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Harnessing the Power of the Millennial Generation Through Crowdfunding

Harnessing the Power of the Millennial Generation Through Crowdfunding | Crowdfunding Startups |
Cori Snedecor, co-founder of recently-launched environmental crowdfunding platform, writes in to discuss the importance of wooing the Millenial generation when running a crowdfunding campaign.

The Millennial generation (ages 18 to 35) is viewed as a struggling one, burdened by student-loan debt and soaring unemployment rates. Often referred to as the “Me Generation,” Millennials are sometimes represented as selfish, living at home with their parents, and unwilling to participate in society.

What is often overlooked, however, is the tremendous power this generation wields: their social consciousness, their global connectedness, and the fact that they’re already shaping the future right before our eyes.

To read the full article, click on the title.

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Interesting to see some numbers on this new generation, the power they have and will have, and the openness to make changes and contribute to charitable causes.

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Exploring crowdfunding options to get funded. The Fastest and Easiest Way to get Funded, watch this video:
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The $4T disruption: Why startup investing is up for a big change

The $4T disruption: Why startup investing is up for a big change | Crowdfunding Startups |
In five years, we will no longer talk about crowdfunding versus traditional funding -- it will all just be “funding." Crowdfunding will be treated as a regular part of the private capital markets because it will co-exist with angel, VC, and private equity funding; it will also incorporate some of their their technologies and best practices.

We are already seeing this in the hybridization of early stage funding: Angels and other investors are looking at a founder’s ability to raise money online (either through product pre-sale or equity). Online raises are already becoming commonplace, and in the future investors will expect to see them as part of a healthy track record.

Read more: click image or title.

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#Crowdfunding is being integrated in the #funding industry. There are now specialized platforms, #equity platforms, debt funding sites, etc.

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10 Insights on Crowdfunders - infographic

With over half a billion dollars contributed to a variety of crowdfunding projects in 2014, discover who the crowdfunders are with this infographic.

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Marc Kneepkens's insight:

Excellent #infographic on #crowdfunding

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Young woman explains how to (simply) change the world [video]

Young woman explains how to (simply) change the world [video] | Crowdfunding Startups |

We are incentivized to be selfish. There's no reason to do good other than sheer altruism, and that has to fight against the urge to pursue self-interest. This TED talk explains how we as a society can overcome that selfishness.

Click image or title to see this 6 minute TED talk.

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A little mind shift? We have the resources... it's just a matter of getting our priorities clear, and finding out what true happiness is all about.

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Did The SEC Just Kill Early Stage Venture Capital?

Did The SEC Just Kill Early Stage Venture Capital? | Crowdfunding Startups |
On March 25, the U.S. Securities and Exchange Commission finally announced rules for several aspects of the 2012 America JOBS Act, which legalized “crowd funding” as we know it.  The announcement by the SEC has the potential to unleash large amounts of new capital into American startups.  It could also [...]
Marc Kneepkens's curator insight, March 29, 9:49 AM

More options for #startups looking for #seedfunding

Willie A Hill's curator insight, April 2, 9:17 PM

So will this filter through to the Australian ESVCLP

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Advice for inventors: turning your bright idea into a business

Advice for inventors: turning your bright idea into a business | Crowdfunding Startups |
The journey from great idea to commercial product can be long and costly – but help is available

It was 2008, when the late inventor John Reid and entrepreneur Arpana Gandhi got talking at a fundraising event for landmine victims. In a long career, Reid had invented, among other things, the plastic security tag used to deter shoplifters.

Reid told Gandhi about the Dragon torch, a product he had developed to disable landmines. Despite its promise, problems such as a lack of raw materials meant it had never come to market. “I explained that I’ve got a good track record and a commercial background, and that was one of the things, unfortunately, that John was not very good at,” Gandhi says now. The two decided to combine their strengths – and that is how Disarmco was born.

There are 120m landmines worldwide, and the principal method of disposal is to blow them up. But that requires carrying explosives across borders, which naturally attracts suspicion. “Because of these conflicts in Libya, Iraq, Afghanistan, everybody is awfully twitchy,” says Gandhi.

Reid – who, sadly, died in 2014 – was very good, says Gandhi, at taking technology used in one area of life and applying it to another. The Dragon torch works like a firework: it directs a very hot flame at the munitions so that the landmine is burnt rather than exploded.
Both Gandhi and Reid had put money into the company but needed more funding to test the product. Attempts to attract venture capital failed, says Gandhi: “People are risk-averse, especially within a sector that they don’t understand, and nobody is prepared to do the due diligence to understand that we’re not going to be using this in a detrimental way, we’re using it for a humanitarian purpose.”
So Disarmco used a very modern method of raising funds: it put a request on crowdfunding platform Crowdcube and within six months had raised just under £150,000 (£30,000 more than the original target). The torch has been tested and should be commercially available later this year – though the company also has other products on the market.
Disarmco’s story demonstrates that the journey between having a good idea and creating a commercially viable product can be long, bumpy and costly: half of UK startups fail within five years, and that is partly down to the difficulty of attracting investment.

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Brand Velocity, Inc.

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Marc Kneepkens's curator insight, February 18, 7:39 AM

Crowdfunding to test new ideas is a great platform.

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How To Get A 0% Loan From Your Community - Inc

Crowdfunding on platforms such as Kickstarter and Indiegogo has become a very popular way for small businesses to raise capital through pre-orders. But did you know that there are platforms that let businesses crowdfund 0% interest loans? I got the chance to interview Rachel Maxwell, Founder/CEO of Community Sourced Capital (CSC), who helps business owners crowdfund 0% business loans from their community. She shares her thoughts on how stronger and more prosperous communities can be built through 0% loans.

Can you briefly describe how CSC works?

Current regulations are too heavy for small amounts of funding. CSC helps small businesses access capital in the form of zero-interest loans directly from members of their own community--we believe zero-interest lending is the right sized way to fund small loans, especially with small dollar amounts like $50.. A business applies, gets approved and then runs a four week campaign to sell what we call Squares. Squares represent a $50 loan that a community member shares with a business. If a campaign is successfully funded, we aggregate the Squares into a zero-interest loan for a business. As the business repays, Squareholders can get their money back or roll the repayments into new Squares.

For a business to be approved they have to show us that the project they are funding is useful, responsible, and connected. It is useful if it is for a purpose that will help the business thrive and grow. It's responsible if the loan is an amount that the business will be able to pay back. And it is connected if the business has a community that will support it. Read more here:

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Great info. Loving your business plan template, makes writing a plan almost fun.

Craig Heppell
Nambour, Queensland

Marc Kneepkens's insight:

Yet one more way to get help funding your business. Leave the bank out of it, work with your community.

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Why A Business Plan Is Essential When Crowdfunding Your Startup

Letting the crowd fund your startup doesn’t mean allowing your business plan to go unwritten.In the business world, approximately 543,000 new businesses get started each month and funding those businesses comes from a variety of sources.

Most recently, startups are beginning to utilize crowdfunding sites to promote their ventures and raise the capital they need through online platforms.

Similar to the popular TV show Shark Tank, startups have the opportunity to present their business to a number of “backers” who can potentially finance their business. Such crowdfunding websites are making it easier for new business owners to spread the word of their company and search for possible investors.

