1. Crowdfunding
WYNTK* (what you need to know)
Hands-on
For Entrepreneurs
CJ Cornell – Propel Arizona

2. 10+ companies
$250M Funding 4 Exits (great !)
$3B Revenues 4 Failures (awful !)
Lots of lessons. Chaos, Pain and Joy.
„Serial/Parallel Entrepreneur”
EIR, Venture Partner
Angel Investor
5 Companies 9 Boards
3,000 Tylenol Caplets. Ego and Brain Atrophy.
Investor/Venture Capitalist
Professor of Digital Media & Entrepreneurship
Arizona State University, SJSU, Stanford (Lecturer)
New York Institute of Technology
Knight Center for Digital Media Entrepreneurship
Research in digital media, behavior, entrepreneurship
University Professor
Advisor/Mentor, Author etc.
ASU – Skysong, Venture Catalyst, RSS etc
Arizona Commerce Authority / Venture ready
Arizona Innovation Challenge
Book: Age of Metapreneurship. Blog/Articles
CJ Cornell
@cjcornell
cj@cjcornell.com

3. The Funding Gap

4. Concept to Product to Growth

5. Concept to Product to Growth
$ $ $$

6. Concept to Product to Growth
$
Entrepreneur IPO

7. Concept to Product to Growth
$
Entrepreneur IPO
$
Entrepreneur IPO
$
Venture
Capital

8. Concept to Product to Growth
$
Entrepreneur IPO
$
Entrepreneur IPO
$
Venture
Capital
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub

9. The Kauffman Index of Entrepreneurial
Activity is a leading indicator of new
business creation in the United States.
In 2012 - The state with the HIGHEST level of
Entrepreneurial Growth was …
Arizona.

10. # 1 in Entrepreneurial Growth
# 46th in Venture Capital $

11. The Series-A Crunch

12. The Series-A Crunch

17. Source: http://theyec.org/making-sense-of-the-jobs-act-and-crowdfunding-infographic/

18. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$

19. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$ Crowdfunding
$

20. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$ Crowdfunding
$ Crowdfunding
$

21. Concept to Product to Growth
$
Entrepreneur IPO
$
Venture
Capital
$
Angels,
accel & incub
Crowdfunding
$
$ Crowdfunding
$ Crowdfunding
$ Crowdfunding
$

22. Crowdfunding
Soliciting & Collecting relatively small amounts
of money (“funding”) from a large number of
people (“crowd”)
WYNTK(what you need to know)

23. http://blog.intuit.com/trends/crowd-power-what-is-crowdfunding-infographic
“
Crowdfunding is a term used to describe individuals
coming together to support – and directly fund
projects by other individual and organizations.
“

24. • Source – http;//crowdfunder.com

25. • Source – http;//crowdfunder.com

26. Equity Crowdfunding
(aka Investment)

29. 5 APRIL, 2012 (AND … AUGUST 2012, DECEMBER 2012 …)
Jumpstart Our Business Startup
ACT, Title III (JOBS Act).

30. Equity Crowdfunding - JOBS
• Eliminates ban on general solicitation and general advertising in connection
with private offerings to accredited investors under Regulation D (Rule 506) and to
qualified institutional buyers under Rule 144A.
• Exemption from Securities Act registration “crowdfunding” transactions
(involving access to small amounts of capital through the internet).
• Exemption to allow issuance of up to $50 million of securities in any 12-month
period, up from the current $5 million threshold
• An increase in the number of shareholders a company may have before being
required to register its common stock with the SEC and become a public reporting
company from 500 to 2,000 total shareholders (including up to 500
“unaccredited” shareholders)
• Amount each person may invest in offerings of this type, tiered by the person's net
worth or yearly income.

31. http://www.pepperlaw.com

32. SAN FRANCISCO, Dec 6 (Reuters) - Netflix Inc said on Thursday
securities regulators warned they may bring civil action against the
company and its chief executive for violating public disclosure rules with
a Facebook post …

33. • Equity Crowdfunding - not in the USA (yet)
• JOBS act (April 2012) technically enables CF – but has
not yet been approved by SEC.
• No documented fraud in USA or other areas.
• Equity CF is for “high growth companies” seeking
significant funding from experienced investors
• Will dramatically change in 3-5 years (CJ prediction)
www.propelarizona.com
WYNTK(what you need to know)

34. “THE KICKSTARTER MODEL”
Rewards-based, Donation Crowdfunding:

38. ALL OR NOTHING

39. Perks &
Rewards

40. Updates (and Blogging)

41. Updates (and Blogging)

42. Comments & Engagement

43. Kickstarter (2012)
2.2 million people pledged a total of
$319,786,629
(up 221% from 2011)
Backers pledged $606.76 per minute
People in 177 countries backed a project in 2012
(That's 90% of the countriesin the world)

44. Source: http://KickstartersHQ.com

45. WHY …
Do people Crowdfund?

47. Lessons from Ethan Mollick‟s “The Dynamics of Crowdfunding: Determinants of Success and Failure”

48. 3 Why’s: 1. They connect to the greater
purpose of the campaign
2. They connect to a physical
aspect of the campaign like the
rewards
3. They connect to the creative
display of the campaign’s
presentation
three main reasons why
people unconnected to a
project or business would
support it:
What Is Crowdfunding And How Does It Benefit The Economy - Forbes
http://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy

49. The Real
(Crowdfunding)
Why’s
• Passion
– For the technology
– For the industry
– For the cause
– For the product
• Affinity
– For the Entrepreneur
– For the region, industry etc
• Connection
• Every reason BUT R.O.I. …

