University of Oxford’s Saïd Business School Announces 18-Month Crowdfunding Research Study that Will Explore How and Why Investors Decided to Invest in Successful Equity Crowdfunding Campaigns

 

Kauffman Foundation and Nesta Grants, Nir Vulkan, Associate Professor of Business Economics at Saïd Business School, funding explore the business of successful equity crowdfunding

By Robert Hoskins

Oxford, United Kingdom – The equity crowdfunding market is worth over £50 million a year in the UK, doubling in size last year as an increasing number of individuals look for an alternative place to invest their capital. Despite its size however, there is very little research into market dynamics, the success of campaigns to attract funding and the associated risks.

Seedrs makes it simple to buy into the businesses you believe in and share in their success

Nir Vulkan, Associate Professor of Business Economics at Saïd Business School, University of Oxford, has been granted funding from the Kauffman Foundation and Nesta to explore the business of equity crowdfunding. Working with Thomas Åstebro from HEC Paris, the 18 month project will explore the criteria for success for crowdfunders and how investors make decisions on what projects to back.

“We are looking to find out how investors react when presented with different information about an investment,” said Nir Vulkan. “Do they respond more strongly to information about the founding team, to company milestones, existing investors, or previous sales made? We will be able to understand what generates success and what leads to failure, and this will have important implications for companies looking for investment of money and community expertise. More broadly our findings will be of great importance for regulators and governments both in the UK and internationally looking at the benefits and risks associated with the crowdfunding sector.”

The study is being conducted on Seedrs, one of Europe’s leading equity crowdfunding platforms. Seedrs matches investors with businesses seeking capital, conduct due diligence on the businesses, executes the investment transactions and acts as nominee on behalf of investors to protect their rights.

Seedrs was founded by Oxford MBA alumni Jeff Lynn and Carlos Silva, who worked on the idea for the company as part of their Entrepreneurship Project at Oxford Saïd, mentored by Vulkan, before it was launched in July 2012. On average, over £2 million is invested through Seedrs per month, and in 2013 it became the first crowdfunding platform for equity investments to allow cross-border fundraising rounds across the EU. Seedrs has made over 2.5 years of historical data, on an anonymized basis, available to Vulkan and Åstebro for the project.

Jeff Lynn, CEO and co-founder of Seedrs, said, “It’s a great honor to work with my former Oxford tutor, Nir Vulkan, along with Thomas Åstebro on this project. Equity crowdfunding is only in its infancy, and I expect their research to prove highly valuable for practitioners and observers alike as the space continues to grow rapidly in coming years.”

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Understanding the Best Type of Crowdfunding Site to Support a College or University Campus

What’s the Best Type of Crowdfunding Platform to Serve a College or University Entrepreneurship Center, Co-Working Space, Incubator or Accelerator Program?

By Robert Hoskins

Understanding the Crowdfunding Funding Process

The first step in building a crowdfunding business model is to understand the various forms of crowdfunding and at what step of the business creation process each should be used.

This crowdfunding infographic is a good representation on each step of the business creation process from the business idea, generating revenue, validating marketplace demand, expanding operations and maturing into a fortune 500 company.  It also shows what type of crowdfunding is usually best to fund startups and each step of the business’ evolution.

The Crowdfunding Escalator by Crowdfund Suite Shows the Different Types of Crowdfunding

Source: CrowdfundSuite.com

Donation-based Crowdfunding – At kitchen tables, dinner parties, happy hours and dorm rooms around the world many brilliant ideas are born and discussed for the very first time. Once an idea has been pitched and vetted among friends and family and it begins to gain momentum toward the first step of crowdfunding, Donation-based Crowdfunding, which is used to scrape enough money together to begin building a business plan to figure out how much it will cost to bring a business idea to fruition and/or develop at one or more prototypes. Donation crowdfunding sites make it easy to collect money for new creative ideas as well as expand the crowdfunding campaign’s reach from just family and friends to a global audience of potential supporters.

Most donation-based crowdfunding sites are usually built to provide fundraising activities for campaigns that do not offer any rewards or perks.  They are also used to support non-profit causes.  Donations to 501(3)(c) are tax deductible and can be written off at the end of the year.  

