Crowdfunding

Crowdfuding ”the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet.” Oxford Dictionary

Crowdfunding "the practice of soliciting financial contributions from a large number of people especially from the online community“ Merriam Webster Dictionary

Actors in crowdfunding project initiator who proposes the idea and or project to be funded individuals or groups who support the idea moderating organization (the "platform") that brings the parties together to launch the idea 4

Examples of growdfunding platforms ArtistShare (2003) Chipln (2005) EquityNet (2005) Pledge (2006) Sellaband (2006) IndieGoGO (2008) GiveForward (2008) FundRazr (2009) Kickstarter (2009) RocketHub (2009) Fundly (2009) GoFundMe (2010) Microventures (2010) SeedInvest (2011) Fundageek (2011) 5

Funds raised through growdfunding YearMillion dollars

7

Additional benefits to the initiator 1 Profile – Boosting the reputation Market feedback – Successful campaign can prove that there is a market for the product – Unsuccessful campaign gives market feedback for improving the product 8

9

Additional benefits to the initiator 2 Audience engagement – Utilizing comment features on the project's crowdfunding page Feedback from potential users – Engaging the crowd in research and development – Beta-testing the product before the actual release 10

Additional benefits to the initiator 3 Utilizing the wisdom of the crowd – Traditional financiers cannot not always predict what will be a success – Projects which have been rejected by traditional financiers get a chance Free marketing – Campaigns get publicity – Word of mouth promotion 11

Additional benefits to the initiator 4 Increase in venture capital – Total amount of available risk financing increases 12

Risks and barriers 1 Bad reputation 1) failure to meet the campaign goals 2) failure to deliver the promised project Concerns of Intellectual Property (IP) protection – Threat of idea theft and plagiarism – Can hinder the use of crowdfunding 13

Risks and barriers 2 Donor exhaustion – if same donors are approached repeatedly they cease to participate Public fear of abuse – Scams and abuse of funds possible – Regulatory framework needed 14

Risks and barriers 3 Managing communication with a large number of investors and supporters can be very demanding – Especially if there are problems with the project 15

Thank you! 16

17