On the flipside websites like Kickstarter, Indiegogo, and Fundable are allowing for investors to check out a multitude of emerging businesses for possible fruitful endeavors, which leads us to….

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"I have been receiving "Growing Your Empire" newsletter for about a year, and I appreciate the advice that you have been sharing on entrepreneurship - I have leveraged the information you’ve provided many times."
 Alex Stolyar

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Business plans are the best and most required tool to get funded. Don't get caught without one once you have an investor requiring it.

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The benefits of crowdfunding aren’t what you think

The benefits of crowdfunding aren’t what you think | Crowdfunding Startups |
Local founders agree: marketing, not money, is crowdfunding's true value.

Crowdfunding’s appeal is obvious — it’s essentially free money just for having a clever idea. At least, that’s the impression the casual observer gets when they see a guy raise $55,000 to make some potato salad or $6,000 to “hire a man in a plane to write stupid things with clouds in the sky.”

Even with “reward-based” crowdfunding platforms like Kickstarter or Indiegogo, the crowdfunding process allows new companies to gather the capital necessary for their business without giving up equity in their business or taking on expensive debt burdens. It seems like a no-brainer: anyone with sufficient social capital can parlay it into some tangible capital.

But if you speak with the entrepreneurs behind successful crowdfunding projects, most will only mention the cheap money as an afterthought. To them, crowdfunding’s real value isn’t raising funds — it’s raising awareness.

According to a recent survey of Kickstarter projects by Wharton’s Ethan Mollick and the University of North Carolina’s Venkat Kuppuswamy, crowdfunding’s ostensibly ancillary benefits are actually the primary reasons why successful startups use it. “Crowdfunding is not just a means for immediate funds,” said Kuppuswamy. Rather, it’s a way to validate ideas, test markets, launch brands, find customers and impress investors.

"I was almost immediately approached by investors following success of the campaign."Cora Founder Molly Hayward

When asked why they turned to crowdfunding, 70 percent of successful campaigns said “to see if there was demand for the project,” making it the most popular response, followed by marketing and connecting with a community of supporters. Only 54 percent said “the project could not have been funded without raising the goal,” and a mere 30 percent said they turned to crowdfunding because “other traditional financing options weren’t available.” Among savvy startups — 59 percent of respondents said they were using crowdfunding to launch a new business, and another 17 percent said they were launching a new product for an existing company — the “crowd” is more important than the “funding” in crowdfunding.


Is this really a good idea?

So, why crowdfund? “Proof of concept and market validation,” said Lorenzo Buffa of Analog Watch Co., which raised $73,000 on Kickstarter for its Carpenter Collection, an all-natural, soft-strap wood watch.

“Proof of concept” was also “the main reason” why Rooster Soup Co. turned to crowdfunding, according to Steve Cook of CookNSolo Restaurants, the guys behind Federal Donuts, Zahav and a few other esteemed eateries. Their latest is a charitable joint venture with Broad Street Ministry that will uses the profits from selling soup made from Federal Donut’s excess chicken to expand BSM’s hospitality collaborative. Despite having an enviable track record that would make even Allen Iverson levels of over-confidence understandable, Cook said they turned to Kickstarter “basically, to understand whether this was a good idea.” Forty-five days, 1,587 backers and $179,000 later, they knew they had an idea that Philadelphia would get behind.

By going on Kickstarter first, companies obviate the risks of investing a ton of time and money in a product no one wants (sadly, it is too late for AC to crowdfund Revel). “I could have spent a lot of my own money,” said Buffa of Analog Watch. “But that’s such a high risk on my end. On Kickstarter, it’s such a low risk venture.” And even though Buffa “already knew there was demand and interest” for his watches, Kickstarter gave him a better idea of how much demand. “I didn’t know it’d be that popular,” he said.

The risk, of course, is that a failed crowdfunding looks worse to potential investors than a successful campaign looks good.

Crowdfunding “speaks to the desire in the market for your product,” said Molly Hayward of Cora, which raised $30,000 on Plum Alley, a crowdfunding platform specifically for women. Cora delivers a “personalized menstruation management kit” replete with tea and chocolates each month, while also delivering a similar package to a girl in India who would otherwise need to skip school during her period.

Cora went on women-centric Plum Alley to create a customer base. “We were essentially pre-selling our products,” said Hayward, adding that the crowdfunding was really just a bridge to a larger, more traditional capital raise. Crowdfunding “was a way to get some validation, to increase our customer base and sort of get a little bit of money until we could open a few [angel investment] rounds and close a few rounds.”


Getting ready for Round 2

Building a larger, and loyal, customer base is critical for Cora’s next project: raising $500,000 in capital this fall. “One of the great benefits of crowdfunding … is that I was almost immediately approached by investors following success of the campaign,” said Hayward. “That was a huge benefit; it opened a lot of doors. If you can galvanize 250 people around what you’re doing, and get them to open up their wallets, it says something about your product that really can’t be conveyed before you have your product. It’s a form of traction that investors usually can’t see and really want to see.”

According to Kuppuswamy of UNC, many businesses use crowdfunding to make themselves more attractive to potential investors. Startups use their crowdfunding success as a way of impressing loan officers, angel investors and venture capitalists. “Assessing demand is a big deal,” he said, not just from an operational standpoint, but also as a way to pique the interest of investors.

Impressing would-be investors was one of the main reasons why Pete Merzbacher of Philly Muffin took out a $5,000 loan on Kiva Zip. By demonstrating he can make those loan payments, Merzbacher says he’ll have an easier time convincing future creditors to loan him money. “It’s a way of building a track record. It’s like very public credit.”

"The marketing and exposure is fantastic."Analog Watch Co. Founder Lorenzo Buffa

Analog Watch Co. will, in time, turn to investors to ramp up international distribution and marketing, but Buffa is in no rush to give away large chunks of equity. That’s why he’s returning to Kickstarter to launch a second, “more high-end” collection this fall. “If I can say I’ve launched two successful products [on Kickstarter], do you think I’ll hold onto more equity in my company when I go to investors?”

The question was rhetorical. “Hell yeah!”

The risk, of course, is that a failed crowdfunding looks worse to potential investors than a successful campaign looks good. A founder can — and likely will — flub a few investor presentations without causing too much harm, but  “an unsuccessful [crowdfunding] campaign is pretty damning,” said Hayward. The research bears that out: 90 percent of the successful campaigns studied by Kuppuswamy and Mollick turned into ongoing projects, compared to just 60 percent of unsuccessful campaigns.

The same publicity spotlight that sets the stage for a successful company exposes an unsuccessful company’s failure for all to see.

And successfully raising money is just one half of the battle. “Crowdfunding alone isn’t validation, unless you can get enough customers and then keep them,” said Cora’s Hayward. Investors want to see the demand for the product and that you can actual produce and ship it, she said. Otherwise, the successful campaign faces another risk from all its exposure, says Kuppuswamy: failing to deliver on a good idea that you’ve now published for all to see on the Internet invites imposters to take your market-tested concept and run with it.


Crowdfunding and marketing

If you ask a marketer, Shakespeare was wrong: A rose™ by any other name does not smell as sweet.

