressure (or excitement) mounts to raise the final dollars required to meet the target within the funding timeframe.

Crowd funding platforms such as Queensland-based iPledg makes it possible for those seeking funding for disaster relief to engage the crowd by raising money for specific projects. The crowd can then give to the campaign that best touches their heart. The crowd can watch how the campaign progresses during the funding campaign, and get involved by further promoting “their” campaign to networks on social media or email databases. It is true direct involvement and engagement.

Project creators with their specific disaster relief campaigns also become more accountable. Relief projects are properly costed, and the crowd engaged to raise precisely the monies required to make the project happen (although it is still possible for campaigns to be overfunded if the crowd feels it is warranted). The monies raised are then spent where they need to be, and where the crowd has wanted it to be spent, rather than disappearing into an unaccounted-for pot of funds. Monies are not loosely allocated as determined by administrators, but right from the start the crowd has a say in what relief projects will actually initiated simply by the projects they support. It is real governance of the community by the community.

Truly global sites like iPledg allow for broader engagement, with the need for assistance being able to be spread to a worldwide audience more easily, and enabling a connection with anyone anywhere in the world to support a campaign specific to their interests.

Crowd funding now presents a wonderful and powerful opportunity for funding specific funding relief programs, with transparency and accountability that engages a caring public and allows them greater ownership and involvement in helping communities get back on their feet – more quickly, more effectively , and with greater involvement from an engaged crowd.

Posted on February 10, 2013 By iPledg With 0 comments

Raising Capital for Entrepreneurs and Start-ups While We Wait for Investment Crowd Funding

2013 was earmarked as the Year of The Entrepreneur. Back in April 2012, President Obama signed off on the JOBS Act, paving the way for investment crowd funding to see in the New Year, bringing with it an estimated $300bil in funding for new and small business, all without any impost on government. Much of the world, with their laws pretty much prohibiting investment crowd funding, was taking their place on the sidelines, ready to watch it all unfold, with plans to base their changes on what emerged. But with the SEC more focused on the Fiscal Cliff, the introduction of Investment Crowd Funding stalled, leaving many to question “what now for small business and start-ups?”

Further confusion was created in some parts of the world as regulators, keen to reign in the activities of over-anxious project creators and platform operators, announced that until investment crowd funding came into local law, crowd funding could not be used by small business or start-ups in their part of the world to raise capital required for commercialisation or growth of their business.

Whilst it is true that in many parts of the world, crowd funding cannot be used to offer investment, equity, financial return, or securities as rewards to those who pledge their support, small business and start-ups can very successfully and very legitimately use crowd funding to raise the funding they require. And with the stalling of investment crowd funding in the USA, it is more poignant than ever that the pledge model of crowd funding can be and is being used to raise capital quickly and relatively easily.

Astute business owners and entrepreneurs have realised that the pledge model of crowd funding offers them an avenue of raising funds that does not involve taking on loans that need to be repaid, or the surrender of equity in their company or idea. Crowd funding, in its current format, allows for owners of small business and start-ups to engage the crowd, to share their passion, and to build a following. It is not merely a case of making pre-sales to customers who seek a bargain. It is about building a following, and a loyal band of “fans” that are not just there for a fleeting moment, but now become part of the company, its success and its growth.

Without offering equity, businesses are able to offer cool rewards to those who pledge, often making these rewards available for pledges far less than the face value of the inducement on offer. But it is also about telling a story about the team, the product or service they hope to deliver, and the objective they hope to achieve (the reason why they need the funding). If there is a greater good or a problem that will be solved for the community by the project being achieved, then that adds more weight to the campaign.

So while many stand with crossed arms, tapping their foot, and impatiently awaiting the next move of the SEC with regards to investment crowd funding, others are getting on with the business of doing business – all funded by crowd funding used in a the manner that is currently permissible by law. And as long as entrepreneurs and start-ups stay away from offering equity or financial returns to those who pledge their support, crowd funding as it currently stands offers a great way to fund enterprise and initiative.

Posted on February 3, 2013 By iPledg With 0 comments

Crowd Funding – Making Us All Philanthropic

Philanthropy is something that has long been associated with the wealthy. The masses were largely excluded from being called “Philanthropists” as it was a term reserved for the “Haves” who would do their bit to support the plight of the “Have-nots”. But now, through crowd funding, philanthropy is in reach of everyone. Crowd funding enables us all to easily review and choose the causes we wish to support, to pledge our assistance (no matter how small) through the micro-finance payment gateway, and to engage with the groups we fund.

The key ingredients of crowd funding are recognised as the next iteration of social media, the ability to transfer funds quickly and at low cost through international mirco-finance, and the ability to build tribes, all against a backdrop of relatively tough economic times. These are then easily translated into the ways in which all of us can now become philanthropic and use crowd funding to “spread the love”.

Charities, community groups, and causes of all sorts are starting to realise the ability for crowd funding campaigns to help them cut through the noise and stand out from the crowd of people searching for community support. Moreso, the realisation that such a campaign is so easily communicated to a fan-base through social media makes crowd funding an effective tool for organisations that are resource poor but rich in need.

“The crowd” have become battle hardened against the invasion of door-knockers, tin-rattlers, and cold-callers who invade personal space in the most inopportune time. The crowd now can look at which causes they wish to support, to review their story of need, and pledge their assistance at a time and in a manner that best suits them. Through the ability to send money over the internet without the previously high transfer fees makes it easy for people to send small amounts, regularly, and support people and groups in need with as little as a couple of dollars. Effectively, everyone now has the ability to become a philanthropist, with the ability to pledge support with a click of their mouse.

Donating and sponsoring are feel-good activities. People love to belong, and to be seen as being part of something. Your “entry fee” to join the club or become one of the tribe of supporters is now as little as you want it to be. You can pledge a couple of dollars (or very much more) and you too become a philanthropist, and part of the movement. Pledging to crowd funding campaigns makes it easy for the project creator to publicly thank their supporters and dish out public kudos, and spread the word though social media networks. Likewise, those who pledge their support can tell their networks of what they have done and who they are now supporting. The drums start to beat and the message starts to spread, drawing more people in and soon a movement is created (if you want to see a great example of this, check out this video by clicking here).

So we now have the ability to go from mere mortals to philanthropists. Any one of us can show our humanitarian side, and extend any generosity we can afford and support a cause for as little as a couple of dollars. Through crowd funding, we can review and support any cause when it suits, in a manner that is most comfortable to us. No longer just the domain of the rich and wealthy, we all have the ability to become a patron of the causes that touch our hearts.

Crowd funding – proving to be a wonderful mechanism for everyone to support the growth and work of the greater good.

Posted on January 28, 2013 By iPledg With 0 comments

Crowd Funding – The Importance of a Truly Global Platform

Over the past two years we have seen some emerging giants in crowd funding platforms. But the success of a crowd funding campaign not necessarily linked to the size of the platform. It is about the ease by which the project creator can engage with the crowd. Some projects on larger sites are lost in the noise and clutter of the sheer volume on these monolithic sites. Other large sites make it hard for foreign projects to list or for project supporters from abroad to pledge. It is the emerging global platforms that really offer much to project creators.

A crowd funding platforms offers project creators a place where they can post their projects and invite friends, fans, and potential followers to pledge their support to the campaign. The campaign page (with its own special place on the internet) must be easily found by the people invited through the marketing and promotional activities of the project creator. A common complaint of projects on larger sites it that they are often feel like a lone person in rush hour on the New York subway, pretty much lost in the crowd, and unable to stand out from the masses. Their desire to participate in an uncluttered and clean environment, on a site where they can be more readily found, is satisfied by young, emerging sites like iPledg.

