Enterprise Crowdfunding: How an IBM experiment improved innovation

Courtesy of The Soho Loft.

Courtesy of The Soho Loft.


by David Drake

Can the principles of crowdfunding work within the walls of an established corporation such as IBM?

With the popularity of Kickstarter, Indiegogo and Kiva, crowdfunding has taken a new turn inward in corporate America. We are calling the trend Intranet or Enterprise Crowdfunding.

Instead of going out to seek financing, technology giant IBM saw the internet fundraising model as a viable way to generate engagement and participation within its own ranks, and to spark innovation and collaboration by its own employees.

On August 28, I had the opportunity to sit down with Michael Muller of IBM Research, who initiated this project together with Steven Daniels, Werner Geyer, Todd Soule and John Wafer.

The IBM initiative is one of the world’s first enterprise crowdfunding projects. The first trial run was started in the spring of 2012. Compared to Internet Crowdfunding, where individuals or groups use their own personal funds to finance projects they want to support, IBM’s month-long Intranet Crowdfunding project was sponsored and funded by the enterprise itself. But the decision of how and where to allocate the company fund was left up to the employees.

Five hundred employees were each given $100 and the chance to propose a project — but they could only use the funds to support the projects of their co-workers, not their own. The projects they created sprang from needs shared by all employees, in areas such as the cafeteria or the printers used by many departments. The participation rate was a whopping 46 percent. A second trial was run in another part of Research, with even stronger participation.

The third trial of the concept was run by the CIO and IT divisions, offering $10,000 to $50,000 per project, and focused only on technologies. About 300 employees from 29 countries were involved and 10 projects were successfully funded. (Like Kickstarter, the model was an all-or-nothing funding.) Compared to the first trial, where only 42 percent of the funding came from people unknown to the project leader, in the second trial 80 percent came from anonymous donors within the organization.

A third trial was run by the CIO and IT divisions, offering $10,000 to $50,000 per project and focused only on technology.

With three successful trials under its belt and a fourth about to begin, IBM has found that enterprise crowdfunding works, for projects both large and small. As long as people have something in common with the project proposer (e.g., a country, working group or division), they will invest. When a communication strategy is in place, participation is guaranteed and collaboration is boundless.

What we see in this project is the removal of ego-based crowdfunding, where some project owners market a project for their own benefit or where donors use their personal funds to influence who gets funded in an all-or-nothing funding model. As stewards of the company’s funds, employees can bankroll projects that do not even directly benefit them, and can propose projects in which they have no direct vested interest.

The IBM initiative helped create highly innovative projects and increased employee engagement, since the projects were all for the common good. It created a strong community ethic within the company and encouraged real innovation and genuine collaboration.

The IBM initiative shows that companies can benefit from crowdfunding by truly connecting to and engaging employees and community, leading to grassroots innovation, better executive decisions, an improved participatory company culture and higher morale.

If enterprise crowdfunding can improve innovation and morale within a single company, just imagine the ways it can transform the country as a whole.

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft, a financial media company helping firms and funds to advertise to investors, QIBs and family offices in compliance with the new SEC law 506c. You can reach him directly at David@LDJCapital.com.
Read more at http://venturebeat.com/2013/09/29/enterprise-crowdfunding-how-an-ibm-experiment-improved-innovation-and-morale/#KOrxME09E8CLcDG3.99

Tags: ,


This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise ...NPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it woul [...]

EntrepreneurWhy Some Small Business Owners Are Turning to Crowdfunding to Save Their CompanyEntrepreneurMany owners of beloved local businesses, especially in pricier cities, have been forced to swallow their pride and appeal to their customers in times of crisis -- a process streamli [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

Crowdfunding bid to cut car cover for millennialsThe TimesAn insurance start-up that claims it can reduce premiums for millennials will launch a £15m initial coin offering (ICO) next month in another sign of the growing frenzy over digital currencies. InsurePal will use the funds rais [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

Crowdfunding For French CastlesNPRYou too can own a French chateau, in part, anyway. Romain Delaume, CEO of Dartagnans, tells NPR's Scott Simon about a crowdfunding effort underway to preserve La Mothe-Chandeniers. SCOTT SIMON, HOST: What if I told you that for about $60, you cou [...]

CryptoCoinsNewsCrowdfunding Giant Indiegogo Looks to Make ICOs MainstreamCryptoCoinsNewsCrowdfunding platform Indiegogo has a plan to help initial coin offerings (ICOs) break into the mainstream, even as the U.S. Securities and Exchange Commission (SEC) is ramping up its oversight of [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |