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Crowdfunding Sites - Holiday Tech 2015

    by Douglas Dixon

 


          

Contents

See also:

  

  


Crowdfunding


Crowdfunding Industry

Crowdfunding industry is nearly doubling each year since 2011

Top campaigns

  • $20.0M - Pebble - Kickstarter - 2015
  • $13.2M - Coolest Cooler - Kickstarter - 2014
  • $12.8M - Ubuntu Edge - Indiegogo - 2013
  • $10.2M - Pebble - Kickstarter - 2012
  • $8.5M - Ouya - Kickstarter - 2012
  • $5.0M - Ponomusic - Kickstarter - 2014
  • $5.0M - An Hour of Code for Every Student - Indiegogo - 2014
  • $4.5M - Bitvore - Crowdfunder - 2014
  • $4.0M - Ponomusic - Crowdfunder - 2014 ($4M equity)
  • $2.4M - Oculus VR - Kickstarter - 2012 (Acquired by Facebook for $2B)

Types of Sites

  • Donation (30%) - Fundraising / Charity - GoFundMe, CrowdRise, DonorsChoose, Generosity, Crowdrise
  • Rewards (43%) - Creative projects - KickStarter, Indiegogo, RocketHub, teespring
  • Artists - Patreon
  • Equity (15%) - Investment - Crowdfunder, OneVest, Wefunder, EquityNet, AngelList, SeedInvest, ...
  • Lending (13%) - Lending Club

See Crowdfunding.com - Top Crowdfunding sites


Definitions [Kickstarter]

  • Project - Finite work with a clear goal that you’d like to bring to life. Think albums, books, or films
  • Creator - Person or team behind the project idea, working to bring it to life
  • Funding goal - Amount of money that a creator needs to complete their project
  • Funding period - Time period project is open for pledges
  • Backers - Folks who pledge money to join creators in bringing projects to life
  • Pledge - Amount promised by backer to creator (may depend on reward level)
    • Typically credit card charged when project funded (or donation made)
  • Rewards - How creator shares a piece of their project with their backer community
    • Often include a copy of the creative work being produced (CD, DVD, book, etc.)
      or an experience unique to the project
  • Stretch goals - Levels of enhanced product / rewards when project exceeds original goal
"Kickstarter is not a store. It's a way to bring creative projects to life."
  • "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project.
    It is the responsibility of the project creator to complete their project as promised, and the claims of this project are theirs alone."

 


Charitable Giving

  • Direct donations to individuals are not tax deductable
  • Contributions to registered 501(c)(3) nonprofits can be tax deductible
    • DonorsChoose - Donations 100% tax-deductible.
    • Indigogo - Processed by FirstGiving; Have "Verified Nonprofit Campaign" badge

 


Creative Projects

  • Donation-based funding of creative projects
  • Project creators keep full ownership of their work
  • Project types - Art, comics, crafts, dance, design, fashion, film & video, food, games,
         Journalism, music, photography, publishing, technology, theater
  • Not for businesses, causes, charities, or personal financing
    • Cannot offer equity or financial returns, or solicit loans
  • Exclude: Alcohol, Drugs, Gambling (including lotteries, raffles, or sweepstakes),
         Investment opportunities (including equity, loans, and revenue sharing), Pornography, Weapons (RocketHub)

Campaign lengths

Rule of thumb (RocketHub) - Shorter timeframes (than 30 to 75 days) require more time dedication and planning than many Project Leader(s) can handle amidst other priorities. Longer timeframes can become more difficult to manage as they lose a sense of urgency.

Basic
$1,000-10,000
Intermediate
$10,000-100,000
Advanced
$100,000+
Contributors 40 to 200 150 or more 1,000+
Campaign (days) 30 to 45 30 to 60 30 to 75

Funding logistics

  • "All-or-nothing" - Fixed Funding - Campaign funded only if reaches goal
  • "Keep what you raise" - Flexible Funding - Creator keeps all pledges even if campaign does not reach goal
  • "All-or-nothing" [Kickstarter] - No one will be charged for a pledge towards a project unless it reaches its funding goal.
    • Creators always have the budget they scoped out before moving forward.
    • Protects creators from being stuck with a fraction of the funds they need and an audience expecting fully funded results
    • By minimizing risk, it also makes backers more likely to pledge.