The responsiveness of the smaller sites which pride themselves on being fast, flexible and relevant is another feature that is being sought after and appreciated by project creators. This is especially so by sites that have broken down the restrictive barriers on some of the larger sites that only allow “locals” to create or pledge to projects, limiting activity to those with a local bank account or social security number. Again, it is smaller sites like iPledg that have recognised that we are all part of a global community, and (as such) project creators should be able to easily reach potential supporters from all around the world. People from all around the world should be unrestricted from posting their projects on the site and, similarly, such projects should be able to take pledges from all around the world, thus dramatically opening up their earning potential.

With a new year rapidly dawning, many more people are waking up to the benefits of crowd funding, but they want to be heard, to be noticed, and do not want to be lost in the crowd. They recognise we are part of a global community, and don’t want obstacles and barriers in the way of their project engaging with a willing crowd. It is the astute project creator who has realised that for a site to work well for them, it doesn’t necessarily have to big, to be based in the USA, and to have millions of projects on the site at a time. To the contrary, it is the smaller, emerging sites,  that may just offer them the best chance of being heard and, ultimately, crowd funding success.

Posted on January 20, 2013 By iPledg With 0 comments

Crowd Funding – The Window of Opportunity for Charities

Many sectors of the world economy are getting tighter. There is seemingly less cash about for charitable organisations, and more people in need of the work and relief these organisations provide. As budgets become increasingly stretched, charities struggle for new ways to be heard above the noise of the crowd, to get some form of cut-through, and to connect with the philanthropic among us. They seek new ways to engage and to catch the attention of those who share their passion. Surely then the answer, one of the new ways for them to connect, is through crowd funding.

Crowd funding represents a great way for charities to tell their story. Through one centralised portal, charities are able to articulate their story, to present their short video, and display pictures about their cause, mission and the project for which they are conducting their funding campaign. It outlines their needs, the goal, and simplifies the manner in which supporters can get on board. A crowd funding campaign undertaken by a charity can also give further inducements or incidental enticements, giving people even more reason to support the campaign beyond that of simply sharing the passion of the project creator**.

Crowd funding offers charities a way to take followers and fans on social media to the next level. Now, supporters cannot only say they “like” you, but can take their connection and involvement further by liking you with their wallets. Crowd funding ties perfectly into social media presence, as social media platforms are the number one feeder for crowd funding campaigns. Once charities have their fan base established, the process of leading into a crowd funding campaign is quite simple and almost a natural progression from the moral support they give on the social media platform.

A legacy of the structure of crowd funding campaigns is the transparency and the ”real-time” view that supporters receive. Crowd funding campaigns give supporters a chance to see more clearly where their funding is going, and how the campaign is progressing towards its goal. A common complaint of those who give to charities is they do not see where their money is going, and what is being achieved. A campaign on a crowd funding platform such as iPledg has a clear project definition, a purpose and a goal. Supporters can see in real time how funding is progressing in line with the target and time-frame. They can post comments and interact with other supporters of the campaign and of the cause. In addition, project creators are able to liaise and post comments about the progress of the campaign, what’s happening behind the scenes, and when the campaign is finally complete, they can report as to how the actual project (funded by the campaign) is progressing.

Given that crowd funding is a relatively new phenomenon, charities are able to use it as a point of difference for now. There is a short window of opportunity during which charities that are the early adopters have the ability to stand out from the crowd and take the wonderful new world of crowd funding to their audience, engage them, and get greater buy-in to the causes and projects that need funding. Once it becomes a mainstream form of fund-raising for charities (and we believe in time it will), crowd funding will be as accepted as the door-knockers, tin-shakers and raffle ticket sellers are today.

 

** Charities with DGR status are tightly governed by laws as to gifts they can give to those who pledge. As such they should seek further advice from their crowd funding platform before offering such inducements.

Posted on January 13, 2013 By iPledg With 0 comments

Crowd Funding – The Ultimate Litmus Test

Most new commercial ventures are based around the conceptual – a great idea that has been fleshed out to varying degrees, whether it be merely an articulation of the concept, working diagrams, or (in a minimal amount of cases) proof of concept trials. But when entrepreneurs, inventors and project creators go to the market to seek investment, they do so seeking support for blue sky concepts. Pledge model Crowd Funding offers project creators the ability to demonstrate social proof and real interest from the crowd, and this becomes quite a powerful platform on which to attract further investment.

Rather than going to the market cold, offering little more than a great idea, those that have implemented a successful crowd funding campaign have the social proof to then go to the market with an almost proven concept. Consider the inventors of the Tik Tok Watch Kits who were initially told by potential distributors that their product would not really be attractive to the market, only to have over 13,000 backers when they subsequently ran their crowd funding campaign.

Amassing backers is a solid attestation as to the potential market interest in the product. Rather than collecting well-intended expressions of interest, project backers provide far more than good intent. Project backers back their interest with their wallets, providing potential future investors an indication of the true and sincere market interest of the product, business or concept.

With governments experiencing ever-tightening budgets, crowd funding may provide a great way for them to qualify businesses and start-ups for the grant funding being applied for. Currently, grant applicants must convince the government body of the proposed merits of the project for which they require funding. Most of the application is based on forward projections – market potential, export prospects, etc, but little is given to the market proof of the project to date. If governments were to make crowd funding a part of the application process, they could potentially qualify applicants as to the proven market interest, as well as obtain feedback from those who do provide funding to the campaign. In addition, pressure could be removed from the government grant pool, as crowd funding could provide part of the funding sought by grant applicants, meaning that each one would need less grant funding, allowing for the available grant funding to go further and help more applicants.

Crowd funding campaigns, once successfully executed, could provide more comfort to potential angel funding, or funding by both sophisticated and general mum-and-dad investors. Again, it is all about proof, about the confidence of the investor not having to be the first follower, but for them to see that others have already backed the concept financially, to see interest in the product, business or concept. A successfully run crowd funding campaign gives the potential investor the comfort that there are others willing to back the venture, that there is a market for the endeavour, and that investing is less of a gamble and more of a sensible decision to back a concept with momentum and a proven following.

As the new year dawns, and crowd funding becomes the fastest growing trend for 2013 in the finance world, sites like iPledg may well become the initial test portal for not only raising seed funding, but for the proof required to obtain considerably more funding from the broader investment community.

Posted on January 6, 2013 By iPledg With 0 comments

Crowd Funding – Projecting Forward to 2013

2012 has seen an upsurge in the number of crowd funding platforms and an increase in the general awareness of this dynamic form of e-commerce. The million dollar glass ceiling that we struggled to burst through in previous years, is now the ceiling we dance on as we continue to push the envelope and add another zero to the targets that can be achieved. Governments have now signed off on legislation that will not only bring about changes in the USA, but will see a seismic shift in funding for small business around the world. But as the sun sets on 2012, we start to look towards 2013 and consider where the world of crowd funding will lead us.

Making projections and predictions is always fraught with the danger of being proven embarrassingly wrong – Just ask the hapless Mayans who, in a couple of weeks, will be turning in their graves from the embarrassment of mis-forecasting the end of the world (it’s safe for me to say that, because if they are indeed right, there will be no-one around to prove me wrong!).

What will the New Year bring?

In the area of pledge-model crowd funding, the big platforms will continue to grow as awareness increases and success is sold off success. Juggernauts like Kickstarter have the critical mass and momentum to keep growing and keep going, leading the industry. They have the expertise, the ingenuity to continue to develop and implement positive change, and the financial reserves to reinvest in their market awareness. Save for a derailment due to lack of probity or any form of misadventure, the big will continue to get bigger.