As The Economist recently noted, brands can be the most valuable asset a company owns. And though intangible, brands are built just as surely as inventories, factories and other company assets. Brands are built on words, from stacking the bricks of consumer opinion and the mortar of corporate communications. And in the hands of the right marketing masons, crowdfunding is a powerful tool.

“Performance on Kickstarter can create immense buzz around a product,” said Kuppuswamy. Moreover, that buzz “can just really feed into the success of the product,” creating a virtuous cycle of ever-increasing buzz and funding.

Crowdfunding gives startups shortcuts to building at least two of the three elements of brand equity: consumer awareness and brand loyalty. And it doesn’t necessarily detract from the third: brand association (“association” here refers to the brand’s qualities rather than its associates — e.g. PBR says “cheap,” not “and a shot of Jim Beam.”)

Kuppuswamy pointed to Pebble as a famous example of a company that leveraged its crowdfunding buzz into greater consumer awareness. “Pebble would have had trouble getting into E3 and SXSW without the publicity and attention they received on Kickstarter,” he said.

When Buffa launched Analog Watch on Kickstarter, he “knew [he] was trying to cultivate a brand.” Like Pebble, Buffa was able to leverage its crowdfunding into the kind of advertising that money literally couldn’t pay for: an invitation to show his watches at a Museum of Modern Art show featuring crowdfunded pieces. For Buffa, who said he set out to design watches “for people who shop at MoMA,” crowdfunding gave him access to his ideal audience.

The ability to build awareness among a niche audience was also why Cora’s founder chose Plum Alley for its crowdfunding. For obvious reasons, Hayward was only interested in reaching half of the population. Crowdfunding on Plum Alley provided Cora an automatic hook for the press — Cora wasn’t simply an interesting company, it was a company that needed the reader’s support. Similarly, Rooster Soup and Analog Watch both used the crowdfunding angle to pitch coverage of their campaigns — and, thus, the actual businesses behind the crowdfunding.

But more than just brand awareness, crowdfunding breeds brand loyalty.

When I asked Kuppuswamy whether backers of crowdfunding companies are any more likely to support a business than other customers, he responded with two anecdotes. The first was about a coffee cart in Durham that used crowdfunding to build a brick-and-mortar shop, leading the customers-cum-backers to drag friends to the café to say: “I helped make this happen.”

Successful campaigns are meticulously planned and require huge amounts of personal outreach.

The next anecdote was a bit more famous: Oculus VR, a crowd-funded virtual reality headset maker. Originally backed for nearly $2.5 million, Oculus was subsequently bought by Facebook for $2 billion, causing a huge backlash among its backers. “That sense of violation [of trust]” proved that a sense of community existed, Kuppuswamy said. That sense of community is something major brands like Apple, Coca-Cola and Harley-Davidson spend untold millions cultivating and developing over years. Crowdfunding generated that loyalty almost overnight — and for free.

Well, nearly for free.

Most platforms take a small percentage of the money raised and successful funders need to deliver rewards to backers. But that cost is about the same as what a good marketing company would cost, says Buffa. A good Kickstarter campaign, combined with shipping fees, might take about $9,000 out of a $100,000 campaign, “and that’s what you would have paid a marketing agency to do stuff for you.”

With crowdfunding, “the marketing and exposure is fantastic,” Buffa added.

Still, crowdfunding isn’t for everyone. While many of its benefits — marketing, branding, investor outreach and idea validation — seem free, and the platform fees are low, crowdfunding is extremely costly in one regard: time. Successful campaigns are meticulously planned and require huge amounts of personal outreach. And as some crowdfunding catastrophes have shown, the backlash from a failed crowdfunding can be devastating.

Still, if there is any truth to McLuhan’s famous line, “the medium is the message,” crowdfunding — done right — can say more about a project than how much money it raised.

Jim Saksa is a freelance writer and attorney who has written about esoteric beer laws, behavioral psychology and complex securities legislation for Slate, City Paper and PlanPhilly. He tweets bad puns at @Saksappeal and loves to receive tips at

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Marc Kneepkens's insight:

Crowdfunding works! But the main benefits aren't in getting funded. It's all about market validation, brand awareness, and more. Very interesting article.

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Small Businesses Use Crowdlending to Borrow from Communities, Not Banks

Small Businesses Use Crowdlending to Borrow from Communities, Not Banks | Crowdfunding Startups |
Summary Crowdfunding evolves to include small business lending by local investors. New Crowdlending platform, InvestNextDoor, beats launch estimates and credits community-impact model for early success. One crowdsourcing site on the edge of this crowdlending evolution is InvestNextDoor. An early market mover in this space, InvestNextDoor is now seeing two applications per day with numbers rapidly increasing, according to Lisa Ohman, InvestNextDoor COO. “We’re on par with the growth rates Lending Club saw when it first opened seven years ago,” she explains. “With 27 million small businesses supporting 50% of employment, we see tremendous market potential to help turn around local economies.” SOURCE:

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Banks have hugely disappointed. Crowdlending is gearing up to connect small business with investors directly.

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Crowdfunding and Venture Funding: More Alike Than You Think

Crowdfunding and Venture Funding: More Alike Than You Think | Crowdfunding Startups |

A recent academic study looked at theater projects on Kickstarter, including one titled “Thanks For Playing: The Game Show Show!,” found that projects picked only by crowds were as likely to deliver on budget — and achieve commercial success and positive critical acclaim — as projects favored by experts.

Hug wants to raise $34,000 to build an app and sensor band that wraps round your water bottle to track daily hydration. Van Eko is targeting €150,000 (about $200,000) for an eco-friendly electric scooter made of hemp fibers. PetTunes is seeking $196,000 to build a personal music player that optimizes sound frequency for dog and cat ears.

A catchy, even irrelevant idea is seemingly all an aspiring entrepreneur needs these days to raise money on crowdfunding sites like Kickstarter — a point driven home this summer when a Columbus, Ohio, developer, Zack Brown, raised $55,492 to make a potato salad.

Now, researchers are tapping into the growing data on crowdfunding to take stock of the phenomenon. A central question: Do crowds — driven by a herd mentality, crowd euphoria or sheer silliness — gravitate toward funding seemingly irrelevant ideas? Or can crowds make rational funding decisions and, better yet, exceed venture capital investors and other traditional gatekeepers in identifying promising projects?

A recent academic study explored those questions by looking at theater projects on Kickstarter. In that study, researchers tracked 120 theater-related campaigns on Kickstarter between May 2009 and June 2012 that aimed to raise at least $10,000. Researchers also asked 30 professionals, all with experience in evaluating applications for grant-making organizations like the National Endowment for the Arts, to evaluate those same campaigns.

Their findings: Crowds and experts agreed substantially on what makes promising theater. Where crowds and experts disagreed, crowds were generally more willing to fund projects. Yet projects picked only by the crowd were as likely to deliver on budget — and achieve commercial success and positive critical acclaim — as projects favored by experts. The crowd, in effect, picked strong projects that experts might not have recognized.

“The crowd is often thought as being crazy. There was a sense that they would back musicals about Internet cats, and experts would back serious work,” said Ethan R. Mollick an assistant professor of management at the University of Pennsylvania’s Wharton School. “It turns out the crowd does consider the quality of projects and outcomes pretty well.”

