On March 3, the National Crowdfunding Association of Canada hosted Canada’s first Crowdfunding Summit at the MaRS Discovery District in Toronto. A sold-out crowd of more than 350 attended. Like many other social entrepreneurs in attendance, I was there trying to figure out if crowdfunding is a viable option for the social enterprise I’m helping to build. I walked away with tons of information and tips. Here are four that I think all social entrepreneurs considering crowdfunding should know.
Crowdfunding is growing in leaps and bounds
Crowdfunding is no longer just a way to raise money for cool gadgets like the Pebble Watch. According to Teri Kirk, CEO of The Funding Portal, the global crowdfunding market is currently worth about $2.7 billion, with 60% of that money going to North American campaigns. In Canada, securities regulations have held crowdfunding growth back, because equity-based (investment with the expectation of a financial return) funding is not currently allowed. However, equity funding is growing globally. The Summit’s keynote speaker, Jon Medved, Co-Founder and CEO of Israeli-based Our Crowd, has raised more than $100 million (US) for around 60 select ventures. For more information about the growth of the Canadian crowdfunding marketplace check out this recent report from The Funding Portal.
If you build it, they still may not come
Many of you have probably heard the story of how the Pebble Watch campaigns have broken Kickstarter – twice. But, according to Bret Conkin, CMO of Canadian crowdfunding site Fundrazr, for every Pebble campaign, there are thousands that don’t even come close to hitting their goal. So before you launch your campaign, it pays to do your homework. Start by looking at recent successful campaigns. Here are three to start with: the Coolest Cooler, Ottawa’s Wipebook and the $1 million ShareCraft campaign for Save the Children. Sometimes you have to build it twice; here’s how Coolest Cooler turned first-time failure into success.
It’s about more than a good idea or cause
The ultimate $13 million triumph of the Coolest Cooler campaign proves that inventor Ryan Grepper really did have a great idea. But, as crowdfunding statistics show – estimates range from 30 – 35% success rates on Indiegogo to 40-45% on Kickstarter – even a really good idea or cause on their own isn’t enough. The Coolest Cooler’s first campaign failed due to a combination of poor timing (turns out people don’t buy cool coolers in December), an original design that failed to “wow” and an overly ambitious funding goal.
The second campaign corrected for these shortfalls and, in addition, significantly ramped up on the social media front. Facebook shares went from 700 in campaign number one, to an astounding 350,000 in campaign number two. On the Canadian front, according to crowdfunding expert, Diana Yazidjian of DFY Consulting, Waterloo’s Voltera spent three years preparing for its ultimate crowdfunding success. On the cause front, the 2012 ShareCraft crowdfunding campaign on Fundrazr was able to raise over $1 million due to the social efforts of YouTube gaming personality, Athene. Ultimately, without strategy and preparation, a good idea or cause alone will only get you so far in terms of crowdfunding success.
Crowdfunding is hard work
At the end of the day, the conclusion I reached is that the best crowdfunding campaigns on any platform are those that involve the most preparation. As the crowdfunding market expands across the globe, campaigns and campaigners are getting help. In the case of Our Crowd, which Jon Medved described as, “A hybrid of venture capital and equity crowdfunding for accredited investors,” the name of the game is careful curating. This means that in the 18 months since their launch, Our Crowd has selected only 2% of the deals pitched to them to promote on their platform.
In total, 57 campaigns on Our Crowd have raised $100 million, an average of almost $18 million per campaign. That’s big money for the ventures that meet their rigorous standards. But 98% get rejected. In the cause-oriented space, my quick online review of sites like Causes and Rockethub and Canadian site Greedy Giver showed a number of campaigns that were far from hitting their targets, some still not even out of the starting gate. Perhaps they hadn’t had the kind of advice shared last week at the Summit. The good news is there’s lots of help out there, so you can avoid those mistakes altogether. Toronto-based Greedy Giver offers free campaign consulting. And you should also consider a free (but donations encouraged) membership in the National Crowdfunding Association of Canada.
Verity Dimock is a non-profit business leader and social entrepreneur. She is a graduate of Ontario’s School for Social Entrepreneurs and currently works as a fundraiser for Toronto’s new Black Creek Community Farm. In addition she is working on the development of a food based social enterprise that promotes healthy, sustainable food at the doorstep. In her spare time, Verity likes to write about social enterprise and is a fan of DIY and handmade projects that feature upcycling and recycling. You can find Verity on Twitter @thecraftstudioTO and @socentgirl. Verity holds an undergraduate degree in Politics and Economics from Trent University and a Master’s Degree in Instructional and Performance Technology from Boise State University