Smaller platforms, on the other hand, will struggle. The attraction of starting a platform to cash in on the crowd funding phenomenon will be quickly met by the realisation that it is a bit more difficult on than inside than it appears from the outside. Engagement and the challenge to be heard in an increasingly noisy marketplace will see many of the smaller and emerging crowd funding platforms will die off. There will always be new players to enter the market, but the increase in new entrants will be less than those early adopters who will exit and seek other forms of business. The growth (in number of platforms) will still continue, albeit at a slower pace. Growth, from the perspective of funds raised on the other hand, will continue to increase in 2013.

As economic pressures increase in a post GFC economy, and many feel the pinch of collapses in Europe as well as “the second wave”, the need for alternative sources of funding will see a fertile environment on which CF will flourish. Artistic types, commercial entities from start-ups to SMEs to mature businesses with new projects, charities and community groups will all continue to find crowd funding as a way to stand out, to engage and to raise required funding. Given that crowd funding is still a relatively new form of e-commerce, those that engage will still manage to stand out from the crowd and attract attention for being different and relatively unique.

The JOBS Act and the introduction of Crowdfund Investment in the USA will be delayed past their anticipated January 1 start, but will make a significant impact when it does come into play, not just in the USA but globally. With an expected $300bil in funding coming online in the USA through Crowdfund Investment, it will definitely be The Year of the Entrepreneur as small business and start-ups will benefit from community funding. Exciting times ahead, but many other countries around the world will watch with interest, and assess the benefits of Crowdfund Investment. Governments around the world are eager to see if indeed there is this shift from reliance on government funding for those who need capital now being able to turn to their community for the monies they need. Around the world, regulators will, however, also see areas in which they can modify to further mitigate risk of project supporters (and, I dare say, how they can tax and licence the industry in their country to generate income from this growing form of ecommerce).

2012 will be remembered as the year in which crowd funding truly blossomed. 2013 promises to be a year in which the flowering will continue, and the first fruits will become edible. How bountiful and sweet that fruit turns out to be is yet to be seen. Stay tuned – we are in for interesting times!

Posted on December 9, 2012 By iPledg With 0 comments

Crowd Funding – You Are the “Shirtless Dancing Guy”

21% of crowd funding campaigns fail to raise even a single dollar. One in five project creators just don’t seem to sync with the crowd, despite some of these having great project descriptions and fantastic rewards. How you engage the crowd, and (more importantly) how you bring on your first followers is key to achieving your funding targets and meeting (or exceeding) your crowd funding goals.

It is a well documented fact that strangers are unlikely to pledge their support to a crowd funding campaign until it reaches at least 25% of its funding target. The importance of engaging the crowd and doing so early cannot be overstated. A project creator needs to ensure that their “nearest and dearest” (family, friends, neighbours, workmates, etc) are primed before the campaign starts, ready to jump on board as soon as the campaign goes live, giving it momentum right from the start, and putting the  campaign onto the radar of strangers very early in its funding timeframe.

Over 2 million people are familiar with The Shirtless Dancing Guy – the You Tube video that explains so graphically (and in a fun way) in less than 3 minutes how to create a movement, and engage your first followers. The lessons are simple and so very true when the parallels to crowd funding are explored:-

  • Make yourself easy to follow (your project description needs to be clear and simple), and a video helps to convey your message
  • Engage your first follower early, as they will show others how to follow, and just how easy it is to do so
  • Embrace your first followers as an integral part of your campaign, and ensure that people see it is as much about the followers as it is about the campaign itself
  • Underscoring the importance of getting to 25% of your target before strangers will jump on board, you need to start to build a crowd (of followers), as a crowd is news. A movement must be public
  • Outsiders need to see more than just the leader (or project creator). Everyone needs to see the followers, because new followers emulate followers, not the project creator
  • As more people jump on board, it is no longer risky to follow. If they were on the fence before, there is no reason not to jump in once momentum has reached its tipping point
  • Once momentum is achieved, followers will be part of the “in crowd” once they follow. In fact, there becomes a point where they will follow purely so that they don’t get left behind

Just like when we were kids and headed off to our favourite swimming hole. We would all stand on the side, urging each other to jump in, with the promise of following close behind. Not until someone actually jumped in did the swimming actually begin. And not until a few of the gang were actually in the water was it no longer cool to be left standing on the edge, and everyone was in. The trick was to get everyone primed on their way to the river so that we didn’t waste too much time standing on the rocks. Otherwise swim time was over with people left standing on the rocks when it was time to go home.

As with any movement, a crowd funding campaign involves the early engagement (or even priming beforehand) of advocates and “super-fans” – those that will jump on board early, and show others it is alright to do so, as well as validate your campaign. It is the first followers that are very much the key to your crowd funding success.

Posted on December 3, 2012 By iPledg With 0 comments

Crowd Funding – Revenue for Regional Rescue

It’s a common issue. The regional centres being overlooked and overshadowed by “the big smoke”. The big cities get the limelight, the attention, and (worst of all) the funding when it comes to governments dishing out the dollars in their ever tightening budgets. But now there is a way for economic development to get the stimulus and financing it needs, and for all sorts of initiatives in regional areas to secure funding – the answer is Crowd Funding.

Crowd funding, with its world-wide reach, allows for people from small communities to be as active in the global community as someone sitting in New York, London, or Rome. The “information super highway” doesn’t isolate people in regional areas in the same way that larger governments do, so everyone is equal in the eyes of “the crowd”. Whilst the sheer weight of numbers in regional centres is lighter than that of their big city counterparts, anyone anywhere can post their project onto the internet and catch the attention and support of every internet user on the planet. This alone means that typical barriers of operating in regions centres are now eliminated, and regional folk are now engaged on a  level playing field.

Artistic types as well as entrepreneurs are feeling their creativity stifled as government grants and funding grants dry up in the post GFC world. Community groups and sporting clubs constantly need to come up with new and creative methods to fill the void left behind by local government cutbacks in community spending. And charities, with causes that are not time neutral and requirements that never rest, need to find new ways to fund raise that will allow them to stand out from the crowd and engage a wider audience, usually much larger than just the local regional community.

Through a well told story, some carefully selected yet highly sought-after rewards, and a well executed campaign to communicate the message to a broad (if not global) audience, crowd funding becomes the “great leveller”, making the regional project as real and relevant as the projects that originate from the major cities. Local governments just need to embrace this technology and this form of funding, and ensure that their communities are aware that such an option exists.

Fortunately, an increasing number of progressive and forward thinking local governments have started to recognise the benefits of crowd funding. As they feel the ever slowing trickle of funds coming down from national and state government budgets, they are looking for workable methods of getting the funding for the constituents they serve. While the increasing demands of the community are outstripping the supply of funds with which to meet such requests, leading local governments are suggesting crowd funding platforms like iPledg to local associations looking for funding, and as another option to community groups who have been unsuccessful in obtaining funding through traditional government avenues.

Some regional government bodies are looking to leverage off limited community funding and run with the social proof that crowd funding brings. They are opting to form a pseudo “Private / Public Partnership” whereby the government themselves conducts a crowd funding campaign against which they can gauge the projects of which their constituents are most supportive, and then match funding for projects that have the most social proof (a smart move, as it makes the government appear to be supportive of the most popular projects and of those that have the greatest weight of community support).

No longer do regional communities need to feel isolated and overlooked in preference for their capital city cousins. Crowd funding allows for them to tap into the global audience and receive the support from the crowd, wherever they may be.