One reason crowds might do as well, or even better, at picking promising projects is that they tend to be more diverse and might avoid, for example, some of the gender biases that have long directed the bulk of the venture capital funding to male entrepreneurs.

Two recent studies of Kickstarter projects have found that crowndfunding is indeed opening entrepreneurship and investing to more women. A recent study of 16,000 Kickstarter projects, by researchers at the University of California, Berkeley and the Hebrew University of Jerusalem, found that female investors were more likely to invest in female entrepreneurs, and that these female entrepreneurs enjoyed higher rates of success in reaching their funding goals.

Another study by Jason Greenberg at New York University’s Stern School of Business and Mr. Mollick also found higher proportions of female funders led to higher success rates in capital-raising for women.

Venture capital investors are scrambling to tap the wisdom of the crowd, financing projects that found their first legs in crowdfunding. In the last quarter of 2013 alone, 10 previously crowdfunded hardware start-ups raised a total of over $150 million, according to a report published on Monday by CB Insights.

In March, Oculus VR, the virtual reality company that raised $2.4 million on Kickstarter, was acquired by Facebook for $2 billion. And with 19 deals through July, investor deal activity to crowdfunded hardware companies is on pace to break 2013’s record this year, the report said.

Crowdfunding platforms have become “a valuable source for dealflow” for venture capital investors, the report said.

Still, what explains the success of potato salad guy? Or projects like the first-ever all-pug production of Hamlet, successfully funded this month?

The Wharton School’s Mr. Mollick shrugs off those examples. “Sometimes, there’s just weirdness on the Internet. The Internet likes strange things.”

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SAGA starts crowdfunding in Korea after succeeding in Japan - musicJAPANplus -Pick up+-

SAGA starts crowdfunding in Korea after succeeding in Japan - musicJAPANplus -Pick up+- | Crowdfunding Startups |

With "NO BORDER" (= there are no country borders in the world) as their theme, even though it has only been 4 months since they started their activities, SAGA has already finished their world tour and is currently gaining name all around the world.

They have announced that they will not be releasing their new album through any label - instead they wish to create the album with fans in countries all over the world by crowdfunding. They started their crowdfunding project in Japan in July, and since the project has reached 99% with unbelievable speed, the Asian electro unit has started their crowdfunding project in Korea.

There are no previous examples of any group that includes Japanese members succeeding in crowdfunding in Korea, however with only after 1 week of the start their project has already reached 80%. Like their project in Japan, this project is also opening whole new roads towards connecting all countries in the world through music.

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What a way to do crowdfunding. No labels, only albums through their fans, and going from one country to the next, all over the world.

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Crowd Funding Is Not New, But Crowdfunding Is

Crowd Funding Is Not New, But Crowdfunding Is | Crowdfunding Startups |

Crowd funding is not new, but crowdfunding is. Completely intuitive, both terms mean funds conveyed by a crowd to a solicitor.

Crowd funding is actually traditional banking, insurance, stock markets, charities and the like, where the crowds are relatively small and absolutely defined. Now a new word, crowdfunding is very similar except that it’s conducted on the Internet where the crowds are innumerable and possibly anonymous.

It’s largely due to those two words, innumerable and anonymous, that crowdfunding has caught on to the point where several online platforms now aggregate funds seekers with funding crowds. Now with crowdfunding, the Internet simultaneously facilitates and disrupts our experiences with what I call the Four Cs of Modern Society: Connect, Communicate, Communities and Commerce.

So far, crowdfunding fits primarily into two categories:


This is where an emotional connection motivates members of a crowd to give to a cause, project, idea, ideal, etc.  Besides the emotional motivation, merchandise like a T-shirt or first album, for example, are likely to be involved as a token of thanks. This crowdfunding form is nothing more than donations.

Business funding

This money goes to a commercial venture, often a startup, with the expectation of receiving a first-of-its-kind product or future discount. The crowd knows the funds partially pay for the merchandise and partly capitalize the venture to which this crowd also has an emotional connection. This is business funding in the form of a commercial

transaction, not investment.

Recently, crowdfunding has nudged closer to debt and equity capitalization. Peer-to-peer lending is an emerging form of crowdfunding, while the investment model still has legal and practical hurdles.

It’s clear that the future of small business capitalization will look a lot different than it does today. But for most small businesses the jury is still out on how the crowdfunding options will be part of their capitalization future.

In my next column I’ll use a practical approach and some tough love to reveal the challenges facing both the debt and equity sides of crowdfunding.  Ironically, those two advantages of crowdfunding mentioned earlier, innumerable and anonymous, will manifest as potential barriers as we discuss the more sophisticated forms of crowdfunding.

Write this on a rock…

Crowdfunding is just new tools to accomplish traditional fundraising and capitalization.

Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”

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Setting terminology straight and understanding crowdfunding better.

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£1.2m raised in 16 minutes? That'll be a world record

Crowdcube, the equity-based crowdfunding platform, has broken the world record for the fastest fundraising after taking just 16 minutes to hit its target.

In a world first, Crowdcube, which raises funds from armchair investors in exchange for equity, today closed a £1.2m round within just 16 minutes.

This was 12 times faster than the previous record for the fastest crowdfunded pitch and set a world record for the fastest equity crowdfunding raise of all time.

The previous record for the fastest equity crowdfund was Crowdfunder, a Cornwall-based crowdfunding platform focusing on rewards, which raised £500,000 in three hours.

141 investors backed Crowdcube’s latest round of crowdfunding, which will be used to expand the company's operations both in the UK and internationally.

The average amount invested topped £8,500.

This latest round follows a £3.8m cash injection from venture capital firm Balderton Capital last week.

The company, which now has a presence in seven countries, including Brazil, Sweden, Dubai, Poland, Italy, Spain and New Zealand, is hoping to build a truly global crowdfunding platform.

The total investment pot, which now totals £5m, will also be used to double the size of Crowdcube's team to 50 staff, opening new offices in London and Scotland while expanding its Exeter base.

Darren Westlake, Crowdcube CEO and co-founder said: “This is the first time that any sizeable fundraise has meshed traditional and alternative finance methods and we expect to see more of this in the future.

"Crowdcube is in a fantastic position to pursue our growth plans and continue to support both investors and small and growing businesses in their investment and finance requirements.”

Mr Westlake and co-founder Luke Lang launched Crowdcube in February 2011 to "democratise investment". According to Mr Westlake, "Banks adopt a no-risk approach to lending, while business angels and venture capital funding are difficult to access. We are leveraging the potential of the crowd to pool small amounts of investment."

Crowdcube takes a 5pc cut of each successful fund-raising. If a project fails to reach a predetermined target, money is returned to investors.

Crowdcube has successfully crowdfunded through its own platform two times previously, raising £320,000 in 2011 and £1.5m in 2013.

How to create a successful crowdfunding campaign. Watch Growthink's video:

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Crowdfunding is gearing up all over the world for some big business.

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U.S. SEC approves new crowdfunding rules

U.S. SEC approves new crowdfunding rules | Crowdfunding Startups |

(By Michael Erman) – U.S. securities regulators approved new crowdfunding rules on Friday, allowing start-up companies to raise money from mom-and-pop investors over the internet.