 


Fees

  • Typically 5% fee for platform, plus 3-5% for third-party payment partner
  • Recipent pays fee when funds withdrawn
  • DonorsChoose - Optional 15% fee to support DonorsChoose.org

Compare to Charity Program Expenses

  • Charity Navigator
    • 7 out of 10 evaluated charities spend at least 75% of their budget on the programs and services they exist to provide
    • 9 out of 10 spend at least 65%
  • Sample program expenses
    • Save the Children 90.9%, American Red Cross 90.3%
    • Doctors Without Borders, USA 87.4%, United Way of Northern New Jersey 87.8%
    • Habitat for Humanity International 80.7%, The Nature Conservancy 70.7%

 

 


Crowdfunding - Charity / Personal Funding


Personal Fundraising

 


GoFundMe


  • "World's #1 Personal Fundraising Site"
  • Keep each donation received - No deadlines or limit goals
  • Founded 2010
  • www.gofundme.com
  • People use to raise money for themselves, a friend or loved one during life's important moments
  • Can be private, or listed in GoFundMe Public Search Directory
    • Verified using valid Facebook account

Stats

  • Over $1 Billion raised in the past year - by millions of people
  • $4M raised per day

Categories

  • Popular - Near Me - Almost There
  • MOST COMMON - Medical expenses, Volunteer programs, Emergencies, Education costs,
    • funerals & Memorials, youth Sports, Animals & pets
  • CATEGORIES - Business, Charity, Community, Competitions, Creative, Events, Faith, Family,
    • National News, Newlyweds, Other, Travel, Wishes

Fees

  • Withdraw at any time - No penalties for missing goal
  • GoFundMe 5% fee + Processing fee ~ 3%

Noteworthy

Success Stories - https://www.gofundme.com/success

  • Chris Mintz - Umpqua Community College shooting survivor
    • $814,000 raised - 24,028 people in 1 month
    • Links to 12 other GoFundMe campaigns for other victims
  • Texas deputy Darren Goforth - Murdered while pumping gas
    • $371,000 raised - 5,093 people in 2 months
    • Fund closed by wife - "people have done enough for her and the kids"

Top

 

 


DonorsChoose


  • Help a classroom in need
  • Public school teachers across America create classroom project requests
  • Give any amount to the project that inspires you
  • Founded 2000
  • www.donorschoose.org

When project reaches its funding goal

  • DonorsChoose ships the materials to the school
  • Doners receive photos of project taking place, letter from the teacher, and cost report
  • Donations over $50 and also receive hand-written thank-yous from the students

Projects can remain on site up to 4 months

  • If not fully funded, donations returned to doners as account credits
  • Can choose new project to support, or send the teacher DonorsChoose.org gift card

Stats

  • $376 M   Dollars raised
  • 1.9 M     Supporters
  • 650K     Projects funded
  • 36K       Active project requests currently seeking funding
  • 66% of projects fully funded
  • $691 - Average cost of funded project
  • $58   - Average donation size for new donors

Categories

  • K-12 public schools in all 50 states and the District of Columbia, including public charter schools

Fees

  • Donation 100% tax-deductible
  • Optional 15% fee to support DonorsChoose.org

Noteworthy

Impact - http://www.donorschoose.org/about/impact.html

  • 257 K   Teachers with projects funded
  • 65 K      Schools participating
  • 16 M      Students helped
  • 68% of public schools in America have at least one teacher who has posted a project on DonorsChoose.org
  • 70% of high poverty schools have participated in DonorsChoose.org
  • 81% of funded projects are from high poverty schools

Top

 

 


Generosity by Indiegogo


  • Personal fundraising - "The only socially conscious fundraising platform that’s free, fast, and open"
  • No platform fee (although payment processing)
  • Founded 2015
  • www.generosity.com

Introduced October 2015 - Goal is becoming world’s most active platform for compassionate giving

