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Crowdfunding CEO Predicts Industry Shakeout in 2013

22 Jan

By Robert Hoskins

We agree with the CrowdFunding Incubator that there is a growing misconception that if you just toss an idea up on a crowdfunding website, money will come running after it. Or the belief that contributors stay up all night scouring the internet for projects they can toss extra money at. This grandiose belief in monetary magnetism is going to cause a lot of crowdfunding project sponsors incredible grief in 2013. The fact is that any venture requires a vigorous and continuous participation on the part of sponsors in promotion. Project sponsors will have to put more of their resources into promotion and building credibility, and this will translate to an improved standard of quality in this new capital market medium.

What's in it for the Contributors?

The Crowdfunding Proposition

“When the credit card bills from Christmas come rolling in, and when some crowdfunding platforms and sites start to post their actual success and failure numbers, prospective contributors are going to be tougher to come by. They will be more cautious, more skeptical and have less money to gamble with than in 2012,” says Douglas E. Castle, the CEO of CrowdFunding Incubator, LLC (CFI), looking ahead to an inevitable shakeup in the crowdfunding industry.

Castle continued by saying, “If anything, entrepreneurs are going to have to do everything that they can to convince an increasingly disenchanted public that their projects will not turn out to be embarrassments, and to persuade the public that contributors, as true believers, will receive some form of compensation, either real or emotional, in exchange for their paid vote of confidence.

The notion of just posting up a request for funding on the web and waiting for the money to materialize is disappearing. Now, more than ever since the crowdfunding phenomenon started gaining media traction and public attention two years ago, organizations which require crowdfunding for their capitalization base are going to have to participate actively in the promotion of their ideas.

This will include more than ever a great deal of blogging, classified advertising, emailing, text message announcements, press releases, videos and social media activity And while that doesn’t have to be expensive, the small sums and significant hours required to get the news of a project to stand out and reverberate are going to be a requirement. Sponsors who are truly ambitious about raising money through this supercharged vehicle will have to drive much of their own traffic to the crowdfunding sites or platforms where they are being featured.”

CFI’s Chief Operations Officer, RD Watkins added, “The better crowdfunding websites are going to be getting more choosy about which project promoters they want to rent out their valuable website real estate to. The decision makers who own these crowdfunding platforms are going to be looking very, very carefully at not only the viability of any given project, but they’ll also be looking at how much the project’s sponsors are willing to participate in the promotional process.

Money is not getting easier. It is getting harder and will probably continue along that trend for some time to come. The whole process is becoming much more active and participatory than before; especially in light of some recent refunds to contributors and some funded but badly stalled projects.”

Castle added, “People are getting educated about crowdfunding. Contributors as well as the operators of the funding sites want to see three things. They want an idea or a business plan that makes sense; they want some kind of consideration in exchange for their contributions of seed or early-stage capital; and they want to see that the innovators and entrepreneurs who are looking to them for funds have some serious skin and sweat in the game.

“Projects just don’t fund themselves. In the coming year, the entrepreneurs are going to have to do everything within their power in order to drive prospective contributors to the platforms where their businesses or business ideas are being showcased.

“On an optimistic note, this market scenario will impose a higher standard of quality on the part of both the website owners and the entrepreneurial hopefuls. It’s an inevitable form of ‘market adjustment’ or ‘correction’ that follows a period of too much money and too little oversight. This will benefit the contributors and the private sector. It will be refreshing to see some sensibility and sanity brought home to the crowdfunding market.”


Equity Crowdfunding Industry Booming in the UK, CrowdBnk Opens New Crowdfunding Operation

22 Jan

By Robert Hoskins

While the officials at the SEC cite fraud as a reason to put their head in the sand, the Equity Crowdfunding industry in the United Kingdom is moving at full steam ahead to fill what a recent Breedon report suggests is a £191 billion funding gap over the next 5 years for small business seeking new startup capital.

CrowdBnk Opens Equity Crowdfunding Operation in the UK

CrowdBnk Opens Equity Crowdfunding Operation in the UK

Small businesses have long been an important source of jobs in the UK and represent a significant portion of the UK output. Given the current economic climate and public spending cuts, startups and small businesses in the UK have an even a greater role to play.

The Crowdfunding  industry offers an alternative source of funding for these businesses. This week sees the dispatch of the eagerly awaited crowd-funded product – the Pebble Watch, which ships worldwide. The startup Pebble Technology raised over $10 million in the US, through Kickstarter, to manufacture their smart watch – proving that people will get behind ideas that capture their imagination.

CrowdBnks opened its doors today and to  kick off the new Equity Crowdfunding event the portal is running the #GreatIdeas Crowding competition for people with ideas to test their entrepreneurial skills through crowdfunding. It is a UK wide competition open to anyone with an idea whatever stage they are at, across all sectors. Success will be judged by the crowd as people back ideas they are excited about here:

Starting on the January 31st and running until the 1st of March, it is free to enter and at the end of the competition the winners get cash prizes to help get their ideas off the ground. The idea that raises pledges worth £10K the quickest will win £7K additional funding from CrowdBnk. The idea that is shared the most by its supporters through social media wins an additional £3K. The funds will be awarded to the entrepreneurs at an event held in March 2013.

CrowdBnk is a crowdfunding platform that works with ideas across the whole spectrum from charity, through social enterprise to business, including those businesses raising capital in return for equity.

Ayan Mitra, CrowdBnk’s CEO stated that, “I started CrowdBnk to prove a point: that there’s another way to get ideas off the ground. It’s not new for people to put their hands in their pockets for something they believe in. All we’re doing is changing the scale. We’re making it possible for more people to get involved and we’re making it easier for entrepreneurs and supporters to find each other in a safe and trusted environment.”

Sundance Film Festival Announcements Reveal Crowdfunding Trends

22 Jan

By Robert Hoskins

Seed&Spark, Dogfish Accelerator, and Nice Dissolve revealed today at the Sundance Film Festival a group of independent film makes are building  a  new community forum,, to help independent filmmakers Crowdfund their films in order to remain independent filmmakers.

“We are three companies working together to innovate the industry from different angles to restore true independence to filmmaking. This includes introducing new business models, financing and distribution channels as well as using technology and social media for film projects,“ said Emily Best, founder and CEO of Seed&Spark. “Creative collaboration and transparency are the cornerstones of innovation. We want to gather and share the wisdom of the independent filmmaker’s crowd to move the film industry forward together.”

Beginning at Sundance, the three partners will engage with filmmakers around the world to share best practices and new ways of creating movies that combine artful storytelling with audience engagement and sound business practices. They will meet them at film and media festivals. In addition, filmmakers can participate via the website, Twitter and Facebook.

“By getting all great minds together, we can form a community around best practices across the film industry. We won’t waste our time trying to reinvent the wheel, instead we will build a very fast, energy-efficient car, “ added James Belfer, co-founder and CEO of Dogfish Accelerator.

$6 Billion Crowdfunding Opportunity vs. Traditional Startup Capital – Infographic

22 Jan

Getting Funded Online –
The Many Ways Of Crowdfunding

By Robert Hoskins

1/22/13 – Funders and Founders put together a great infographic that details the differences between raising Crowdfunding donations versus Equity Crowdfunding investments. The graphic calls Crowdfunding a Sea of Opportunity worth $6 billion.

Crowdfunding vs. Traditional Investment Capital

Crowdfunding vs. Traditional Investment Capital

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