Private companies were previously allowed to solicit only accredited investors – those with a net worth of at least $1 million, excluding the value of their homes, or annual income of more than $200,000.

The Securities and Exchange Commission voted 3 to 1 to approve the measure, the last piece of the Jumpstart Our Business Startups (JOBS) Act, a 2012 law enacted with wide bipartisan support that relaxes federal regulations to help spur small business growth.

Crowdfunding was delayed at the SEC by leadership changes and difficulties in crafting workable rules. Since the crowdfunding rules were originally proposed in October 2013, the SEC has tightened limitations on how much investors can invest in these start-up companies. Read more: click on image or title.

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Marc Kneepkens's insight:

Finally a great step forward in the crowdfunding sector. Small investors can now officially take part in raising money on the #crowdfunding platforms.

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4 Tips to Set You Up for Crowdfunding Success

4 Tips to Set You Up for Crowdfunding Success | Crowdfunding Startups |
For small-business owners considering alternative funding options, here are a few basic things to know about crowdfunding.

Securing funding from traditional lenders has become increasingly difficult for many small-business owners. Banks are under a lot of pressure to make good loans, and that pressure trickles down to entrepreneurs.

Fortunately, in the past year, the amount of small businesses with crowdfunding campaigns has significantly increased, proving it’s a viable alternative funding option. A 2015 report from Massolution, a research firm specializing in the crowdsourcing and crowdfunding industries, shows 41 percent of all crowdfunding capital raised last year was for business and entrepreneurship. And while there are billions of dollars being exchanged on crowdfunding platforms, a 2015 survey by Manta found that only 3 percent of small-business owners had funded their business through crowdfunding. More than 30 percent of the small business owners surveyed said they would consider crowdfunding if they knew more about it, so for these small-business owners considering alternative funding options, here are four basic things to know when getting started. Read more: click image or title.

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Marc Kneepkens's insight:

Learn more about crowdfunding and be successful.

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How Women Entrepreneurs Bypass Obstacles To Fund Innovation

How Women Entrepreneurs Bypass Obstacles To Fund Innovation | Crowdfunding Startups |
Author and funding expert, Geri Stengel, helps women understand they can break through the barriers and fund innovation.

Women are creating companies that meet the needs of the market. Not that men don’t, but women have an edge: Women make the vast majority of consumer buying decisions so they have a handle on what the market wants.

Some like Kara Goldin of hint, Cybele Pascal of Cybele’s Free to Eat, and Wendy Strgar of Good Clean Love created products to meet their own personal needs. Others, like Sara Andrews of Bumbleroot Foods and Courtney Nichols Gould of SmartyPants Vitamins wanted to make a difference in something they were passionate about. Some of these enterprising women have companies in very early stage, like Bumbleroot, others are running companies with tens of millions of dollars in sales, like hint. Read more: click on title or image.

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"Growthink is a full-service business, representing you through the whole process - very important value-added service. We've been very impressed with the professionalism and kindness that Growthink has shown us in the rather complicated world of commercial financing."

Debra Soto
Freeballer Surfwear

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#Women #Entrepreneurs come up with problem solving services and products. #Crowdfunding helps them get funded. The article illustrates this with some very creative solutions.

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SEC: Startups Can Now Raise $50 Million in 'Mini IPO'

SEC: Startups Can Now Raise $50 Million in 'Mini IPO' | Crowdfunding Startups |

The SEC on Wednesday approved game-changing final rules in the implementation of Title IV of the JOBS Act, known as “Regulation A+,” which will allow small businesses and startups to raise up to $50 million from "the crowd."

As I reported more than a year ago, this little-known provision of the JOBS Act will allow a startup company or emerging business to hold a “mini IPO” from the general public, not just accredited investors, and should be a complete game-changer for the way businesses are funded.  Read more:

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The Growthink group was very easy to work with and took the time to understand our business and needs carefully. I was surprised at how quickly they picked up the nuances of our business and were able to communicate our thoughts into an organized structure that has helped jump start our future plans. 
- Adam Unger, Principal

Marc Kneepkens's insight:

The SEC has been very slow implementing the new regulations. Here is the big breakthrough.

SageRave of Get Custom Content's curator insight, March 26, 5:56 PM

Ladies and gentlemen, time to fire up those Gofundme pages!

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How Women Entrepreneurs Bypass Obstacles To Fund Innovation

How Women Entrepreneurs Bypass Obstacles To Fund Innovation | Crowdfunding Startups |
Crowdfunding lets entrepreneurs bypass stereotyping to reach investors who are sympatico with their business models.

Women are creating companies that meet the needs of the market. Not that men don’t, but women have an edge: Women make the vast majority of consumer buying decisions so they have a handle on what the market wants.

Some like Kara Goldin of hint, Cybele Pascal of Cybele’s Free to Eat, and Wendy Strgar of Good Clean Love created products to meet their own personal needs. Others, like Sara Andrews of Bumbleroot Foods and Courtney Nichols Gould of SmartyPants Vitamins wanted to make a difference in something they were passionate about. Some of these enterprising women have companies in very early stage, like Bumbleroot, others are running companies with tens of millions of dollars in sales, like hint.

So what’s the problem?
Yet, women still face obstacles that seem ludicrous, given their proven performance. You may have read last week’s Newsweek article “What Silicon Valley Thinks Of Women.” I’ve also written about sexual harassment, unconscious bias, and an overall unfriendly environment for women raising money. Failure to recognize that edge women have and the value of their business ideas is depriving investors of good returns and entrepreneurs of the investors they need. A lose-lose if ever there was one.

But, there’s hope! A new source of capital allows women to bypass obstacles and gatekeepers. Equity crowdfunding gives women (and men) easier access to like-minded investors. Though equity crowdfunding is relatively new, its track record so far shows that it can help start and scale innovative companies that institutional investors are overlooking.

Read more: click on the title or image.

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Growthink really understands how to create compelling business plans and raise capital, and Growthink's Capital Raising Products succeed in infusing this knowledge.
-John Morris
Managing Director, GKM Ventures,
Board of Governors, Tech Coast Angels

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These women come up with fantastic ideas to solve real day to day problems.

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The Creator Behind a Robotic Bartender Spills the Secrets on How to Run a Successful Kickstarter Campaign

The Creator Behind a Robotic Bartender Spills the Secrets on How to Run a Successful Kickstarter Campaign | Crowdfunding Startups |

Dylan Purcell-Lowe, one of Somabar's creators, walks us through the entire Kickstarter process.

Somabar -- a Wi-Fi connected craft cocktail kitchen appliance that, after you've selected a custom-made drink via an app, promises to concoct the beverage in five seconds flat -- stemmed from frustration.

"The idea was an amalgamation of being annoyed by waiting in long lines for drinks at bars combined with the difficulty of making good cocktails at home…especially when you've had a few," says creator Dylan Purcell-Lowe, who came up with the idea for the "world's first app controlled automated bartending appliance" back in 2011 with CTO Ammar Jangbarwala.