Posted on November 26, 2012 By iPledg With 0 comments

Charities Riding the Wave of Christmas Generosity in the Lead Up To the Festive Period

It is this time of year when our awareness is heightened of charities and the work they do. It is all to do with our shift in focus to “giving” rather than the mundane toil of daily life that consumes us during the other 11 months of the year. But charities see this time of year as that in which their need for funding is under the most pressure. Crowd funding now presents charities with a real and relevant way to stand out from the crowd and raise the money they need for their work in the lead up to and over the festive period.

Charities that work with community or family support programs are under pressure to deliver a wonderful Christmas to the communities they serve. Delivering presents, food packages, and the bare necessities, as well as holding events to which the lonely or needy are invited all cost money, and put a great strain on the resources of charities.

Groups and organisations that offer care and respite, or conduct research into cures and solutions realise that their plight does not sleep over the Christmas break. They too need to continue to fund their work over a time when the regular supporters of their cause are turning their attentions to presents and turkeys rather than the needs of the charities that have been well supported at other times of year.

And it’s not just the lead up to the festive period, or the festive period itself, but there is a real need that charities and community groups have for funding immediately after the festive period. Their work usually goes to supporting families, individuals and communities after the festive period when people can feel the most alone, isolated, or desperate.

Now crowd funding offers these great organisations a new way of raising funds in a manner that is proven, fast, and does not require an army of door knockers or resources to draw on the communities that are able to support them. A simple campaign that taps into the passion of the community, offering them simply the reward of being part of making a difference, and the chance to feel good for doing so, can raise surprisingly large amounts of money to fund charitable initiatives.

Whilst Christmas comes but once a year, crowd funding offers charities not just a one-off opportunity for funding their projects and events, but can well become part of their overall fund raising strategy. Through well articulated campaigns, communicated to the fans, followers and supporters of the cause, crowd funding promises to be a way for charities to have their message heard, to stand out from the crowd, and to use limited resources to raise their much needed funding.

Posted on November 20, 2012 By iPledg With 0 comments

Crowd Funding – The (Not So) Secret Steps to Success For Million Dollar Projects

Back in 2009, Crowd Funding really started to gain the early attention of the first followers. Small projects were able to benefit by using crowd funding to raise early stage funding, primarily for artistic and creative projects. Over the next 3 years, hitting the elusive $1mil mark for a crowd funding campaign was a pipe dream, akin to pre-1960s efforts to land on the moon. But since the start of 2012, there have been over a dozen campaigns that have burst through the million dollar ceiling, and they have all exercised similar initiatives in achieving their success.

Let’s study the common stats, and benefit by the learnings…..

  •  55% have been in the area of Games, with the other successful categories being design, technology, music and comics
  • 93% of these successful campaigns had a video, and the video was short and sharp, running for an average of just under 4 minutes
  • Further embracing the concept of “short and sharp”, on average these campaigns ran for around 30 days
  • The importance of a good sized audience cannot be underestimated, and in the case of these large, successful campaigns, the average number of Twitter followers was just under 15,000 and the average number of Facebook fans just over 17,000. It should be noted that when the campaigns were commenced, these following was nowhere near these numbers, but grew as the word was spread and they successfully engaged with the crowd. However, they did start with a healthy number of followers to whom the message was communicated, and who then passed on the message to their networks and so on.
  • Interestingly, these larger projects offered, on average, 14 tiers of reward levels. They started with very affordable “entry level” rewards, and incorporated quite a number of “stretch goals” (really high priced rewards to stretch the project supporters who really wanted to kick the can in a big way)
  • Backlinks, referrals and endorsements played a big part in their success. On average, each project had 13 external backlinks to their project page, and these backlinks were usually placed in articles about the experience and qualifications of the project creator, not just the dollars being sought. In most cases, the articles containing the backlink were published before the campaign actually launched, and many also took the innovative step of arranging reciprocal endorsements with projects on the same crowd funding platform

Most campaigns succeed or fail even before they go public. Like a top-flight Olympic athlete, success was largely determined by what was done way before taking their position in the starting blocks. The key is to build a following, and to share your story. Show proof to the world that you can do it. Prepare well. Build and engender community spirit around your project and your passion, and this enthusiasm will spread.

But not only was it important to prepare before launch, once live, communication was the key:-

  • Post regular project updates. On average, these successful campaigns posted one update every 1.78 days
  • Get good at answering questions from backers and potential backers. This serves to further engage and to give the answers to many questions that are in the minds of potential supporters, but often not put forward.

And for these highly successful campaigns, the results were quick in coming, and well in excess of their initial expectations –

  • On average, these dozen large projects achieved $470,000 in funding in their first 24 hours
  • Whilst they substantially exceeded their funding goals, almost all of these met their original target within 2 days, and then went on to receive considerable multiples of their original funding target

The learnings are there. The examples have been given. Following these teachings may just give you and your campaign a great shot at not only reaching your target, but achieving multi-million dollar results.

Good luck!!

(With thanks to www.KickstartersHQ.com for the stats)

Posted on November 12, 2012 By iPledg With 0 comments

Crowd Funding – More Powerful Than Any Petition

They say that Money Talks. If this is true, then the collective chatter generated by crowd funding speaks loudly when it comes to indicating the mood or desire of the crowd. Petitions carry the weight of signatures, but a well executed crowd funding campaign carries the weight of collective cooperation involving the masses who are prepared to put their money where previously their signature would go.

Here is something to consider, a case in point as it were. Take the example of your favourite musician, who regularly bypassed your city in favour of the brighter lights of bigger venues. What if you were to contact the promoter, and find out the minimum number of ticket sales it would take to get them to stop in at your town, and play their music for the local fans? You would then be able to crowd fund your favourite musician to play in your city.

Promoters are moved by the constant groundswell of requests for a performer to play in a particular city, but the collection of autographs does little to minimise the risk of the performer playing to half filled venues. A well run crowd funding campaign that meets (and exceeds) the artist’s minimum expectations of a venue is sure to sway their thoughts on popping in to play a few tunes.

The crowd funding of artists to play in your location is a simple one. Fans simply pre-order their tickets to a “gig” proposed by a promoter (or super keen group of fans), which are only charged if a certain threshold is reached and the concert actually occurs. Fans are committed to “pay up” if the threshold is met, but no payment is made until the target is reached and the gig confirmed.

The risk to the promoter is totally mitigated, in that the concert only actually goes ahead if the minimum number of tickets is reached. In this way, the artist or promoter can rightly say they will only visit the city when a certain number of tickets is pre-sold. The fan base can see how sales are going in real time, and they can prompt other fans to get on board to ensure the minimum targets are reached. The fans, in effect, do all the marketing for the artist and the promoter.

So if the people of the Gold Coast wanted an artist like Pink to play in their city, they could simply put up a campaign on the local crowd funding platform, iPledg, and in consultation with the promoter agree that the concert will definitely go ahead on the decided date when the agreed target is reached. The same campaign could be used to pre-sell promotional material, giving the promoter even further confidence that the trip to a previously unscheduled city is well worthwhile.

As has been demonstrated in other parts of the world where crowd funding has been used for exactly this purpose, the hope is that a handful of superfans could take it upon themselves to market the show beyond purchasing the ticket. They’ll have a vested interest in having the tour land in their city.

Crowd Funding in place of a simple petition is a wonderful demonstration of the power of public opinion versus the power of the public purse, something any artist or promoter would be hard pressed to ignore.

