UK Crowdfunding Jo Briggs, Northumbria University Principal Investigator on RCUK project A Taxonomy of UK Crowdfunding

Crowdfunding Online crowdfunding platforms enable individuals, groups and businesses (project ‘founders’), to raise money for creative, charitable and entrepreneurial activities through the solicitation of multiple micro-payments from 'the crowd’ (‘funders’)

Why is it Topical?  Technological innovation  New way of connecting those seeking funding for a given cause or commercial initiative (‘fundraisers’), with those wishing to give to or invest in it (‘funders’)via the Internet…  Involves collaboration tools, social media and ‘platforms’  Is facilitating thousands of new products, services and social innovations  Societal changes  Facilitates individual/grassroots empowerment/social action  e-tail/e-commerce; ‘digital natives’ era  Economic challenges  For fundraisers: shrinking budgets/constraints to accessing finance  For funders: lucrative, novel and accessible investment opportunities

 Part of the crowd economy; one of several new ‘economies’ (‘collaborative economy’; ‘sharing economy’ e.g. Airbnb, Uber)

Rapid UK Growth 2013 UK estimated* economic value: £20.5m for rewards-based (387 percent annual growth) £310m for donation-based £28m for equity-based (600 percent annual growth) Collins, L., Swart, R. and Zhang, B. The rise of Future Finance: The UK Alternative Finance Benchmarking Report, Nesta with universities of Cambridge and Berkeley December 2013*

Donation-based crowdfunding is more philanthropically/community motivated. UK Spacehive aims to facilitate the improvement of local public spaces and amenities Rewards-based crowdfunding (or, pre-sales) for which the funder usually receives a material reward e.g. Kickstarter Definitions

And, in the (variously labeled) loan-based crowdfunding, peer- to-peer, peer-to-business or ‘non- bank’ lending, platforms such as Funding Circle broker deals for borrowers from funders on pre- agreed terms. Equity crowdfunding is profit driven e.g. Crowdcube solicits multiple venture capital investments for businesses in exchange for which funders receive a share of equity/bonds Definitions

“Keep it all” The fundraiser keeps whatever is raised “All or Nothing” A funding goal must be reached for money to be exchanged “DIY” Run your own version from your website Hybid models offer a mix of these Definitions

BUT crowdfunding always involves more than just people's wallets "Disruptive" - but not just in terms of access to finance... …and we still don’t understand much about people’s online behaviour

So, what makes a successful campaign?  Don’t ask for running/operational costs, needs to be part of an overall strategic plan and specific offering  Careful and transparent budget  Clear narrative (KISS), well presented (film, write up etc.); tell a good story  Digital communications plan  Realistic and responsible reward structure (or share offering)  Follow-up plan

 Crowdfunding is not just about raising cash…  It brings with it a whole raft of challenges and opportunities for SEs, charities and mutuals  It’s very hard work! Success rates for some sites/sectors are low  How might "clictivism*" help or hinder social change membership and community organisations? [*“the use of social media and other online methods to promote a cause”]  **Successful campaigns rely on excellent communications and marketing planning**  In turn, campaigns usually bring changes to an organisation's profile and relationships with its customers/ users - for better or worse! Small Businesses and Groups

Nae Pasaran  ae-pasaran-an-untold-story-of-chilean-solidarity ae-pasaran-an-untold-story-of-chilean-solidarity

Grow Ossining

Leeds Bread Coop

Creative Sector

Where to start?  Start with rewards-based crowdfunding (doesn’t involve taking on debt or giving away equity/IP)  Use Tim Wrights TAMP method (targets; audit; method; plan)  Targets: What/when/why/who…  Audit: Assets/skills/resources/tools  Method: Reward/equity/peer-to-peer/donation  All or nothing/keep it all/duration/platform  Plan: Resources/responsibilities/schedule/publishing plan  Before/during/after

Resources  Directory of platforms  CrowdingIn CrowdingIn  ‘Toolkits’ and ‘how to’  