After three years tinkering with a series of prototypes, in which the duo "worked out of our garage like stereotypical entrepreneurs" the product launched on Kickstarter. It was a runaway success, reaching its $50,000 goal in less than two weeks, and raising a total of $312,707 by the close of its 53-day campaign, which ended last week.

Entrepreneur spoke to Purcell-Lowe about how he prepared for the campaign, his experience on Kickstarter and what's next for Somabar. Read more here:

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Copying successful campaigns works, learn the best ideas and follow through.

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3 Things You Must Do to Make Your Crowdfunding Campaign a Success

Crowdfunding is not for the faint of heart. To give yourself the best chance, here's what the veterans suggest.

Crowdfunding your new product or idea sure beats dipping into your own pocket, and it's probably significantly less stressful than asking family members to invest. But ask anyone who has ever done a Kickstarter or Indiegogo campaign and they'll tell you it's no walk in the park.

Only about 44 percent of Kickstarter projects meet their goal and Indiegogo's success rate is even lower. Many crowdfunding campaigns fail because there are too many similar products being promoted, lack of public awareness, and insufficient information about the project that causes backer doubt.

Don't let that scare you away. Despite crowdfunding's journey into oversaturation in multiple markets, companies and individuals are winning funding, as well as publicity buzz. After reviewing dozens of glowing campaigns, it seems success boils down to these three things:

1. Planning Ahead

Popbasic, a women's fashion brand in San Francisco, reached its goal of $20,000 in less than five hours. In fact, it has made more than 300 percent of its initial goal and still has a couple weeks to go.

This windfall seemed to happen very quickly for the company, but that is not the case. It planned the campaign six months in advance, constantly engaging their mailing list of over 30,000 women who knew about the silk blouse the company would be rolling out. In fact, the fans even helped choose the print and decide on design features. Popbasic's audience was emotionally invested in this Kickstarter long before the page ever went up!

The campaign didn't come without roadblocks. "It was tough to keep the momentum of the initial excitement of the campaign," says Madeline Veenstra, Popbasic's Co-Founder. It didn't affect them getting funded; however, as you plan for your own campaign, think about life after the launch. Maybe plan a special surprise in the middle of the campaign--an event or new incredible reason to back you. This way, you can continue the buzz around your product through the duration of the campaign.

2. Constantly Engaging the Audience

Comedian Ben Rosenfeld kept his audience engaged on and offstage during the Kickstarter campaign for his new illustrated coffee table book, Russian Optimism. "Before I made my Kickstarter public, I put together a spreadsheet of blogs, sub-Reddits and Facebook groups to pitch," he says. "Once I launched the campaign, I just made sure to do a little every day. I'd also make sure to do the stage version of the book every night when I performed and mentioned the website for the book after each show."

Ben exceeded his goal, but reminds us that between Kickstarter and Amazon Payment fees, a sizable percentage will be deducted from the funds. Also, international shipping fees to backers are expensive--so plan accordingly and adjust your funding goals.

3. Gaining National Exposure

"Most of our donations came from articles written about us and our products," says Etai Granit, Founder and CEO of BitBite, a wearable technology that helps monitor eating habits. The company gained national media exposure surrounding the evergreen topic of losing weight and improving personal nutrition. They were featured in Yahoo!, CNet, and CNBC to name a few and within 48 hours of launching their product, they had $20,000 in donations.

BitBite didn't have a physical product that people could hold in their hands, so they had to work harder to convince their backers that the product was worth waiting for. Because of the strong design factor displayed in their Indiegogo page, they were able to generate credibility.

If you are launching a crowdfunding campaign for a product, go above and beyond to show your audience all of its features as if they had it in their hands. Have a strong video that clearly shows the product and how to interact with it. Make sure your materials lay out the technology and its functionalities in a way that is comprehensive, but easy to understand.

You cannot be overprepared for a crowdfunding campaign. Better to push your launch to a later date than to do it when you're less than 100% ready. Once your materials are the best they can be, you have planned your media campaign to the endth degree, and you have the manpower to answer backer questions immediately, it's time to pull the trigger. Good luck!

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Making A Crowdfunding Video That Sells Itself

Making A Crowdfunding Video That Sells Itself | Crowdfunding Startups |

In order to make a video go viral, we must intentionally have the mindset to make one that sells by itself from Day One.

I’ve had a lot of fun coming up with the video concept for my previous crowdfunding campaign, the PROTAG Duet. That video eventually went viral and received over 9,000 Facebook shares.

But the greatest lesson learnt was that in order to make a video go viral, we must intentionally have the mindset to make one that sells by itself from Day One.

(Duet’s campaign video has over 9,000 Facebook shares)

Though it is not a requirement for crowd funding campaigns to have a video, Kickstarter statistics show that campaigns that have a video are 66 percent far more likely to raise funds than those that don’t. Videos are great ways to tell your product’s story, as well as for viewers to make a human connection with you, the product creator.  

Let’s look at three powerful ways we can make crowdfunding videos that sell by themselves:

1. Videos that sell ‘steal’ ideas from other great videos

Good artists copy. Great artists steal“- Steve Jobs

Remember this famous quote?

There’s a fine line between copying and stealing. Copying means explicitly taking someone else’s idea and calling it your own. But if you are inspired by an existing idea, and modified it so that its your own, that’s the context of what Steve Jobs was referring to.

While its a controversial statement, it holds weight. It’s true even for the process of learning. We learn everything in life by imitating others. For example, if I want to get better at cooking, I’ll imitate the cooking of great chefs by following their tips, advice and recipes.

The same thing goes for making great videos. Videos that sell usually borrow concepts and ideas from other videos that have proven to work.

If this is your first time making a video, don’t be intimidated. Seek successful campaigns out, and spend time watching and observing what makes great video. After all, if a video has already proven itself to make good money, why risk reinventing the wheel?

2. Sell the story first, then your product

Lumi is a special ink dye for printing your own clothes and fabrics, using only sunlight or UV rays to develop the color.

Lumi’s video sells its product story very well, because its founder Jesse Genet makes it easy for viewers to understand and follow its chronological journey from concept to creation. When you make it easy for people to walk through your product’s story, it immediately builds credibility.

Notice that Lumi’s video focuses strongly on the human element. The video displays the genuine and authentic personalities of Jesse and her team, and she’s personally narrating throughout the video.

People like to see campaigns that have passion, combined with some great product demonstration to prove that what you’re selling works.

3. Sell an experience

If you still haven’t heard about the GoPro camera, well, you are probably living in the stone age!

GoPro is a high definition personal camera that’s often used in extreme action video photography. Before proceeding any further, watch this GoPro promo video first, and take note of the emotions running through you.

GoPro wasn’t crowdfunded, but its promo video is well-done. There is an important lesson we can learn from it.

Pause for a moment, and now relive the emotions that you felt while watching this video. Did you find the clip..

  • Scary
  • Exciting
  • Daring
  • Full of adrenaline

Those were some of the feelings that described how I felt while watching GoPro’s video. Did you notice that GoPro did not focus at all on selling the camera’s features at all? Instead, it only simply showed the GoPro in action, mounted on a motorcross helmet.

Even if I’m not an adventure enthusiast, this video is enough to trigger an internal desire to buy a GoPro camera.

