No doubt you’ve heard about crowdfunding. What you might not realize is that there are many forms of crowdfunding and each type is used in a myriad of ways. Rewards, Equity, Donation and Lending.
However, they all have this in common. They gather supporters that are both near and dear to them so that these supporters broaden the campaign far and wide. The more traction that the near and dear create the more successful the campaign.
Let’s look at the two types:
Reward: Basically pre-sales of products that need funding and supporters to be produced.
A perfect example is Flowhive
A father and son working away in Byron Bay Australia for 10 years worked out a way to allow the collection of honey so that a tap could be turned and the honey ran out easily and cleanly without the risk of being attacked by bees.
- They put their campaign on Indiegogo expecting to raise $US70,000 in a month. They raised that amount in under eight minutes.
- When the campaign ended the raise as detailed in the picture above was $US12.48 million
The plastic flow frames for the prototype hives were 3D printed, but this prepared samples so they could get volumes produced with injection moulding.
This raise is a perfect example of a convincing, compelling and credible story supported by an experienced, passionate team. However, where the home run was hit was in the area of supporters. Millions of people worldwide are aware and worried that the bee population is declining and they know that bees play an essential role in ecosystems. A world without bees would be devastating for food production. In the minds of the over 37,000 backers supporting the Flowhive campaign they are helping save the world and also get a regular supply of quality honey outside their kitchen window.
Equity: Come along for the ride with us and invest in our business and help us grow and you can also grow with us and help a craft brewery.
A perfect example is Camden Town Brewery
Camden Town Brewery is one of London’s biggest breweries. They’ve come a long way these past few years, growing their annual revenues by 10x from £900k to circa £9m in just three years. Now, Camden is building a brand new custom-built brewery to help them keep up with demand and bring the taste of Camden Lager to the world.
- Camden Town Brewery raised £2.75m from 2,173 Crowdcube users in April.
- It became the second exit for the equity crowdfunding market when it was sold to beer giant Anheuser-Busch InBev in December.
One investor disclosed they bought 851 shares this year for £550, giving a 68 percent return if they take the cash now.
The raise gathered a passionate group of 2,173 supporters and they delivered to the tune of nearly three million pounds. Supporters are a double edged sword though as many saw when Facebook bought virtual reality goggles maker Oculus VR Inc for $2 billion. The acquisition made Oculus VR one of the most successful projects to emerge from the Kickstarter platform.
The sale to Anheuser-Busch caused the founder of Camden Town Brewery to defend the decision to sell the craft brewery.
Crowdfunding is an excellent way to get your supporters to fund your project or business objectives. There are many lessons you can learn from people that have “been there done that” in crowdfunding often grace the stage at Crowdfunding Week’s events and share their valuable experiences.
But that’s just my opinion… what do you think?
About the Author: Paul Niederer is the COO at Crowdsourcing Week, a global forum to present collaborative solutions for the 21st century. Crowdsourcing Week Global annually gathers forward-thinking executives, entrepreneurs and leaders to learn the disruptive applications, opportunities and implications of the Crowd Economy across industries.
Unlock The Power of Your Crowd
How can the crowd drive growth, innovation and efficiency for your organization? Join me at the fourth annual Crowdsourcing Week Global for an unparalleled look at the how the crowd economy is fundamentally changing business practices across all industries.
Virgin describes it as “Fascinating talks… on everything from smart cities to the sharing economy.” Learn from 60+ global experts blazing the path, who will share the crowd technologies, trends, best-practices, and market opportunities that are driving massive transformation and innovation—and how to apply it within your organization.
Paul Niederer is one of world’s leading authorities in equity based crowdfunding investments and raisings and constructing collaborative funding solutions. He has personally been involved in over $75 million of transactions with 90 different companies seeking capital.
With the intense interest worldwide in EquityCrowdfunding Platforms, and Collaborative Funding Platforms Paul is involved in consulting to a number of parties on how to structure their funding portals, processes and regulations to have successful raises with a fair deal for investors and stakeholders.
He regularly presents seminars on on a number of topics including Collaborative Funding, Crowdfunding in 2020, Investor Crowdfunding: How to run and manage your own platform compliantly and successfully, The Democratization of Capital – Why it is happening now and how to handle it and Executive and Management Briefings on Crowdfunding.
Paul has spoked at a number of events worldwide including the annual Crowdfunding Bootcamp in Las Vegas, the Crowdfunding Asia Summit in Singapore, INSME Academy’s “How Small Businesses Can Embrace Crowdfunding for Success!”, the WASME 19th International Conference on SMEs in Durban, the Crowdfund Investing Innovation Forum in Orlando with the topic “Fraud and the Crowd” and an International Business Angels Event in Amsterdam.