Crowdfunding IEI Toolbox #1

Robert McNamee
Assistant Professor & Academic Director
Follows bottom-up, crowd-driven, trends
 Wisdom of Crowds – 2004 book (large crowd is smarter
than a few smart people)
 Prediction Markets – people invest / play game of
predicting outcomes (can be very accurate)
 Crowdsourcing – outsourcing task to distributed group of
people / public
 Open Innovation Challenges – ask world for ideas 
better ideas than few experts
 Collective effort of individuals who pool resources to
support efforts initiated by others
Equity Crowdfunding
Funding of a company by selling small amounts of equity
to many investors.
 Wider pool of small investors w/ less restrictions
 Signed by President Obama on April 5, 2012
 SEC has 270 days to establish rules & guidelines
Hotly Contested / Rapidly Changing Landscape
 Significant risk of abuse  wasted money / investors loss /
fraud / low quality companies (e.g., 2000 IPO craze)
 Distributes power / opportunity away from large investors
 Allows “crowd” (stakeholders) to pick companies
Non-equity Crowdfunding
Large group of people provide funding to help launch
companies or facilitate activities – no equity changes
hands (but funders may receive something of value)
 1997 - British rock group Marillion (fans supported US Tour
w/ $60k donations raised via fan-based Internet campaign)
 2001 - ArtistShare (first crowdfunding website for music)
Sellaband (2006)
RocketHub (2009)
Sponsume (2010)
Indiegogo (2008)
InvestedIn (2010)
PleaseFund.Us (2011)
Pledge Music (2009)
GoFundMe (2010)
Peerbackers (2008)
Kickstarter (2009)
Rock The Post (2011)
Fundable (2012)
“Kickstarter is the world's largest funding platform for creative
projects. Every week, tens of thousands of amazing people pledge
millions of dollars to projects from the worlds of music, film, art,
technology, design, food, publishing and other creative fields.”
Purpose & Innovation are Equally Important
Some significant risks
 Failed projects = Funders lose money / Platform loses legitimacy
 Too much success + Poor cost estimates = Bankruptcy
Finding Your Purpose…
This is about providing value to people and society
 “Getting to Why” – Simon Sinek (Video)
 “Art of the Start” – Guy Kawasaki (Video)
Increase Quality of Life
 Innovative products can do this…
 Capture Clip / WindowsFarms
Right a Wrong
 Social impact can certainly do this…
 FoodPrints / Proof Sustainable Sunglasses
Prevent the End of Something Good
 Anything that brings back something retro that people miss is
pretty popular these days…
 Keep The Crescent / Preserve Chicago's Music
Broadening the idea of Purpose…
What Values / Purpose comes through in these commercials / KS
Samuel Adams:
Cisco (Just for fun):
Sustainable Longboards:
BMW (Theo Jansen):
E-Paper Watch:
DC Teaching Kitchen:
Total Successful Projects and Funding (US $ Millions) by Category
Projects Counts &
Success Rate by
Percentage Distribution of Successful Projects by Funding Size
Unsuccessful Projects by Funding Threshold (“30% Rule”)
Coming up with a Kickstarter project
What are you passionate about / want to fix?
 Adding purpose to a business can seem insincere
 Creating a business around a purpose is likely more genuine
Used forced association…
 Bridge / Connect: purpose <> business idea / business model
Don’t forget Kickstarter [implicit] constraints…
 How much money would you need to launch? (don’t forget more
projects fail when they ask for $20k+ / very few project in $100k+)
 What can you give a person for $20-$100? (if main value /
deliverable is offered at $1000 it shrinks your donor pool)
 What will motivate people to want to give you $$$? (same question
applies for any venture – what motivates people to be associated
with you, work for you, buy from you, write about you)
Kickstarter Tips
Leverage Your Social Network / PR Channels
 Update often – projects that get 31+ updates get 4x the
money as less frequently updated projects
Be creative with your reward levels (not just T-shirts)…
For now local is usually not good
(e.g., new retail business unlikely to work)
 As local communities grow may have hope…
Write a script – remember you are telling a story in 2 minutes
 Get to the point quick – say it before they click away…
 People don’t fund projects, they fund people – make your
video personal
FAQs & Helpful Guidelines
Overall instructions / explanation for how it works:
FAQ- All your questions will be answered:
Also here: /
Kickstarter School
Practicalities- creating a good video (lighting / audio matter):
Google: how to make a good video ;)

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