Most universities will only build donation-based crowdfunding sites that can be used by students and faculty to collect money by students and faculty for a wide variety of projects including college educations, scholarships, research and development, campus improvements and all kinds of not-for-profit endeavors. Crowdfunding can be used for very small fundraising efforts to raising millions of dollars from alumni, foundations, institutional investors and corporate sponsors.

Donation-based crowdfunding sites will make it easy for anyone to search for, discover, research and fund their favorite pet projects on their alma mater’s campus.

Rewards-based Crowdfunding – Surprisingly enough 90% of people in the world still are not familiar with the term crowdfunding. Mention Kickstarter or IndieGoGo and most people do recognize the brand name and know its purpose and have heard of popular crowdfunding campaigns such as Oculus, Star Citizen, Coolest Cooler and the return of the Pebble Time SmartWatch.

Rewards-based campaigns are used to take ideas, concepts and prototypes to the next level. They are used in a similar fashion to how typical marketing campaigns are used to support product/service launches and rollouts with an added twist.

People with ideas build a crowdfunding profile, shoot a crowdfunding pitch video and build a list of up to 20 perks or rewards that are pre-sold to raise enough money to develop a prototype or pay for the very first manufacturing production run.  Not only do rewards-based crowdfunding campaigns validate industry demand, but they allow businesses to test market various product versions, colors and price points to gauge public interest. More importantly, they help startups generate their first revenue by pre-selling their products and services in order to raise enough money to get the business started. Gaining this type of market traction is very important to angel investors because it shows that there is an audience of people who are willing to pay for the company’s products and services. 

The best way for universities and colleges to cut their teeth on the crowdfunding business model is to launch a rewards-based crowdfunding site, which usually collects a 5% commission on the crowdfunding campaign’s total amount raised. That may not sound like much but since 2009, Kickstarter alone has raised $1.6 billion, which at 5% means $80 million over 5 years in gross revenue or an average of $16 million per year that could be used to fund a wide variety of college/university projects.

Not only are crowdfunding platforms a good source of revenue, but with the right marketing resources crowdfunding campaigns have the potential to raise a huge amount of marketplace awareness for the university’s projects, business development goals, research and development labs and technology transfer programs. All at no cost to the university because the crowdfunding campaign managers are the ones that spend money to market their crowdfunding campaign to the world.

The other reason to consider launching a rewards-based crowdfunding program is that they are easy and do not fall under the jurisdiction of the SEC or state securities board regulators because no securities are being sold. For new startups it also means that raising money does not involve selling any equity shares or giving up any control of the company’s administration.

Rewards-based crowdfunding campaign commissions can also be used by colleges/universities to establish co-working spaces and to fund college incubator and accelerator programs. Co-working spaces with at least 25,000 sq. ft. can generate millions of dollars per year in additional revenue from rent and mentorship programs.

It is important to note that rewards-based commissions combined with co-working space revenue can provide millions of dollars in seed investment capital to begin funding the next step in the process, equity-based crowdfunding sites, where schools, students, faculty and alumni can become equity investors in new startups.

Equity-based Crowdfunding – Setting up equity-based crowdfunding websites will allow schools to play the role usually enjoyed by Angel Investors, Venture Capitalists and/or Broker-Dealers. They will allow students to raise money for startups by selling debt, such as convertible notes, or selling equity shares for a certain percentage of the company to raise enough seed investment capital to produce prototypes, fund early manufacturing runs, setup distribution agreements and hire manufacturer representatives. 

Other types of equity crowdfunding involve sharing 20% of the gross profits with investors or making royalty payments on a per item sold basis until the investors receive a 3x to 5x payback on their initial investment.

Investing in startups is a risky business, but with the right education and building a small group of experienced Super Angel investors to follow, a large group of novice accredited investors can invest smaller amounts of money along side seasoned experts with a proven 25-30 year track record.

In states like Texas, Michigan, Georgia and 11 others non-accredited investors can also pool their money together to purchase equity shares of stock. This is something that has been illegal for the past 80 years, but intrastate crowdfunding exemption laws are now allowing average people to begin investing in startups just like angel investors and venture capitalists.

The aggregation of novice accredited and non-accredited investors are known as Investment Syndicates, which is the process of following expert investors.  This allows students, faculty members and the general public to learn the equity investment business and enjoy the benefits of being an insider when a great business idea is transformed from a startup company to an Initial Public Offering (IPO).

For example, a $300 investment for a single share of stock and pair of Oculus virtual reality goggles would have paid investors a return on investment of $45,000 when Facebook bought the company for $2 billion dollars.

Equity-based crowdfunding is much more complicated than rewards-based crowdfunding due to the stringent requirements needed to meet the SEC and state securities board regulatory requirements.

Unlike rewards-based crowdfunding, equity crowdfunding provides a great opportunity for business administration, legal and finance students to get hands-on experience writing business plans, structuring deals, protecting intellectual property (IP) and planning real world product/service launches that are part of every single equity crowdfunding campaign.

Working alongside experienced angel investors and venture capitalists is also a great way for students and faculty to learn the finance industry from the inside out.

Learn more about crowdfunding:

• Building a Rewards-based and/or Equity-based Crowdfunding Ecosystem;
• Providing Easy Access to Seed Investment Capital with Crowdfunding;
• Generating More Revenue to Support Co-Working Spaces and Startups;
• Using Equity Crowdfunding Sites to Finance Incubators and Accelerators;
• Taking Advantage of Investor Syndicates that are Seeking Better Deal Flow;
• Splitting Revenue from Incubator and Accelerator Mentors Consulting Fees;
• Streamlining Technology Transfer Offices (TTOs);
• Cross-Pollinating College Education with Real World Startups; and
• Learning to Build Better Alumni and Local Community Relationships

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Equity Crowdfunding Platform Commission Revenue Can Fund College & University Incubators and Accelerators

How to Launch an Equity Crowdfunding Site to Provide Sufficient Revenue to Fund Successful College and University Incubator and Accelerator Programs

By Robert Hoskins

Equity Crowdfunding Platform Commission Fees

As deals receive funding, equity crowdfunding sites usually collect a 5% to 10% commission fee.  This funding can be used to setup incubator co-working spaces, which can then start charging monthly rent to begin generating monthly recurring revenue. Once an incubator has been setup, the crowdfunding commission fees can be used to begin building a pool of investment capital to fund a school’s accelerator program.

Most states, however, will not let a equity crowdfunding sites invest in crowdfunding campaigns hosted on their own site unless they are a registered broker dealer with the SEC. 

Schools can, however, setup a separate LLC and begin investing money in startups via the separate entity.

Rules vary by state, so check with a local securities attorney to make sure you understand what the legal guidelines are in your state.

The main point is to note that with the right marketing programs in place, any college or university in the United States can begin build up their own equity crowdfunding investment syndicates and crowdfunding platforms to help fund co-working spaces, incubators and accelerator programs.

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Starting a University Equity Crowdfunding Ecosystem to Build Better Alumni and Local Community Relationships

Crowdfunding Sites Provide Alumni with a Personal Way to Begin Investing in their Alma Maters’ Promising Startups and Reap the Benefit of Making a Lot of Money if They Invest in the Right Projects

By Robert Hoskins

Stimulating Alumni and Local Community Engagement

Establishing an Equity Crowdfunding Ecosystem is a great way for colleges and universities to reconnect alumni with their alma maters and engage them to begin investing in the school’s future.  

Unlike giving donations to a school with no idea of how the money is going to be spent, investing directly in equity crowdfunding campaigns not only gives alumni a way to give back to the university that that helped launch their careers, but also provides them with a personal way to begin investing in creative projects that are near and dear to their hearts as well as reap the benefit of making a lot of money if they invest in the right projects.

Building an Equity Crowdfunding site to market college and university projects to alumni and the rest of the world can help:

• Build Better Relationships with Alumni;
• Migrate Alumni from Blind Donations to Targeted Equity Investments;
• Generate Substantially More Revenue to Finance School Programs;
• Increase Long-Term Return on Investment; and
• Produce Much Better  Global University Marketing Opportunities.

Equity Crowdfunding Sites are Great Marketing Tools

Not only do crowdfunding campaigns provide a great opportunity for students to raise money for their startup companies, but the marketing that is done to drive investors to their crowdfunding profiles is a great way for colleges and universities to market their school’s brand name and recruit new students in a similar manner to running TV advertisements during college football and basketball games.

The difference, however, is that instead of producing a bland 10,000 ft. overview of a college’s academics, research and development facilities and a fly over of the university campus, each equity crowdfunding campaign has the opportunity of demonstrate exactly what is actually going on inside their R&D departments, computer science data centers and bio-tech wet labs. It is a new way to streamline the Technology Transfer process.  

Equity Crowdfunding is a much more cost-effective way to bring new technology and businesses to market and can earn schools substantially more money via equity investments than licensing agreements or royalty deals. 

Entrepreneurship Centers, Incubators and Accelerators

In addition, crowdfunding sites allow schools to promote the fact that they are now offering entrepreneurship centers, co-working spaces, incubators with mentorship programs and accelerators that can help raise money to fund new startups.  Equity crowdfunding ecosystems and alumni angel networks will make is possible to attract more millennials, smarter entrepreneurs and aggressive startup high-tech and bio-tech companies seeking a fertile environment in which to launch their business ideas.

For example, look at the successful marketing campaigns that the Coolest Cooler or the Pebble Time SmartWatch crowdfunding campaigns are generating for Kickstarter.  Not only are they transforming Kickstarter into a global brand, but with 18 days left to go the Pebble Time SmartWatch has raised over $17 million. These marketing, PR and social media campaigns have generated massive amounts of free, positive and credible publicity. The same type of exposure can be generated for any college that has startups marketing their university’s equity crowdfunding campaigns via the internet and social media networks.  

Equity Crowdfunding Generates Nice Revenue Streams

Not only is the free, positive publicity great for promoting a school’s brand name, but collecting a fee similar to Kickstarter’s five-percent crowdfunding site commission fee is also a great way to make money to fund the school’s incubator and accelerator programs.

For example, the Pebble Time SmartWatch crowdfunding campaign’s site commission fee will deposit more than $1,000,000 into Kickstarter’s bank account for doing little more than setting up an e-commerce site. A simple task for any computer science college. 

College and university crowdfunding sites will start slow at first like Kickstarter did but given the strength of the university’s mass communication department, it could be much quicker.  Regardless, over a five-year period, a school’s crowdfunding site has the same opportunity to create a massive crowdfunding ecosystem like Kickstarter’s which to date has collected almost ~$2 billion in investment seed capital over the past 5 years.  

It you are a school administrator, what would injecting $2 billion into your Technology Transfer Office do for your college or university?  And that is straight rewards-based crowdfunding.  What would the same $2 billion return if just 10% percent of your startup companies went public and raised $100 million each? Once the first several dominos fall the financial returns would sufficient enough to continue growing a stronger pool of wealth with each generation of graduates. This method is precisely how Palo Alto, San Jose and San Francisco built the Silicon Valley in California into a global angel investor and venture capital powerhouse.

Alumni, Mentors and Future Students

Future students, leading mentors and disconnected alumni will suddenly have a purview into exciting projects and developments that are percolating behind the scenes in a very similar manner to Kickstarter. Crowdfunding will make it possible for the local community and general public to see the huge innovations that are going on behind the scenes, which will create the desire to get involved in the process so they too can strike it rich. Suddenly, alumni will be very motivated to keep in touch and invest often. 

Conclusion:

The crowdfunding industry is clearly fueling a new generation of makers that realize that it is more possible now than ever to bring their creative ideas to life with other people’s money, not just on the east and west coasts, but anywhere in America.

Learn more about crowdfunding:

• Building a Rewards-based and/or Equity-based Crowdfunding Ecosystem;
• Providing Easy Access to Seed Investment Capital with Crowdfunding;
• Generating More Revenue to Support Co-Working Spaces and Startups;
• Using Equity Crowdfunding Sites to Finance Incubators and Accelerators;
• Taking Advantage of Investor Syndicates that are Seeking Better Deal Flow;
• Splitting Revenue from Incubator and Accelerator Mentors Consulting Fees;
• Streamlining Technology Transfer Offices (TTOs);
• Cross-Pollinating College Education with Real World Startups; and
• Learning to Build Better Alumni and Local Community Relationships

 

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Want to setup an Equity Crowdfunding Ecosystem for your college?