Posted on November 5, 2012 By iPledg With 0 comments

Crowd Funding – Tapping into the Blogosphere

Getting supporters to get on board your funding campaign is not just a matter of making a cool video and offering really sought after rewards. It is equally as important to get the word out to the crowd and let them know of what you’re doing and what you’re offering. And perhaps the best way of doing this is by tapping into the Blogosphere.

Crowd funding is not a passive exercise. A project creator needs to be proactive. It involves gathering and engaging your community to spread the word and to get involved by way of any support they can give – feedback, monetary pledges, or just letting the world know of your plans and aspirations. Engaging the crowd can be done in the physical sense (going and seeing them, or at least calling them by phone), or online by way of social media, emails, and blogging. But it is blogging that gives a project creator the ability to really engage online, and to reach out to a broader crowd with greatest effect.

Clever project creators, the ones who achieve the greatest of success, start by making a list of the blogs and communities to whom they can possibly reach out. This is best done before the funding campaign even starts, and sometimes the project creator will start to build a following even before the campaign starts, thus building anticipation and a want to get involved from day one.

Going directly to the editors of blogs can also be a powerful way of getting your message out there and bringing on advocates for your campaign. Editors will have a great deal of influence on the focus and direction of the blog, so getting in touch with them and getting on their good side is paramount to being heard.

Choosing the blog sites can be a mission in itself. The best way to work out which blog sites to include in your list is to go with anyone that has a stake in the message you are trying to convey. If you are conducting an environmentally based campaign, then find any blogs with any sort of environmental focus, as you will be surprised as who will engage. And if you can find any celebrities and famous personalities on these blogs, make sure to address them personally and do what you can to get them on board, as their networks and following are sure to be extensive.

Make sure you build credibility and rapport with them by not only taking an interest in what they have to say, but by showing them what qualifications or experience you have in the area of your project, or what successes you have achieved before. And it’s not so much about asking for money, rather than telling people what they can be part of.

During your crowd funding campaign, the pace will ebb and flow somewhat. Having the list of blog sites that you composed prior to kicking off your campaign will give you areas in which to focus your attention in the quieter times. New “noise” can be generated when revisiting groups regularly with a new angle or approach regarding your project. For example, if your campaign is about saving the elephants, you may talk about how they are endangered, then next time talk about the ivory trade, and then the next time speak of the environmental impacts, and so on.

But the best way to ensure that momentum is maintained during your funding campaign is to ensure that you maintain regular promotional activity, and this includes the blogging that you do. Regular, steady, metered approaches are better than flooding the blogosphere one week, and then doing nothing for days until all momentum is lost and you need to start again from a stationary standpoint.

And for the project creators who don’t feel confident enough about their writing skills to deliver their message in a blog – the answer is simple – be creative! Feel free to exchange a written blog for a cartoon (there are a heap of websites that can help convert your message into a cartoon), or even deliver your message in song. There is also the option of a video blog, where you can simply use your phone to make a 1 minute video with you addressing the screen about what you are doing or what you want from the crowd. Or perhaps even get a friend to write your blog pieces for you, and involve them in spreading the word about your campaign.

But the key to getting the greatest success on blog sites is to first build some momentum from those closest to you. Be sure to engage family and friends and get some pledges from them first. If you can get those who know and love you to start you off, others will be more likely to jump on board and pledge based on the initial credibility and momentum you have created. Keep in mind that people are reluctant to be the first follower, but are likely to jump on board if your campaign can get to (at least) 10 – 20 % shortly after launching.

Posted on October 29, 2012 By iPledg With 0 comments

Crowd Funding – The Crowd Offers You So Much More

The benefits and rewards of a successfully executed crowd funding campaign are well documented. As Owen Laughlin put it so well, “it’s always the idea that starts the money”. Crowd funding can deliver the money to great ideas, but crowd funding can also bring many other benefits by way of collective collaboration and focus as supporters bring so much more than just the funding.

Bringing into play the concepts of crowd sourcing (the close cousin of crowd funding), a cleverly orchestrated and smartly run crowd funding campaign will deliver to the project creator the benefits of open innovation.

Not the least of these is feedback. Project supporters will vote with their wallets. Rewards can be made up of various different product offerings, and these can be used to deliver market research. The crowd will tell you their preferred colours, styles, models and flavours of your offering. In addition, they can assist with critiquing the concept for which the campaign is being run.

The power of a connected crowd and extended networks allows for increased market reach for project creators. Akin to the power of tribal drum beats used to spread a message through the jungle, social media can be used to spread the word of not only the funding campaign, but of the project for which funding is being sought. Thus, when the campaign is (successfully) completed, and the project ready to commence, the market reach for the end product or project is already in place.

Successful campaigns not only deliver cash, they deliver something much stronger – social proof. A campaign which “the many” have backed allows for the project creator to take the project to the market, with evidence that there is indeed a market for the product, and that the market is willing to listen, to engage, and to open their wallets and buy.

And for campaigns that don’t meet their target, there is the added benefit of feedback as to how to do it better next time around. A sympathetic and supportive crowd will always be willing to give their views on what went wrong, and how to do it better next time. Even more importantly, the supporters of the first attempt have usually built sufficient familiarity and trust to pledge their support to a project creator’s second attempt to reach their goal through a subsequent campaign.

The power of the crowd is able to be tapped through the wonderful vehicle of crowd funding. But it’s so much more than about the money – it’s about the community and collective collaboration, the nurturing and support, and the “1+1=3” effect that crowd funding can bring.

Posted on October 22, 2012 By iPledg With 0 comments

Crowd Funding – The Gift That Keeps On Giving

As the old saying goes “Give a man a fish, and you feed him for a day. But teach him how to fish, and you feed him for a lifetime.” The same can be said about the enduring nature of the pledges made to crowd funding projects, and the manner in which such pledges can have a residual effect, from which the project creator (and others) may continue to benefit again and again, over many years.

A classic example of this is a company who came to iPledg recently to discuss a crowd funding solution to a problem that they shared with their client base. This company provides sustainable, price saving and green solutions for the provision of power, heating and lighting. What we came up with delivered results that are potentially nothing short of outstanding.

Their dilemma was that their customers, many of them community groups and charities, could not afford the green power solutions that would deliver continued cost savings over future years, as well as a solution with a greater green footprint, and one that would reduce their carbon foot print.

The solution is crowd funding.

Their charity and community group clients are now offered the solution, along with the funding to achieve implementation. The provider informs their clients that they can save thousands each year on their power bills (and we all know that a saving for a charity means greater deliver of aid or services). And the cost of implementation of the solution is zero! They simply create a project on iPledg and fund the cost of lighting, solar panels, or whatever through the cooperation of the crowd. If it is one thing that most charities and community groups have is a fan base, followers who can be called to action to support sensible initiatives.

The provider now gets the client to crowd fund the cost of installation. So as to take full advantage of the “all or nothing” crowd funding model, they start with a low target (say $5,000) to change over their lighting to an option that will reduce their monthly power bill. This sets the bar low, and any funds raised above this can go to higher targets for more costly projects that will deliver an even greater saving to the charity over time. This is all written into the project description – for example the funding target for the campaign may be $5,000, but the project description might add that if they exceed their target and get to $15,000 they can get another cost saving solution, delivering even greater savings, and so on right up to very large amounts. During the campaign, the crowd is then encouraged to keep going to the next milestone each time, eventually delivering a greater result than initially planned.

So not only does the charity get the benefit of a fully funded campaign, but they get the enduring benefit of cost savings that their project delivers. Imagine the difference to the beneficiaries of the charity, with the charity now having potentially tens of thousands of dollars more in their account to deliver service and aid to their community. So the charity benefits, the community benefits, and the effect of the green solutions delivered by such projects benefits mother earth. And that’s good news for each and every one of us!

