Entrepreneurs Night Out in London – Crowd Funding
“ Crowd funding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organization” (Wikipedia)
On my first week in London, I attended an “Entrepreneurs Night Out” event, with Slava Rubin, founder of indiegogo.com, as the guest speaker. www.indiegogo.com is one of the world’s biggest crowd funding platforms and since it started in in 2008 it has distributed millions of dollars to over 35,000 campaigns in 200 countries. Anyone in the world with a passion can fulfill their dreams and fund creative, entrepreneurial, or cause campaigns.
Since I am working on a crowd funding project targeting the Tunisian diaspora, this event was of a particular interest to learn more about the “crowd funding secrets” as his presentation was amusingly entitled.
Why do people get involved in crowd funding? What triggers thousands of people to finance one very project on internet? According to Salva, there are 4 main (and only) reasons to it:
- Because they care ( I care about environment so I will support projects that protect it)
- Because they want the service or the product ( I want a theatre in my street so I will support it)
- Because I want to be part of something big (I want to support the construction of the first spacecraft to Mars)
- Because I want a share of the profits (I want 1% of the profit generated by this company)
Salva also believes there must be many more factors than just raising money behind any crowd funding campaign:
- Gauging demand an mitigating risks: if your project is not successful in raising funds, it might be a good idea no to do it now, and therefore save money and efforts;
- Test marketing: raising funds is an opportunity to see which messages, stories, pitches really appeal to people;
- Extra promotion: starting a crowdfunding campaign is always a way to get extra promotion if not money;
- Raising money (hopefully!);
- Customer data: a funder is a future customer so you better save his data for future interactions, deals etc;
- Curry Serendipity: Sharing a project online might expose it to copycats. But as Salva said “if someone steals your idea and do it better than you, than too bad”, i.e it might be better to face competition before even developing the product or service.
Followed some “best practices” for a successful crowd funding campaign:
- Explain the story behind the idea;
- Give a honest pitch;
- Be proactive by email, twitter, Facebook (updates, updates and updates);
- Find an audience who cares but get your people first (usually 30% is funded by relatives and friends);
The discussion then switched to the business model of the platform. Salva thinks that given the benefits of crowd funding in terms of testing new products and marketing them, more and more companies will start using crow funding as a financial and/or a marketing tool. Everyone is using existing platforms such as WordPress and Blogger for blogging now (instead of creating a website from scratch). The same thing is also expected to happen for crowd funding.
To my question “ Who will buy indiegogo.com? ” Salva gave a hint by saying “the platform is an amazing source for marketing data. If you fund a movie related project, then we can assume you are interested in movies, and we might use it for customized ads. Google bought Blogger for the amazing amount of similar marketing data it offers about bloggers and viewers”