Stats

Categories

  • Medical, Community, Education, Celebrations, Emergencies, Memorials, Animals, Faith, Volunteer, Sports

Pledges & Fees

Free of platform fees common to most personal and nonprofit fundraising sites

  • Payment processor charges 3% + 30 cents on every donation
  • Users can choose to donate directly to help cover Generosity’s operating costs

Noteworthy

(Formerly launched on Indiegogo Life)

Most funded - https://www.generosity.com/explore#/browse/most_funded

Top

 

 


Crowdfunding - Creative Projects


Donation-based funding for creative projects

 


Kickstarter


  • Curated donation-based funding for creative projects
  • "World's largest funding platform for creative projects"
  • "Serve creative projects
    and the artists, designers, and creative people who make them"
  • Founded 2009
  • www.kickstarter.com

Stats

  • Almost $2 billion pledged, more than every crowdfunding site combined
  • Pledges by more than 9 million people, funding more than 90,000 creative projects

Live Stats 10/15 - https://www.kickstarter.com/help/stats

  • $1.9 B         Total dollars pledged to Kickstarter projects
  • $1.6 B         Successful dollars
  • 256 K          Launched projects
  • 95 K            Successfully funded projects - 37%
  • 5.8 K           Live projects
  • 9.4 M          Total backers
  • 2.9 M          Repeat backers
  • 25 M           Total pledges

Stats by categories

  • Projects - Music 21K, Film&Video 18K, Art 8K, Pub, Games ... Tech 3k (but $$)
  • Successful Funding $  - Games $355m, Design 296, Tech 291, Film 249, Music 141, Pub, 67, Food 65 ...

Categories

Creative projects

  • Art, comics, crafts, dance, design, fashion, film & video, food, games,
  • Journalism, music, photography, publishing, technology, theater

Pledges & Fees

All-or-nothing funding - No payment or fees if project does not reach its funding goal

  • Kickstarter fee: 5% fee
  • Third party fee for payment partner (Stripe) - Roughly 3-5%

Noteworthy

Favorite projects - Staff picks - https://www.kickstarter.com/discover/recommended

Pebble: E-Paper Watch for iPhone and Android (2012) - $10M

  • Simple smartwatch
  • 68,929 backers pledged $10,266,845 of $100,000 goal
  • $100K in 2 hours, $1M in 28 hours (Engadget)
  • Funded Apr 11 2012 - May 18 2012 (37 days)

Pebble Time - Awesome Smartwatch, No Compromises (2015) - $20M

  • Updated smartwatch - Color, mic, lighter, Gorilla Glass, Steel version, water resistant,7 day battery
  • 78,471 backers pledged $20,338,986 of $500,000 goal
  • Funded Feb 24 2015 - Mar 27 2015 (31 days)

COOLEST COOLER: 21st Century Cooler that's Actually Cooler (2014) $13M

  • Portable party disguised as a cooler, bringing blended drinks, music and fun
  • 62,642 backers pledged $13,285,226 of $50,000 goal
  • Funding goal in 36 hours, $1M in next day
  • Funded Jul 8 2014 - Aug 29 2014 (52 days)
OUYA: A New Kind of Video Game Console (2012) $8.5M
  • Beautiful, affordable console -- built on Android, by the creator of Jambox
  • 63,416 backers pledged $8,596,474 of $950,000 goal
  • Raised $2 million in first day
  • Funded Jul 10 2012 - Aug 9 2012 (29 days)
Pono Music - Where Your Soul Rediscovers Music (2014) $6.2M
  • End-to-end ecosystem for music lovers - high-resolution music store and player
  • 18,220 backers pledged $6,225,354 of $800,000 goal
  • Pre-sold 15,000 players; End 2014 - Almost 20,000 Pono players in users hands
  • Funded Mar 11 2014 - Apr 15 2014 (35 days)
Oculus Rift: Step Into the Game (2012) $2.4M
  • The first truly immersive virtual reality headset for video games
  • 9,522 backers pledged $2,437,429 of $250,000 goal
  • Substantially surpassed goal in less than 24 hour
  • Funded Aug 1 2012 - Sep 1 2012 (30 days)
  • (Acquired by Facebook for $2B)