Posted on October 16, 2012 By iPledg With 0 comments

Crowdfund Investing – A Seismic Shift in Worldwide Funding For Small Business

President Obama called crowdfund investing “game-changing” when he signed the JOBS Act into law on April 5, 2012. Many in the USA are already calling 2013 ‘the year of the entrepreneur’. This new US law creates a financial vehicle for community financing that the average American can use to invest in entrepreneurs and local businesses they believe in and trust.

Simple quick calculations show that if Americans invest just 1% of their savings via crowdfund investing, this policy change will deliver over $300 billion to the small businesses, which will stimulate entrepreneurship, innovation and job creation. These results are achieved without any US government spending. It’s all good news for those in the US, but the same may not be said for other countries that are slow to move, as this bold move by the US may see a seismic shift in the balance of funding and investors worldwide.

Here’s a potential scenario that must be considered….

January 1, 2013 – the new legislation comes into play in the US. Small businesses in the US turn to this new vehicle to seek funding. The average American starts to invest in businesses that they become familiar with. And the economy starts to bloom Stateside.

Further abroad (say, in Australia) where such free-thinking laws are not in existence, entrepreneurs and innovators who are finding it tough to secure funding locally turn their attention to overseas*. Funding comes in, and ownership goes off shore. Great for the US, but for the country in which the entrepreneur sits, they are facing the potential outpouring of billions of dollars each year until their governments catch up.

President Obama, speaking about crowdfund investing, has been quoted as saying “when we find rules that put an un-necessary burden on business, we will fix them”. His actions surely back the rhetoric, and places the US in good stead as far as small business goes. By addressing the needs of small business, Obama has focused on the key driver of the American economy. With small business representing 99.7% of all companies in the USA today, and with these businesses creating 60 to 80% of all new jobs, no other single piece of legislative change has the potential to drive economic stimulus like the JOBS Act.

In Australian the same can be said about the country’s reliance on small business. Of the (approximately) 2million businesses actively trading in Australia, around 96% were small business, with just 3% being medium-sized and less than 1% considered as large companies. However, architects of Australian fiscal policy prefer to wait a year or two before considering whether to change legislation (like the implementation of the JOBS Act). In the interim, the winners will be the US public, who will be able to invest in and enjoy returns from local and foreign companies. The other winners will be US companies who will be operating in an environment which allows investment from a broad range of locals who know and trust them. In the short term, companies from outside the US will gain by the sudden availability of US funds, but the short term gain will surely give way to longer term losses as the wealth from profits is sent back to Uncle Sam at the expense of the economies in which the profits were generated.

“He who hesitates is lost” – it will only be time that dictates the losses that other countries will feel by not responding as quickly and in as forward thinking a manner as the US with the JOBS Act.

* Currently there are no plans to make Crowdfund investing legal in Australia. For an Australian business to take advantage of the funding made available by the JOBS Act, they will need to register as a US company and satisfy the necessary requirements in doing so.

Posted on October 9, 2012 By iPledg With 0 comments

Crowd Funding – Size Isn’t Everything!

Often we at iPledg are asked – “how much money can I raise with a crowd funding campaign?” Whilst the average funding target for campaigns sits between $3,000 and $30,000, the question of “how big is too big?” is relative to the size of your network, and with how many people you can share your message effectively.

For example, if you want to raise $6,000 but only know 3 people, that is a big target. But if you want to raise $50,000 and you have a database of 100,000 people including everyone in your email address book, everyone you know on social media, and all of the people you can access through blogs and media, then the $50,000 is not as hard a target as the $6,000 target is for the person with an audience of 3.

And if the above theory was ever going to be put to the test, it will be in the coming months with two of the biggest projects ever listed on crowd funding sites in Australia. In the past week , the first $1mil project to be listed in Australia appeared on a local crowd funding site. However, within days, it was upstaged by a project seeking to raise $1.2mil (see http://ipledg.com/l/bme-international). With relevance and with audience all around the world, it will be interesting to see how these succeed over the coming weeks.

All projects need to be worked, and the bigger the project, the more work must be done to engage a broader audience. Promotion must start even before the campaign begins. Rallying support is key to ensuring the campaign jumps out of the blocks, rather than taking time to warm up after the campaign has begun, thus losing time during the campaign timeframe. It is essential that the project gets early traction to catch the attention of “the crowd” and to have potential pledgers emulate the first followers. The industry statistic of projects that hit 30% of their target reaching the funding goal 90% of the time means a $1mil campaign needs to hit $300,000+ pretty quickly in order for it to succeed.

From there, success is all around how well the project description Is put together, how well the rewards engage the crowd, and how well the video captures the attention and the passion of the crowd in a couple of minutes (no longer – otherwise they disengage).

How quickly it can gain traction, how often it is promoted, and how successfully it engages with the crowd remains to be seen. If the message can be delivered to a large audience regularly, and they can be moved to engage, large projects can be successful, as we have already seen in the USA where earlier this year a campaign hit $1mil for the first time, and since that one there have been others, culminating in a successfully funded campaign of $10.2mil

Without diligence, urgency, relentless promotion, such large projects will remain merely aspirational.

Posted on October 1, 2012 By iPledg With 0 comments

Crowd Funding – Linking The Past To The Future

Armies are amassing. These are not armies of war, but armies of support, and they’re your armies. The advent of modern technology, namely email, as well as social media has made it possible for you to build your armies over time. In fact, you already have your army gathered, and they await your command, your direction, and your call to mobilise. And your mission, or your project, is the battle into which you must engage and lead your forces.

Your past is being recorded and built each day. Every contact you come across online is added to your database, email list, friends, followers, connections, and “likers”. Your past, when it comes to crowd funding, will often determine your future, and you can affect the outcomes of this future in the way in which you build and engage your supporters and contacts.

Crowd funding is the perfect bridge between your past and your future successes. Through crowd funding you can bring together all the contacts you have, and unite them to one common goal – your goal. Each day, you create your own history, and you can affect this by building your history in a predetermined manner – revolution rather than simple evolution. You can go about building your army with purpose and gathering followers rather than just amassing them over time.

Some people are blessed with already having built a following, so when they come up with a project, they already have an audience to whom they can promote and ask for buy-in, thus linking their past contacts to their future aspirations. For others who do not have a sizeable following in place, all is not lost. They simply need to go back and re-establish contact with connections from the past. Alternatively, or even additionally, they can implement creative campaigns to build followers, and these can quickly build an audience that can be accessed in future funding campaigns

The history you build is the platform on which your future will be formed. Once you have built your army, you have your supporters with whom you can share your passion, and from whom you can ask support. And this army, once immobilised, can create quite a movement, and this can (in turn) attract the attention and support of others, and the momentum can amplify and grow.

Universities are a good example of an organisation with an army of supporters. Over their history, a university has amassed a band of supporters from their student base, their alumni, and their local community. When it comes to crowd funding, universities are well positioned to tap into their past contacts and drive the funding of their future aspirations.

Similarly, sporting clubs have the parents, past players, fans and community who all share the passion and enthusiasm for the club and “the jersey”. Their history, their past and present fans, the journey to date places them in a position where they can fund future projects from the fans that have started to march to the beat of the team’s drum over their history

But you don’t need to be a university or any incorporated body to engage your past to affect your future. Individuals have amassed forces they can mobilise to assist in achieving the goals. They can also build their armies. And utilise the forces to assist in achieving their goals. It is a simple matter of tapping into the contacts of the past, to build the army of today, which will support you in your crowd funding campaigns of the future.

