@TCNupdate
Crowdfunding: How to Plan & Launch a Successful Campaign
Chaim LetwinProfessor of
Management and Entrepreneurship, Suffolk University
Ryan DeChanceSenior Discovery
Manager, The Grommet
Sarah MeisterHardware, Design,
and Technology Growth Manager,
Indiegogo
Joe LemayCo-Founder and
CEO, Rocketbook
Jason FrishmanFounder and CEO,
Netcapital
…
Want to know more? www.thecapitalnetwork.org
@TCNupdate
What is Crowdfunding?• An online, flexible open call relating to the raising of
capital• Dramatic surge in social media usage combined with
persistent undercapitalization has given rise to tremendous growth in crowdfunding*
• Types of Crowdfunding• Equity• Reward• Donation• Debt (“crowd lending”)• Hybrid
*Schwienbacher & Larralde, 2012
@TCNupdate
Types of Crowdfunding• Equity
• 2012 JOBs Act in US
• Capital raising under this method provides various changes to the existing system and creates additional avenues for entrepreneurs and investors, more importantly general solicitation.
• Equity Crowdfunding Portals facilitate offers and sales of crowdfunded securities
• During a 12 month period, any investor (regardless of net worth) may invest $2,000 through crowdfunding: up to $100,000 in the aggregate based on income and net worth
@TCNupdate
Types of Crowdfunding• Hybrid
• Often a combination of donation and pre-order
• Kickstarter
• Indiegogo
• Huge tax benefits, especially when it’s used as a sales channel!
• Kind of the wild wild west
• No legal requirements so fraud concerns
• Fraud is currently estimated at less than 1%
@TCNupdate
Crowdfunding Tips1. Solve an actual problem (pain or delight)
2. Do your homework!
3. Bring $ to the table. Or something. Show that you are investing in yourself.
4. Be strategic about your funding goal amount. Think about what it signals.
5. Effective pitch.
6. It’s not always about the money. And that’s okay.
7. Make it your priority. At least for the 30 days.
@TCNupdate
Other Sources of Capital• Traditional Small Business Loans
• Government-supported loans (i.e. SBA)
• Friends and Family
• Angel Investing
• Venture Capital
• Grants
• Bootstrapping
• And many others!
• Securing capital is extremely difficult and one of the major barriers to venture formation (Brush, Greene, & Hart, 2001)