Top

 

 


Indiegogo


  • Donation-based fundraising campaigns, international
  • "Largest global site for fundraisers"
  • "Millions of contributors have empowered hundreds of thousands
    of inventors, musicians, do-gooders, filmmakers"
  • Fixed Funding (refund) or Flexible Funding (keep if do not reach goal)
  • Founded 2008, raised $56.5M in funding
  • www.indiegogo.com

Stats

  • 15 million people visit each month
  • 275K+ campaigns hosted
  • 7,000+ campaigns active at any given time
  • 1000% increase in funds raised in past two years
  • 224 countries home to Indiegogo campaigns
  • 30% of campaigns start outside of the U.S.

Categories

  • Animals, Art, Comic, Community, Dance, Design, Education, Environment
  • Fashion, Film, Food, Gaming, Health, Music, Photography, Politics, Religion
  • Small Business, Sports, Technology, Theater, Transmedia, Video / Web, Writing
  • (Charity through Generosity)

Pledges & Fees

Fixed Funding - All-or-nothing - Campaign funded only if reaches goal

Flexible Funding - Creator keeps all pledges even if campaign does not reach goal

  • Indiegogo platform fee: 5%
  • Third party fees for payment processors: 3% plus 30 cents per transaction for credit card
    • 3-5% for PayPal transactions; Non-US $25 wire fee, currency exchange

Noteworthy

Most Funded

Indiegogo InDemand - Perks now shipping from past campaigns

https://www.indiegogo.com/explore/perks#/

Top

 

 


RocketHub


  • Donation-based funding for a wide variety of creative projects
  • "International, pioneering, open community that has helped
    thousands of artists, scientists, entrepreneurs, and social leaders
    raise millions of dollars
    "
  • Founded 2009
  • www.rockethub.com
  • Success School - Step-by-step planning

Stats

  • Raised more than $400,000 in capital in its history
  • Operates in over 190 different countries and regions

Categories

  • Projects: Art, science, business, social good
  • Creators: Artists, musicians, entrepreneurs, scientists, game developers, philanthropists,
    filmmakers, photographers, theatre producers/directors, writers, fashion designers, etc.

Pledges & Fees

"Keep what you raise" funding - Keep pledges if don't reach the financial goal

  • No upfront cost to launch
  • Reach goal: 4% commission fee + 4% credit card handling fee
  • Don't reach goal: 8% commission fee + 4% credit card handling fee

Some RocketHub projects offer tax deductible contributions

Noteworthy

  • Creative Studio by Ovation TV - Crowdfunding designed for artists

Top

 

 


Amazon Launchpad


  • Tool for startups, to help launch, market and distribute innovations
  • "Showcases cutting-edge products from startups
        to millions of Amazon customers"
  • Announced July 2015
  • www.amazon.com/gp/launchpad

Help startups launch new products and get them discovered on Amazon

Initially working with startups funded by crowdfunding platforms, venture capital firms, other startup accelerators

  • 25 firms to curate storefront’s selection
  • Andreesen Horowitz, Y Combinator, Indiegogo, RocketHub

Top

 

 


Crowdfunding - Artists


Recurring funding for artists

 


Patreon


  • Recurring funding - Artists funded by patrons monthly or per artwork
  • Creators get paid for creating the things they’re already creating
  • Fans pay favorite creators for making the stuff they love
  • Become a bonafide, real-life patron of the arts
  • Founded May 2013
  • www.patreon.com
  • Fans - Pledge a few bucks per month, or per thing released
  • Creators - Gets paid regularly, or each time releases something new
  • Popular with YouTube content creators, musicians, and webcomic artists
  • Help every creator in the world achieve a sustainable income

Stats

  • 10 K    Creators financially active
  • 250 K  Patrons with active subscriptions
  • $2 M    Funding to creators each month

Categories

  • Video & Film, Music, Writing, Comics, Drawing & Painting, Animation
  • Podcasts, Games, Photography, Comedy, Science, Education, Crafts & DIY, Dance & Theater