Thinking Outside the Box In Relation To Rewards

Rewards, done correctly, provide the motivation for many in the crowd to support projects. OK, in the case of charitable or community projects, the motivator is quite often the shared passion or the ultimate good that will be achieved by the delivery of the project outcome, but in the case of commercial projects, it is the reward that, in many cases, will prompt the project supporter to open their wallet in a show of support.

The type of reward offered does not necessarily need to be determined by the kind of project being run, but given the need to connect with the target audience, there should be a relationship between the project and rewards to be had, even if it is a distant relationship.

For some projects, coming up with rewards is a relatively easy task. Take the example of the author who seeks to raise funds to publish a book. The rewards generally flow as freely as they words they have written in their manuscript. The first tier being a thank you card, then an autographed copy of the book when printed, stepping up to printed acknowledgements in the book, and then perhaps even naming a character after some of the contributors of more significant pledges.

Other projects, again those of more of a commercial nature, can prove challenging to find the right motivators to get the crowd to part with their hard earned dollars. Finding the right inducements for a project about (say) a new type of commercial kitchen hotplate can prove challenging. Again, this is where the reward does not have to be determined by the project, but given the passion and interest of the audience, it is best to ultimately align the rewards to the wants of the crowd. In this case, the potential supporters, in the main, will not want a commercial cooking element, but there may be a lot of interest around the world of cooking, so rewards may include cookbooks signed by famous chefs, invitations to exclusive dinners catered by chefs of note, and such items that would motivate the crowd more so than the output of the project itself.

Whether the reward chosen is something tangible, or perhaps an intangible option (offering a great experience rather than an exciting item), the key is offering something of value, and for the project creator to connect with and motivate the audience. Value is not all about price, so it is not about giving away something at a hugely reduced outlay. It is about how sought after and treasured the reward is. All efforts should be made to value add – a limited release item, that autographed or personalised reward, privileged position or exclusive access – all of these move away from the price of the reward and become far more sought after from an emotive perspective.

And, finally, never underestimate the value of delivering social kudos as a reward. Recognition on social media sites, acknowledgement in the credits, offering naming rights, or a mention on an honour board are just some rewards that cost little, but will inspire many in the crowd to pledge their support. Despite the nature of the project, these types of rewards resonate with the project supporters who want to be involved and want to engage.

Crowd Funding – The Solution To The Broadening Gap At The Bottom of The Funding Ladder

In recent years, the gap at the bottom of the funding ladder has continued to grow. Small businesses, start-ups, charities, and those with creative aspirations have been unable to reach the higher rungs of traditionally available funding. Stock exchanges, venture capitalists, banks and other more recognised funders do not support early stage initiatives or what amounts to little more than a great idea. They require evidence of traction, proof, surety, and a number of boxes to be ticked. And, of late, the gap has continued to get lager, opening the door (quite widely) for crowd funding to come in and answer the funding need.

Many are calling for venture capitalists to be renamed as “development capitalists” as they seem to have stalled in their propensity to venture. Over the last 10 years, global venture capital funds have decreased by 90%, as sources of this method of funding have become less bullish, preferring to put their money into development of proven ideas rather than “taking a punt” to back early stage, new to world concepts.

Right through to the most relied upon and secure backer of projects, the government, the finance sector is stretched. Bank lending to governments (in Australia) has been on a steady incline, with current numbers representing a figure triple that of 10 years ago. Just recently, federal government grants to start-ups and their grant schemes in general were “paused” while the government regroups and reassesses their ability to fund initiative. Governments, like many households, are under pressure to balance the books, and funding new initiatives is one of the first things to face review. Governments can’t sustain the pressure, and the gap at the bottom of the funding ladder creaks and groans as it continues to grow.

But crowd funding has filled the gap, and continues to establish itself as to the solution to the funding required at grass roots levels and at the bottom of the funding ladder.

Despite many thoughts to the contrary, there is money out there. Not in big packets and not in the vaults of the traditional lenders. It is in the pockets of the people – people who are willing to pledge to people they like, to a cause they believe in, to a project that will deliver them funky rewards or social kudos. The proof of the pudding is in the eating, and the evidence is there. Some individual sites are now receiving well over $100mil in pledges a year. In the USA, one crowd funding site alone funnels more money into the arts sector than the National Endowment for The Arts – the federal body that governs and supports the sector. And the crowd funding industry continues to evolve and grow at a staggering 91% globally – something unheard of by most other sectors in the post GFC world.

 

Crowd Funding – Helping The Project Creator

Some project creators have the time and energy to put together a great project with all the ingredients to really make it sing, but do not have the have the time (the few minutes each day), the confidence, or the know-how to get their message to the crowd. iPledg has now developed the solution that will hopefully become the norm amongst those who run crowd funding platforms – The Campaign Assistance Packages (CAPs) Program offers project creators support, direction, and some impetus to their campaign.

 

In response to market needs, iPledg created the CAPs program. Some project creators said they had time to put their project together but no time to promote it, or to do so consistently. Others needed someone to provide them the initial (first month’s) direction and momentum, so iPledg created a service by which they could have their social media engagement done on their behalf, as well as database marketing, and internet research for like minded groups. People can then determine if they want to list a project for free on iPledg and do the work themselves (as is currently the case with most crowd funding platforms), or if they want to pay a small fee and have some of this work done for them.

 

Matching the voice and tone of communication is key to the success of this social media service. By really getting to know the project creator, and their underlying objectives as well as the manner in which they have gained the support of their crowd to date, the essence of their voice is captured, and communication is effectively executed on their behalf. Although the operators of the platform run the process, the project creator must engage and approve the outgoing communications to ensure that the communications indeed reflect their voice and tone.

 

The CAPs program is not intended as a long term service to any project creator. It is their passion and their crowd, so the CAPs program exists to help projects get traction in their early days. It provides impetus, as well as giving the project creator the direction and the confidence to remove the training wheels and hopefully ride successfully to the finish line and achieve a successfully funded campaign.

Posted on September 2, 2012 By iPledg With 0 comments

Crowd Funding – Fad or Phenomenon

Seldom do you get an industry that grows at the rate of 91% per annum. Rarely do you see a sector achieving global growth that is not restricted to one continent or another. And never do you see such exponential growth surviving beyond the “fad” phase. But in the case of crowd funding, we see a wonderful new form of e-commerce defying conventional thinking and achieving all of this and so much more.

Perhaps it can be argued that the growth curve may flatten out a little. Whilst that may be true, the naysayers who dismiss crowd funding as merely a fad fail to recognise the deeper significance of this form of e-commerce, its timeliness given the state of the world economy, and the stage it represents in the evolution of social networking.

Venture capitalists are no longer venturing. Over the last 10 years, the amount of venture capital worldwide has dried up by 90%. The conservative nature of this source of funding has left start ups and new concepts without venture capital as a reliable form of funding, as venture capitalists require a proven track record and a degree of market traction to have been established before they consider their financial intervention. Indeed, it can be argued that the term “venture capital” should be recoined “development capital” as it has shifted to being just that – funding for the development of verified products, theories and business concepts.

Venture capital as a source of funding is not on its own in retracting its cavalier approach to the markets, especially since the GFC three years ago. Punch drunk banks and traditional funders as a whole have been beaten by regulator and market scrutiny post the losses of the global economic meltdown. The amount of available capital has dried up, and those seeking funds have realised that the bar has been considerably raised, leaving a gaping hole at the bottom of the funding ladder. Those with great ideas and inspiring innovations have found it nigh on impossible to access the lowest rungs of available funding. It is this vacuum in the capital markets that has created fertile ground on which crowd funding could succeed at the grass roots level.

