1. Crowd Funding

2. Ty Crandall
Director of Business Services
(877) 600-2487
ty@creditsuite.com

3. What is Crowdfunding?
• Crowdfunding is the collection of finance from
backers—the "crowd"—to fund an initiative
and usually occurs on Internet platforms
• Also known as crowd financing and crowd
sourced capital
• According to WordSpy.com, the earliest
recorded use of the word "crowdfunding" was
by Michael Sullivan in fundavlog[3]
in August
2006

4. What is Crowdfunding?
• Crowdfunding models involve a variety of
participants including the people or
organizations that propose the ideas and/or
projects to be funded, and the crowd of
people who support the proposals
• Crowdfunding is then supported by an
organization (the "platform") which brings
together the project initiator and the crowd

5. Crowdfunding Uses
• Nonprofit
• Political
• Charitable
• Commercial
• Financing for Startups

7. Benefits of Crowdfunding
• Crowdfunding allows good ideas which do not
fit the pattern required by conventional
financiers to break through and attract cash
through the wisdom of the crowd
• If it does achieve "traction" in this way, not
only can the enterprise secure seed funding to
begin its project, but it may also secure
evidence of backing from potential customers
and benefit from word of mouth promotion in
order to reach the fundraising goal

8. Benefits of Crowdfunding
• Profile – a compelling project can raise a
producer's profile and provide a boost to their
reputation.
• Marketing – project initiators can show there
is an audience and market for their project. In
the case of an unsuccessful campaign, it
provides good market feedback.

9. Benefits of Crowdfunding
• Audience engagement – crowd funding
creates a forum where project initiators can
engage with their audiences
• Audience can engage in the production
process by following progress through
updates from the creators and sharing
feedback via comment features on the
project's crowdfunding page

10. Benefits of Crowdfunding
• Feedback – offering pre-release access to
content or the opportunity to beta-test
content to project backers as a part of the
funding incentives provides the project
initiators with instant access to good market
testing feedback

11. Benefits of Crowdfunding
• Crowdfunding also provides an exponential
increase in available venture capital
• If every American family gave one percent of
their investable assets to crowdfunding, $300
billion (a 10X increase) would come into
venture capital
• Another massive benefit of crowdfunding is
that owners retain control of their
operations, as voting rights are not conveyed
along with ownership when crowdfunding

12. Crowdfunding History
• Crowdfunding has its origins in the concept of
crowdsourcing, which is the broader concept
of an individual reaching a goal by receiving
and leveraging small contributions from many
parties
• Crowdfunding is the application of this
concept to the collection of funds through
small contributions from many parties in
order to finance a particular project or
venture

13. Crowdfunding History
• An early precursor of the crowdfunding
business model was praenumeration a
subscription business model, which was used
in the 17th century to finance book prints
• Similar to crowdfunding, an additional benefit
to donors was offered like a mention on the
title page

14. Crowdfunding History
• Then in 1884, the American Committee for
the Statue of Liberty ran out of funds for the
Statue’s pedestal
• Newspaper publisher Joseph Pulitzer urged
the American public to donate money toward
the pedestal in his newspaper New York World
• Pulitzer raised over $100,000 in six months
• More than 125,000 people contributed to the
cause, with most donations being $1 or less

15. Crowdfunding History
• Crowdfunding websites helped companies
and individuals worldwide raise
– $89 million from members of the public in 2010
– $1.47 billion in 2011
– $2.66 billion in 2012
• $1.6 billion of the 2012 amount was raised in North
America
• In 2012 more than one million individual
campaigns were established globallyand
the industry was projected to grow to
$5.1 billion in 2013

16. Regulation and Crowdfunding
The JOBS Act
• Until the JOBS Act, crowdfunding was only a
viable, legal option for projects seeking
donations through rewards crowdfunding,
and not for businesses looking for investors
• Participants can raise as much as $1 million
dollars per year
• Two sections of the JOBS Act directly
pertained to equity crowdfunding: Titles II and
III

17. The JOBS Act and Crowdfunding
• Title II of the JOBS Act was fully enacted in
September 2013
• Also known as General Solicitation, Title II
allows companies to publicly share and
advertise that they are seeking investments
• Title III of the JOBS Act will allow companies to
raise capital from non-accredited investors
• Title III of the JOBS Act is still being reviewed
by the SEC and is not currently in effect

18. CFIRA
• The Crowdfund Intermediary Regulatory
Advocates (CFIRA) is a very active group
working closely with the SEC to provide
commentary on proposed legislation
• CFIRA is comprised of industry advocates and
crowdfunding sites that are champions of
entrepreneurship and investment
crowdfunding

19. FINRA
• FINRA (Financial Industry Regulatory
Authority) is the largest independent
regulator for all securities firms within the
United States
• FINRA works to protect investors, ensuring
that the securities industry operates fairly
• Under the new equity crowdfunding
exemption, FINRA was charged with
overseeing crowdfunding portals