Pledges & Fees

  • Monthly campaign - Pledge fixed monthly amount, charged on 1st of the month
    • Typically for creators that post regularly
  • Per creation campaign - Pledge given amount of money whenever artist creates a piece of art, optional monthly maximum
  • Patreon commission - 5% on pledges

Noteworthy

  • Acquired 24 Subbable subscription service creators (3/15)
    • Collectively generate over $1,000,000 in annual revenue

Top

 


Crowdfunding - Investment


Equity crowdfunding

  • JOBS Act - Jumpstart Our Business Startups (2012, 2015)
    • Permits equity crowdfunding by both accredited and non-accredited investors
    • Everyday citizens can invest in startups

 


Crowdfunder


  • "Leading equity crowdfunding platform"
  • "Bringing capital to early-stage companies
         while giving investors access to top deal-flow"
  • Founded 2011
  • www.crowdfunder.com
  • Crowdfunding for businesses is bringing about a new capital market for early stage finance
    • Platform for raising investment (not rewards)
  • After getting rewards-based funding on Kickstarter or Indiegogo, companies are often giving the crowd
         the opportunity to invest at Crowdfunder to raise more formal Seed & Series A rounds.
  • Crowdfunder currently offers equity crowdfunding only from individuals + angels + VCs

Stats

  • $190 M  Deals
  • 118 K     Individual & institutional investors
  • 30 K       Companies
  • Funded 58 deals at an average deal size of $1.8M

Categories

  • Designed for early-stage startups and more mature businesses raising seed stage, Series-A & Series-B funding
    • Not catered to inception stage companies
  • Categories include Tech Startups, Social Enterprises, Small Businesses, Film & Entertainment.
    • Not designed for non-profit companies

Pledges & Fees

  • Deal can be Private (personal network) or Public
  • No investor fee
  • Flat monthly fee to make Deal discoverable to Crowdfunder's network of accredited investors
    • [$299 for under $500k, otherwise $999 - 7.9% of successful funds, 1.9% - 5% Transaction fee]
  • Can collect investments if Round is not closed
  • Structure of Round dictates when can collect the investments
  • Recommend minimum investment of $5K – $25K
  • Campaign typically lasts 60-90 days
  • Crowdfunder is marketing and engagement tool for Deal
  • Actual closing and transaction of wiring money happens offline with the investor

Noteworthy

  • $4.5M - Bitvore - big data - Crowdfunder - 2014 (part of $4.5M Series A round)
  • $4.0M - PonoMusic - high-res player - Crowdfunder - 2014 ($4M equity)

Top


Crowdfunding - Lending


Online credit marketplace

 


Lending Club


  • "America's #1 credit marketplace"
  • "Apply for a low, fixed rate personal loan or invest to earn solid returns"
  • Founded 2006
  • www.lendingclub.com
  • World’s largest online marketplace connecting borrowers and investors
    • Making credit more affordable and investing more rewarding
  • Operate at a lower cost than traditional bank lending programs
    • Pass the savings on to borrowers in the form of lower rates and to investors in the form of solid returns

Stats

  • $13 B    Loans funded to date: $13,402,853,260
  • $2.2 B   Loans funded last quarter: $2,235,646,412
  • Historical returns by Grade A–C - 5.23% to 8.82%

Loans

  • Personal loans up to $35,000 - Including debt consolidation and to payoff credit cards
  • Small Business Loans
  • Patient Solutions - Finance elective medical and dental procedures

Investing

  • Build portfolio that fits investment objectives
    • Diversify across hundreds or thousands of loans taken by quality borrowers
    • Receive monthly payments of principal and interest as borrowers repay their loans
  • Can invest in fractions of loans in $25 increments (Notes), 36- or 60-month terms
    • 99.9% of investors that own 100+ Notes ($2,500) of relatively equal size have seen positive returns

Fees

  • Investment service fee of 1% of borrower payments (plus collection fees, if required)

Top

 


Next: Crowdfunding Examples

See also: Holiday Gadgets 2015

Top