What’s the lesson here? Great videos sell experiences, not products.

The backflips and death defying stunts are enough to bring out the side of us that longs for adventure. It’s that part of us that longs to do crazy things, or YOLO (You Only Live Once) and gain recognition from our friends. And the subtle message is that where it once wasn’t possible, GoPro now enables people to share those exotic experiences.

When you sell experiences, people intuitively realize the need for them to buy your product.

If you can blend these three power tips together into one video, you have an almost sure winner in the making. And oh, don’t forget to enjoy the process!

How to create a successful crowdfunding campaign. Watch Growthink's video:

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8 Steps to Launching a Successful Crowdfunding Campaign

8 Steps to Launching a Successful Crowdfunding Campaign | Crowdfunding Startups |
Meticulous planning and plenty of hard work are the keys to crowdfunding the capital you need to launch.

Crowdfunding is an effective way for entrepreneurs to launch their companies without much capital investment. Instead of buying loads of inventory up front, crowdfunding enables entrepreneurs to judge the demand for their product while helping them fund their first production run.

We didn’t have the money to fund our first production run when launching my startup, Yes Man, so we turned to Kickstarter. People supported us by pre-ordering one of our watches. The money from preorders funded our first production run.

Yes Man is now onto its second crowdfunding campaign to fund the first production run of our sunglasses. After launching two successful campaigns and advising plenty more, I have compiled a checklist of 8 steps to prepare for your campaign.

1. Develop your story. Crowdfunding is all about stories. Unlike traditional websites that focus on products, people on crowdfunding sites like Kickstarter or Indiegogo want to know how you turned your idea into a reality. Explaining why you need their support is just as important as the product you are pitching.

2. Write your video script. Be sure to have the storyboard of your crowdfunding video dialed in before you plan to shoot. In my first campaign, we worked on our video for over 30 hours because we didn’t know how we wanted our video to look. Plan your video ahead so you don’t waste time.

3. Shoot your video. Almost anything works for a crowdfunding video but if you’re looking for a more professional video that doesn’t break the bank, reach out to the university in your area. Chances are you can find an experienced student willing to work for cheap in exchange for a chance to build their portfolio.

4. Product photos. The presentation of your product while crowdfunding is very important. Taking the time to find professional photographers is completely worthwhile. For Yes Man, we were fortunate to connect with a friend who ran Rapid Eye Studios in San Diego. Utilize your network to find people who are willing to work for a discounted rate.

5. Your website. Having your company’s website completed is not crucial but is recommended. A website further validates you are a legitimate company, which crowdfunding supporters like to see. All you need is a landing page that gives some more information about your company.

6. Crunch your numbers. It is essential to know how many units you need to sell to reach your crowdfunding goal. This will put your goal in perspective. When we launched our first campaign, I knew to surpass our $15,000 goal we needed to sell 152 watches at $99 each.

7. PR outreach. An often overlooked part of crowdfunding is spreading the word. Many project creators assume their projects will somehow automatically get noticed.

Reach out to media outlets that cover your type of campaign. An effective way to find the right media outlets is through a  Google Image search. Simply take a photo from a similar campaign and upload it to Google. Google will then display all blogs, newspapers and other media that have covered that campaign.

8. Submission. Sites like Kickstarter use their own guidelines to accept or deny a campaign. They don’t accept all crowdfunding projects. That may be obvious to many but wasn’t to me when I launched our first crowdfunding campaign. The approval process can take a few days and may require you to make some changes to your campaign. Be sure to submit your campaign at least two weeks prior to your launch.

Crowdfunding is the perfect way to bring your product to market. It enables you to judge demand and help fund your production run. Be sure you know before you launch how you will produce your product and how much each unit will cost.

Though dozens of campaigns surpass their crowdfunding goal, many more fail unnoticed. Using these steps, I hope you are closer to your next successful crowdfunding campaign!

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Via Brian Yanish -
Marc Kneepkens's insight:

Talking from experience...

BSN's curator insight, August 25, 2014 5:04 AM
8 Steps to Launching a Successful Crowdfunding Campaign. #crowdfunding #business #tips
M. Philip Oliver's curator insight, August 25, 2014 3:08 PM


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Neil Young's PonoMusic launches second crowdfunding round, offers stake in company

Neil Young's PonoMusic launches second crowdfunding round, offers stake in company | Crowdfunding Startups |
Company seeks $5000 minimum investment

Neil Young’s PonoMusic is looking for further investment following its $6.2 million funding round on Kickstarter in early 2014.

The company is set to launch its high resolution-music download store and PonoMusic device later this year.

The latest funding campaign was launched on Crowdfunder on August 1, offering investors a stake in the company for a minimum of $5,000 investment. The campaign ends on September 1.

The Crowdfunder target has been set at $4 million, with over $2.7 million already raised. PonoMusic has valued itself at $50 million.

Speaking to the Guardian, Crowdfunder chief executive Chance Barnett said: “We are already seeing that this is a growing trend, where companies who successfully run Kickstarter campaigns then want to give those backers a chance to invest through an equity crowdfunding campaign. This opens up a much bigger pool of capital for the company and also allows the people that are most passionate about the company – backers – the opportunity to invest.

“Oculus sold to Facebook for $2bn after raising millions via Kickstarter. Those who backed Oculus never got the opportunity to invest, and there was a significant backlash when it was sold. Pono isn’t making that mistake with the music community.”

How to create a successful crowdfunding campaign. Watch Growthink's video:

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Successful technique after a successful crowdfunding campaign: sell equity in the company through crowdfunding.

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Crowdfunding Promotions Success Guide - crowdfunding campaign promotion

Crowdfunding Promotions Success Guide - crowdfunding campaign promotion | Crowdfunding Startups |

Crowdfunding Promotions Success GuideCrowdfunding Promotions Success

We all know that the crowdfunding projects can’t accumulate funds on their own. This is the very reason why the term “campaign” is used quite often for generating funds in this manner.

There are several factors that make crowdfunding a success, but the most prominent factor is promotion. In case, if you are planning for funding an idea or a project then it’s for sure that you already might have thought about numerous promotional methods. However, the real question is, “Have you considered using promotional tips which involve little effort and give best results?”

1.Video Presentation

Most of the promoters dread the idea of video promotion, as they are not that simple to do. Besides, most of the users are either too shy to face the camera or believe that it’s a costly affair. However, the fact is that video promotion is not costly at all and there’s no need for you to give the presentation by yourself. Hence, make it a point to go for video promotion, as it will play a major role in the success of your campaign.
Videos make it easier for the viewers to connect with your cause emotionally. In other words, you can convey your message in a smart manner and gain the interest of your potential funders. A brief, but well crafted video will answer all the questions which your audience would usually ask. It will make things easier for you once you launch your campaign.

Creating a video presentation is not that hard. All you need us a built-in web cam or a small camcorder. You can then use strings of still pictures along with the voiceover to execute the job. However, make sure to put your face in the video, so that the viewers will be able to trust you more. In case, if you still don’t want to face the cam, you can ask your friend of family member to become the face of the video.

2. Word of mouth (own voice)

We all get busy promoting our campaign in social media and platforms, but forget to utilize the real social network i.e. talking face to face with people in real scenario.