20. Significant Campaigns
• In 1997 fans underwrote an entire U.S. tour
for the British rock group Marillion Marillion,
raising $60,000 in donations by means of a
fan-based Internet campaign
• ArtistShare based in the United States,
referred to as "a pioneering crowd-financing
platform", was launched in October 2003
• Kickstarter was founded in (2009)
• GoFundMe was founded in (2010)

21. Significant Campaigns
• The highest reported funding by a
crowdfunded project to date is Star Citizen,
an online space trading and combat video
game being developed by Chris Roberts and
Cloud Imperium Games
• As of 10 March 2014, they claim to have
raised $40,000,000
• This beats the previous record of $10,266,844
set by Pebble Watch

22. Kickstarter Successful Campaigns
• On April 17, 2014, the Guardian media outlet
published a list of "20 of the most significant
projects" launched on the Kickstarter platform
prior to the date of publication:
• Musician Amanda Palmer raised $1.2 million
from 24,883 backers in June 2012 to make a
new album and art book
• American Hans Fex raised $1,226,811 from
5,030 backers in March 2014 for his "Mini
Museum" project

23. Kickstarter Successful Campaigns
• Writer Rob Thomas raised $5.7 million from
91,585 backers in April 2013 to create a
feature film version of the defunct television
series Veronica Mars
• Actor, writer and director Zach Braff raised
$3.1 million from 46,520 backers in May 2013
to create the feature film Wish I Was Here,
which premiered at the Sundance Film
Festival

24. Kickstarter Successful Campaigns
• Filmmaker Spike Lee raised $1.4 million from
6,421 backers in August 2013 to make a
feature film that, as of April 2014, is not titled
• YouTube celebrity Freddie Wong, who owns
the company RocketJump, raised $808,000 to
produce the second series of the Web-based
series Video Game High School
• The Flint and Tinder company raised U$1.1
million from 9,226 backers in April 2013 for its
"10-Year Hoodie"

25. Kickstarter Successful Campaigns
• Performance artist Marina Abramovic raised
$661,000 from 4,765 backers in August 2013
after paying $950,000 to buy a building that
would house the "Marina Abramovic
Institute“
• The Kano technology company raised $1.5
million from 13,387 backers in December
2013 to create a "computer and coding kit for
all ages."

26. Types of Crowdfunding
• Donation-based Crowdfunding, in which the
backers essentially donate money to support a
cause
• Sometimes he/she may receive in exchange a
"thank you", a special mention, or even a
gadget, but in any case the pledge is
essentially a gift

27. Types of Crowdfunding
• Reward-based Crowdfunding, in which the
backer receives a reward with a clear
monetary value in exchange of the pledge
• The reward is often a product or a pre-series
item that the backer helped produce by
pledging money
• In this case the money pledged is similar to
paying for a pre-order of a product or service

28. Types of Crowdfunding
• Credit-based Crowdfunding (more commonly
called Peer-to-peer lending or "Crowd-
lending"), in which the backer lends the
money and receives an interest rate in
exchange
• In this case the money is pledged in the form
of a credit loan. -

29. Types of Crowdfunding
• Equity-based Crowdfunding, in which the
backer receives shares of a company in
exchange of the money pledged. In this case
the money is pledged in the form of risk
capital
• Crowdfunding as a service, which allows high
traffic brands and publishers to leverage their
own traffic and crowdfund right on their site

30. The Role of Crowd Funding
• The inputs of the individuals in the crowd
trigger the crowdfunding process and
influence the ultimate value of the offerings
or outcomes of the process
• Each individual acts as an agent of the
offering, selecting and promoting the projects
in which they believe

31. The Role of Crowd Funding
• They will sometimes play a donor role
oriented towards providing help on social
projects
• In some cases they will become shareholders
and contribute to the development and
growth of the offering
• Each individual disseminates information
about projects they support in their online
communities, generating further support
(promoters)

32. Motivation to Participate
• The feeling of being at least partly responsible
for the success of others’ initiatives (desire for
patronage)
• Striving to be a part of a communal social
initiative (desire for social participation)
• Seeking a payoff from monetary contributions
(desire for investment)

33. Distinct Traits of Participants
• Innovative orientation, which stimulates the
desire to try new modes of interacting with
firms and other consumers
• Social identification with the content, cause
or project selected for funding, which sparks
the desire to be a part of the initiative;
• (Monetary) exploitation, which motivates the
individual to participate by expecting a payoff

34. Countries Using Crowdfunding
• Australia
• New Zealand
• Canada
• Italy
• Israel
• Finland
• Germany
• Sweden and Norway
• Turkey
• United Kingdom
• United States

35. Crowdfunding platforms
• As of 2012, there were over 450 crowdfunding
platforms
• There are fundamental differences in the
services provided by many crowdfunding
platforms

36. Crowdfunding platforms
• CrowdCube and Seedrs are both Internet
platforms which enable small companies to
issue shares over the Internet and receive
small investments from registered users in
return
• While CrowdCube is meant for users to invest
small amounts and acquire shares directly in
start-up companies, Seedrs on the other hand
pools the funds to invest in new businesses, as
a nominated agent

37. Crowdfunding platforms
• Crowdfunding platforms serve as a "network
orchestrators“
• They create the necessary organizational
systems and conditions for resource
integration among other players to take place
• They replace traditional intermediaries (such
as traditional record companies, venture
capitalists)