50. emotional ROI.
Not financial ROI
WYNTK(what you need to know)
Crowdfunding is about …

51. (when crowdfunding …)
“its not what you do,
but why you do it,”
WYNTK(what you need to know)

52. http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-
multi-touch-watch-kits

54. http://trendwatching.com/trends/infographics/presumers/
“Consumers who want products before they are
developed”
Pre-orders
Early adopters
Supporters

55. UH OH …
The Kickstart Model..

58. 1. Crowdfunding = New “1st Money” for ventures
($10k - $50k average– but wild exceptions)
2. Equity Crowdfunding is Still Far away
3. Rewards based Model IS Crowdfunding today
4. All or Nothing Crowdfunding – Standard
5. Perks and Rewards: Pre-order Crowdfunding
6. Social Media & Content Intensive
www.propelarizona.com
WYNTK(what you need to know)

59. What does success
look like?

60. • The iPhone-friendly Pebble watch earned $7.6
million more than its $100,000 goal.
• And the Galileo iPhone platform closed its
Kickstarter campaign at $702,000, far
surpassing its $100,000 goal.

61. • Ouya raised $2 million in one day for a new Android gaming
console (it’s raised more than $5 million to date),
• the Nifty MiniDrive, external memory for Apple MacBooks.
The tiny storage company is more than 2,000% above its
$11,000 goal with 15 days left in the campaign.

62. Successful campaigns took an average
11 days preparing for their launch.
http://blog.indiegogo.com/2013/01/12-insights-for-2012.html

63. Campaigns ran an average 49 days in
2012, as opposed to 60 in 2011.
Successful campaigns fundraised for
39 days.

64. Crowdfunding Myths & Mistakes
• Myth #1: If You Build It, They Will Come
• Myth #2: Cash is Free
• Making it about you
• Unrealistic Expectations
• Lack of clarity
• No call to action
• Expecting to be found: (No Marketing)
• Ignoring Small Donations/Donors
http://kickstartershq.com/articles/5-project-crushing-kickstarter-mistakes-how-to-avoid-them
http://www.crowdsourcing.org/document/3-big-crowdfunding-myths-via-funderhut/23804

65. focus on “them” –
not your company
WHO are they?
What motivates them?
Interests, Values …
the
1.
The new 4 P‟s of
Crowdfunding ..
www.propelarizona.com
the
2.
You are pitching to “them”
TELL A STORY !!
WHY is more important than $$
VIDEO(s) & VISUAL(s)
Tell the story in small „chapters‟
VIDEO(s) & VISUAL(s)
And even smaller “sound bites”
Give them a Story they
can tell to others.
the
3.
$$ Value is a negative driver !
UNIQUE
It‟s about THEM
EXCLUSIVE
And what is important to “Them”
FIRST
Make sure it is …
BUZZWORTHY
the
4.It‟s a daily/hourly effort …
SOCIAL MEDIA
It‟s a conversation …
UPDATES, BLOGS, NEWS
Provide Value, and Talking Points
RE-POST, TWEETable
It‟s about … for their network
VALIDATION & EVIDENCE

66. First: Who What Why When …
• The 3 Who’s:
– Who are the donors? (affinity & passion)
– Who is benefits? (the market)
– Who are you?
• The 3 Why’s
– Why would your donors care?
– Why does the market care?
– Why are you the right team to do it?

67. First: Who What Why When …
• What is your project & goal?
– Understandable & Simple
– Compelling & Intriguing
– Repeatable & Memorable
• How and When
– How will you achieve your goal? Realistic?
– When, after funding? When will I get my perks?

68. Perks & Rewards

70. Directed by
Patrick Million
Executive Producer
CJ Cornell
a Patrick Million FILM
American Grandmaster

71. Rewards Crowdfunding
• Incentives & perks
• Pre-Orders
• Pre-Sumers
• Market Validation

73. Rewards don’t have to worth $$

75. • $25 perk is the single most claimed perk,
representing nearly 25% of all perks that are
selected.
• While the $25 dollar perk is only responsible
for raising 11% of total funds.

76. • $100 perks raise more money than any other
perk price and make up nearly 30% of total
funds. A $100 perk combined with the next
three perk price points: $50, $500, and $1000
makes up about 70% of total money raised by
perks

78. some
Rules for Rewards

79. 1. Make perks unique &
exclusive
Avoid T-shirts, Mugs & Hugs

80. 2. Target them

81. 3. Give them a
connection

82. “The
Cocktail Party
Effect”

83. “The
Restaurant
Effect”

84. “The
Carey School
Effect”

85. The less tangible the perk,
the more public (visible) &
EXCLUSIVE it needs to be.

86. Crowdfunding Arizona
Can it jumpstart entrepreneurship?

87. 1. Kickstarter “Fails”
Arizona does poorly …

88. 2. Members =/ Supporters
% of supporters is the key ….

89. 3. Entrepreneurship is Different
Products, Companies, Entrepreneurs …

90. 4. The role of “Ecosystem”
Incubators, accelerators, mentors etc ..

91. 5. The power of Community
Shared Goals, Passions, Outcomes …

92. Shared Goals, Passions, Outcomes …

93. Crowdfunding for Entrepreneurship & Economic Growth

95. People as Important as Projects …
Organizations & Affiliations …

96. Entrepreneurs success as much as funding …

97. $15k - $100k *(Average $50k) ….

98. Local Perks
Unique Opportunity for
Arizona Small Businesses

101. www.propelarizona.com
@PropelArizona
cj@propelarizona.com
Slideshare/PropelArizona