Nothing can be better than convincing people about your campaign via face-to-face discussion. However, keep in mind not to reveal your business model and ideas which took you months of hard work to create.
If your aim is to generate funds from the public, then don’t leave out your friends & family members. They can be the first to fund your project or campaign.
Be ecstatic about what you are explaining to your audience. This will generate more interest in your audience and they would like to know more about it.

3.Follow Up

Once the funds start coming in, you will automatically create a whole new network of followers and associates who all wish to see your campaign succeed. Hence, make it a point to share updates with your investors and supporters.

You can go for short updates like “we just achieved 75% of our target! Thank you all for your help. Please share our campaign page with your followers & friends.” This will not offend your followers, but instead they will feel obliged to be a part of your campaign and will spread out your message to their own followers.

In a nutshell: Create an attractive video, promote your campaign face-to-face and follow up quite often for maximum crowdfunding success.

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Some great basics to keep in mind.

For more detailed info on creating a successful crowdfunding campaign, watch this video:

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5 mistakes that kill crowdfunding campaigns

5 mistakes that kill crowdfunding campaigns | Crowdfunding Startups |
About 57 percent of crowdfunding campaigns on Kickstarter flop. That's because they lack investor incentives and a social media strategy.

Raking in $102,824 on Indiegogo in a campaign that ended July 3, the start-up Ambronite, maker of a drinkable organic "supermeal," achieved a goal that most crowdfunders would envy: It exceeded its $50,000 target by more than 100 percent.

"It was really exciting to see so many people around the world fund our product," said CEO Simo Suoheimo, one of five co-founders at the start-up, which has offices in San Francisco and in Helsinki, Finland, where the young entrepreneurs developed the natural food product in a business accelerator.

Most start-ups that try to raise money on crowdfunding sites are just as pumped about their start-ups as Ambronite's team. Unfortunately, many end up with a goose egg when it comes to money raised. On Kickstarter, 43 percent of campaigns hit their funding goal, and successful campaigns have collectively raised $1 billion. However, the other side of that equation is the 57 percent of campaigns that fall short of their funding goal or simply flop.

How do you make sure your crowdfunding campaign isn't a dud? Here are five mistakes to avoid.

Mistake No. 1: Starting off slow

"Nothing attracts a crowd more than a crowd," said Alon Goren, CEO and co-founder of, who created a white label fundraising portal for individuals and businesses hoping to crowdfund ventures independently of major platforms. If you want to hit your fundraising goal by the end of the campaign, he recommends focusing on raising 30 percent of it in the first two or three days. That's what research shows successful campaigns tend to do, he said.

To make sure donors flock, get your inner circle of supporters—friends, parents, siblings and other die-hard fans—to contribute immediately upon the launch, experts say. "You don't want to be publicly sharing a campaign that has zero amount of money in it," said Goren. "You have to show there is some traction."

Ambronite did exactly that. By doing a private beta test of its product from June 2013 until it launched its campaign in April, the start-up developed a deep pool of supporters before its fundraising appeal ever hit Indiegogo. By the time the company let these fans know about its crowdfunding campaign, many beta testers had shared their feedback and, as fans of the product, had developed an emotional stake in the company's success. As such, said Suoheimo, they were eager to back the campaign.

Mistake No. 2: Assuming supporters are altruistic

Your mom may donate because she loves you. Backers who don't know you may be motivated by something else: The desire to get the gift you're promising in exchange for their support.

Crowdfunders need to offer attractive rewards to supporters to encourage them to tap into your idea, say experts. "They kind of have to think the person contributing is going to be selfish," said Goren. "If people are going to give you money, you want to give them something in return that they really, really want."

Some of the most successful crowdfunding campaigns have functioned almost like an e-commerce store, taking preorders—though Kickstarter has discouraged this: When the Pebble E-Paper Watch for the iPhone and Android phone raised $10.2 million in a campaign that ended in May 2012, one reward for donors was the actual watch—and donors groused publicly when its delivery was delayed.

One good way to revive a campaign that's slowing is to add some new perks instead of hammering your supporters with the same old campaign materials. "Make it interesting again," said crowdfunding expert Richard Swart, director of research at the Program for Innovation in Entrepreneurial and Social Finance at the Coleman Fung Institute for Engineering Leadership at UC Berkeley.

Any rewards you offer should underline the image of your brand that you want to create. "Make sure what you're doing is consistent with your brand experience," Swart said.

Mistake No. 3: Putting the campaign on autopilot

Many entrepreneurs think that viral crowdfunding campaigns happen on their own. Not so, say experts. Many of the most successful crowdfunders made all-out effort by a start-up's founders or hired professional marketers to do outreach. "You have to give it time," said Goren. "You have to think of it as part of running your business."

Don't expect to mobilize bloggers to spread the word on one day's notice if you have not taken the time to cultivate their interest ahead of time. Many crowdfunders list influential bloggers to contact when their campaign starts and assume that simply pinging these writers is enough to get publicity. "They forget these bloggers get hit up constantly," said Swart.

Before you even launch a campaign, get active in social communities and figure out how to use public relations, search engine optimization and other outreach so you capture the attention of bloggers and other influencers. "To make a very successful crowdfunding project, you have to figure out in advance who is going to spread the message," Swart said.

Mistake No. 4: Thinking everything happens online

Not every campaign has the mass appeal of the Coolest Cooler, which at press time had raised more than $7.5 million on Kickstarter—well past its $50,000 goal—with 31 days to go on its campaign. The cooler's inventor, Ryan Grepper, bills it as "a party disguised as a cooler, bringing blended drinks, music and fun to any outdoor occasion."

That doesn't mean you can't host a party to spark that same kind of interest. Whether you hold a backyard barbecue or movie screening—or your public relations firm organizes an attention-grabbing press event—it will give you exposure, said Swart, adding, "Event-driven marketing still works."

The key is identifying your "community of interest" and figuring out how to attract those who have a natural affinity for your project. "You have to figure out how that community likes to come together," Swart said.

MIstake No. 5: Forgetting to ask for a donation

Many crowdfunders put so much time into creating campaign materials, like videos, that they neglect to do something crucial: "They forget to ask people for a donation," said Swart.

Passing around a virtual hat to collect from friends can feel awkward, so focus on explaining why your project is important and how financial support will help toward that goal. Backing a campaign, said Swart, "is an emotional decision."

Successful crowdfunders tap into people's desire to do philanthropic giving—even if those givers are motivated, in part, by the T-shirt they'll get for supporting you. You don't have to be deadly serious to tap into their emotions or to focus only on building excitement around your monetary goal. "People get too focused on dollars," said Swart. The Coolest Cooler's campaign simply says, "Your help at any level brings the coolest one step closer to a beach near you."

Communicating with early supporters of your product regularly—and long before you hit them up for money—can make it easier to ask for donations when the time comes. Figure out which social media they like, and build a presence there. "They will make a decision to back you based on if they like you and care about your information," said Swart.

—By Elaine Pofeldt, special to

How to create a successful crowdfunding campaign. Watch Growthink's video:

Marc Kneepkens's insight:

This article touches on several mistakes that most failing campaigns forget all about.

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