38. Forbes Top Crowdfunding
Platforms

39. GoFundMe
• Personal online fundraising websites
• Usually used for raising money for a personal
cause for yourself, friends, or family
• 5% fee is charged

40. GoFundMe

42. Kickstarter
• Kickstarter is a site where creative projects
raise donation-based funding
• These projects can range from new creative
products, like an art installation, to a cool
watch, to pre-selling a music album
• It’s not for businesses, causes, charities, or
personal financing needs
• Kickstarter is one of the earlier platforms, and
has experienced strong growth and many
break-out large campaigns in the last few
years

43. Indiegogo
• Indiegogo approves donation-based
fundraising campaigns for most anything —
music, hobbyists, personal finance needs,
charities and whatever else you could think of
(except investment)
• They have had international growth because
of their flexibility, broad approach and their
early start in the industry.

44. Crowdfunder
• Crowdfunder.com is the platform for raising
investment (not rewards), and has a one of
the largest and fastest growing network of
investors
• It was recently featured on Fox News as the
new breed of crowdfunding
• 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.

45. RocketHub
• Rockethub powers donation-based funding for
a wide variety of creative projects.
• What’s unique about RocketHub is their
FuelPad and LaunchPad programs that help
campaign owners and potential promotion
and marketing partners connect and
collaborate for the success of a campaign

46. Crowdrise
• Crowdrise is a place for donation-based
funding for Causes and Charity
• They’ve attracted a community of do-gooders
and and fund all kinds of inspiring causes and
needs
• A unique Points System on Crowdrise helps
track and reveal how much charitable impact
members and organizations are making

47. Somolend
• Somolend is a site for lending for small
businesses in the US, providing debt-based
investment funding to qualified businesses
with existing operations and revenue
• Somolend has partnered with banks to
provide loans, as well as helping small
business owners bring their friends and family
into the effort

48. Appbackr
• If you want to build the next new mobile app
and are seeking donation-based funding to get
things off the ground or growing, then check
out appbackr and their niche community for
mobile app development.

49. AngelList
• Perfect for tech startups
• The accredited investors and institutions on
AngelList have been funding a growing
number of top tech startup deals.

50. Invested.in
• You might want to create your own
crowdfunding community to support
donation-based fundraising for a specific
group or niche in the market
• Invested.in is a Venice, CA based company
that is a top name “white label” software
provider, giving you the tools to get started
and grow your own.

51. Quirky
• If you’re an inventor, maker, or tinkerer of
some kind then Quirky is a place to
collaborate and crowdfund for donation-
based funding with a community of other like-
minded folks
• Their site digs deeper into helping the process
of bringing an invention or product to life,
allowing community participation in the
process

52. FundRazr
• This website is dedicated to raising money for
anything from personal causes to nonprofits
to entrepreneurial projects
• Cost: 5% for completed or incomplete
campaign plus 2.2% +$.030 transaction fees
• Deep social network integration to connect to
people in your network, cheap and convenient
transaction fees with funds going directly to
your PayPal, can be used to fund anything,
anywhere

53. GoGetFunding
• This London based fund-raising site can be
used to raise money for anything from paying
for pet’s medical bills to creating a short film
• Cost: 3.5% with a keep-what-you-raised
model, plus 2.9% transaction fee
• Can be used for public or private projects,
anyone can post a project, easy to use

54. Crowdfunder
• This platform blends donation-based and
investment crowdfunding models, as well as
encouraging online and off-line crowdfunding
and collaboration.
• Cost: 5%, with an all-or-nothing format, plus
1.9%-5% Amazon FPS Transaction fee
• Mixes online and offline crowdfunding,
emphasis on businesses’ long-term growth
• For-profit companies only

55. StartSomeGood
• Crowdfunding for social entrepreneurs, as
well as nonprofits and other individuals
committed to making change.
• Cost: 5% for completed campaign, with
“tipping point” model, and 3% transaction
fees.
• Open globally, supports for-profits, nonprofits
and individuals
• Attracts niche audience by highlighting
projects centered on the social good

56. Fundable
• Create a business crowdfunding platform that
enables companies to raise capital from
investors, customers, and friends
• Helped over 6 million businesses

57. Other Crowdfunding Platforms
• Lending Club is the 800lb gorilla in peer to
peer lending, having cumulatively enabled
over $3 billion in p2p loans
• Prosper is another leader in the peer to peer
lending industry
• Peerbackers wants to crowdfund big ideas via
its reward platform
• SoMoLend lends to small businesses via their
social, local lending platform
• Funding Circle, if approved, investors lend
capital at a set interest rate.

63. Resources
• http://en.wikipedia.org/wiki/Crowdfunding#H
istory
• http://www.forbes.com/sites/chancebarnett/
2013/05/08/top-10-crowdfunding-sites-for-
fundraising/
• http://www.sba.gov/tools/learning-center-
view-course/406142

64. Learn more about business credit at
www.CreditSuite.com
Ty Crandall
877-600-2487
ty@creditsuite.com