The economic conditions of the world, coupled with the emergence of microfinance (the ability to transfer small amounts of money quickly and easily) and the rapid rise of social media created the perfect storm in which the planets aligned, with crowd funding being the solution of not only best fit, but of perfect fit.

And with the power of social media, the concept of crowd funding was build on a rock solid and sustainable platform. Many recognise crowd funding as the next evolution of social media, where people not only say they “like” you and what you are doing, but are prepared to put their hand in their pocket to show it.

With the world in post GFC mode and traditional lenders being more conservative with loaning money, this is a fast and flexible form of accessing capital, and allows “tribes” to support their own. It is true governance by the people, for the people, where the real judges of what “gets up” and what does not is determined by the most democratic of ways – by the crowd.

Posted on August 27, 2012 By iPledg With 0 comments

Crowd Funding – Providing Strategic Linkages

Some projects just lend themselves beautifully to crowd funding campaigns. The local gym that needs equipment can easily offer memberships, personal training sessions and yoga classes in their efforts to raise funds from their “crowd” for the equipment they require. But some projects struggle to find the rewards to motivate the crowd into action and to get them supporting with their wallets. However, this gives rise to the opportunity for good strategic linkages if a little thought is exercised, benefitting not just the funding campaign but the project it is aimed to support.

With campaigns aimed to fund projects of a more technical nature, getting creative with rewards can be difficult, but some great ideas can be found when the project creator starts to think outside the square. Recently an inventor of piece of equipment for a commercial kitchen asked us at iPledg “what rewards could I possibly offer?” With a bit of thought, we explored the markets and motivators around the product on which their campaign was centred. We progressed from commercial kitchen, to cooking, to the popularity of cooking shows, and bang! We came up with signed cookbooks from some of the famous chefs from our top ranking cooking shows, a chance to attend a dinner catered for by a top chef, and so on. Now we had some rewards related to the project, and a way forward was forged.

But this is so much more than just rewards for the life of the campaign. This is where strategic alliances really come to the fore, and provide a longer term and more far reaching benefit. It is great that the campaign now had a suite of rewards to motivate the masses, but getting the message out to the crowd became the next challenge. Having engaged the famous chefs, we now had incredible reach to a wide audience. Not only had we secured widely sought after, really cool rewards, but we had a channel to market to let even more people know about the project than the project creator ever could have reached on their own.

So the campaign was well positioned for establishing a good relationship with a large crowd. We had the sweetener by way of great rewards. In securing the rewards, we forged a relationship with people that agreed to give us far greater reach than could have ever been reached by the project creator on their own. If you think this is pretty good, the best was yet to come.

The support from the famous chefs was then topped off with an offer of an ongoing alliance. The offer of a few signed cookbooks was great. The offer to let their audience know of the campaign was a great leg up in the chances of achieving the funding goal. But the support from the strategic linkages formed with the famous chefs really came to the fore when the campaign was due to finish, with the chefs offering to maintain contact, and open doors for the project creator to get the product (the output of their project) into some great applications. They didn’t just provide a few cookbooks as rewards, but an association was formed that bore results right through to a commercial return, which was the project creator’s ultimate goal.

Not everyone knows a famous chef, a well renowned sportsman, or an Oscar winning actor. You don’t need to. The local cake shop can help with rewards and help with spreading the word to the dozens of customers that walk in and out of their doors. Businesses are hungry to engage with their community, to offer their rewards to help project creators (their philanthropic gesture) while building awareness of their own business through a few give-aways (their commercial gesture). Most are willing to engage with and assist the community by promoting the local campaigns to their customer base, even if it is through putting a small sign up in their shop (every little bit helps). All it takes is a bit of creative thinking that not only delivers wonderful rewards, but far greater and ongoing benefits to the project creators, their campaign and the ultimate goal they are trying to achieve.

Posted on August 20, 2012 By iPledg With 0 comments

Crowd Funding – Setting a Realistic Target

Setting realistic expectations and creating a plan that is based on logic right from the start gives a project creator the best possible chance of success. Ambitious plans are quickly exposed, early in a funding campaign, creating a disincentive to continue, and almost a resentment of a non supportive crowd. The project creator quite often disconnects from their fan base, achieving the exact opposite of what a funding campaign is supposed to deliver. But we now have some industry intelligence that sets down the basis on which to set your campaign targets.

There is a great rule of thumb formula on which you can base your funding target. Add up all of your networks. That is, all of your Friends of Facebook, your Followers on Twitter, everyone with whom you have a connection on any form of social media, and every person in your email address book. Once you have amassed the grand total, remove any duplication, and you will end up with your total network reach, or the total number of people with whom you can directly communicate. Whilst you may be buoyed to see the number of people with whom you can connect exceeding your expectations, now comes the grounding piece of news – in setting a target, you should base your forecasts on only 10% of these people pledging their support. So if you have 1,000 people in your total network reach, you should base your forecasts on just 100 people making a pledge. With the average pledge being $50, your target should be around 100 (people) x $50 = $5,000. This then becomes your conservative, realistic, base target.

Ok, so the Pebble guys didn’t have 2 million people in their total network reach (do the maths based on them having achieved $10mil in funding). They did, however, bring into play the next great component in achieving an amazing total. They offered really well sought after rewards. Their inducements evoked a feeling of “I’ve just got to have it” in the hearts and minds of prospective project supporters. T-shirts and coffee mugs just don’t inspire the same emotions, so you really have to give some thought to the rewards you offer and be realistic about the impact these will have in driving the campaign to achieving a greater total. If you take your base target of $5,000 in the example above, and offer a really attractive reward that people really desire, you can comfortably set your target considerably higher. Without such rewards, you are best to stay closer to your base target.

Once the campaign is underway, you have a greater deal of control over their campaign than you would believe. A campaign is work – teamwork! During a funding campaign, you must spend a few minutes each day, engaging the ”team” through social media, email blasts, winning over the media to get them to offer coverage – anything you can to get the word out there. Not just once, but repeatedly. If you are not committed to doing this, then in setting your target you should be far more conservative with your base target. How can people be expected to support a project about which they know nothing or haven’t even heard of? Many would argue that if the project creator is not prepared to really drive their campaign, they should reconsider whether crowd funding is actually for them.

But what does “driving it” actually mean? There are five golden rules for promoting a funding campaign:-

  1. Find other groups on the internet and let them know about the campaign, tapping into your shared passion.
  2. Ask people to not only support the campaign, but to spread the word.
  3. Don’t beg. It is not always about the money. Inform the crowd about the campaign and its intended outcome, and they will engage.
  4. Saying thank you publically and singling out project supporters in social media delivers great kudos, creating a flow on effect in their efforts to provide their ongoing support
  5. Persistence, Persistence, Persistence – keep promoting, even when the campaign hits its target, continue to spread the word and engage the audience

Exploring your immediate crowd and using a simple formula based on global data will help you define your base target. Take into account your preparedness to drive and promote your project – the greater your intentions, the more you should consider increasing your base target (as long as you actually do live up to your intentions! Or as long as you use services like that offered on iPledg whereby they do your social media and database work on your behalf). And don’t forget to consider how you will use the five golden rules for communicating your message.

With the information at hand, and a good hard look at what you really can achieve, you should be able to set realistic targets which, when pursued with unrelenting drive, deliver wonderful results to your crowd funding campaign.

Posted on August 13, 2012 By iPledg With 0 comments