Please fill out this form to get started:

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New BioMetric, Predictive Video Analytics Tool to be Unveiled at SXSW Sports to Enable NFL, NBA, MLB Coaches, Scouts and Recruiters to Shop for New Players 24×7 from Anywhere

Austin-based sports social media network for student athletes to be introduced at press event with ESPN, college/major sports stars and coaches, sportscasters and major league sports executives

 By Robert Hoskins

ScoutsViewSports.com selects SXSW Sports to introduce its new biomechanics, predictive video analytics tool that allows high school, college/university, NFL, NBA and MLB coaches, scouts and recruiters to analyze student athletes’ performance from anywhere in the world.  Endorsed by Fred Akers, former University of Texas Coach and Roberto Clemente, Jr., ESPN TV broadcaster and former baseball player, the new sports social media network is targeting student athletes 13-years-old through pro-level athletes, who can build profiles that catalog their sports career, game performance stats, collegiate standings and much more.

Shark Tank Winner, ScoutsView Sports, Unveils New Biomechanics, Predictive Video Analytics Tool to Help NFL, NBA and MLB Scouts, Recruiters and Coaches Evaluate Student Performance at SXSW in Austin, Texas

Who:

ScoutsViewSports.com, an Austin-based Shark Tank Winner, recently pitched and won an investment from Kevin Harrington, an original Shark Tank Investor, at the Shark Tank Feb. 6^th event held in Austin, Texas.  ScoutsView has an equity investment deal with Mr. Harrington on the table and will receive access to his global TV network distribution, rolodex and the As Seen on TV brand name.

What:

Student athlete social media network that records lifetime achievement, builds a large fan base and provides a huge database of biometrics, predictive video analytic clips where college, university and NFL, NBA, MLB major league scouts can analyze student athletes’ skills, performance and stats from anywhere in the world and shop for players that meet their exact team requirements.

• ScoutsView Sports Social Media Network:
  http://www.youtube.com/watch?v=bFYrtknxcRs

• Athlete BioMechanics Video Measurement Tool:
  http://www.youtube.com/watch?v=i1vMvgY1_BE

Where:

Shiner’s Saloon located at 422 Congress Ave. #D, Austin Texas 78701 or call (512) 448-4600, which is located next door to the Driskill Hotel, which is the headquarters for SXSW Sports.

When:

ScoutsView Sports and ESPN’s “Laying Down the Law” program will be at Shiner’s Saloon everyday from 3/7/14 to 3/10/14 from 3:00 pm to 8:00 pm. The team will be interviewing the following list of famous sport celebrities, college and major sports stars and coaches, sportscasters and major league sports executives, plus many more impromptu interviews and unscheduled appearances.

(other sports journalists and reporters are welcome and encouraged to attend and interview guests)

Interview Schedule with Steven Foster, ESPN and Michael Richardson, CEO ScoutsView Sports

Friday, March 7^th from 3:00 pm to 8:00 pm:

4:00 pm – 5:00 pm

• Fred Akers, former University of Texas Coach
• Dan Akers, son of Fred Akers
• Michael Richards, ScoutsView Sports CEO

Special VIP Guests:

• Cristianne Harder – SXSW Sports Speaker from Notre Dame Athletics
• Clay Walker – SXSW Sports Speaker from USA Today Sports
• Mark Drosos – SXSW Sports Speaker from Loadstone Social Media
• Ryan Baker – SXSW Sports Speaker from Arch Aerial (Drone Cameras)
• Hudson Taylor – SXSW Sports Speaker from Athlete Ally
• Stephania Bell – SXSW Sports Speaker from ESPN News
• Brian Kopp – SXSW Sports Speaker from STATS, Inc.
• John Meyer – SXSW Sports Speaker from Statographics
• Jordan Gremli –SXSW Sports Speaker from Spotify
• Johnny Moore – Former NBA player, San Antonio Spurs

Saturday, March 8^th from 3:00 pm to 8:00 pm

4:00 pm – 5:00 pm – Jeff Beckham – SXSW Sports Organizer, NY Times and Wired Reporter

5:00 pm – 6:00 pm – Mike Vasquez – SXSW Speaker from Tribal Science

7:00 pm – 8:00 pm – Open, please call (512) 627-6622 to setup ESPN interviews

Sunday, March 9^th from 3:00 pm to 8:00 pm

3:00 pm to 4:00 pm – Press Conference with Mike Richardson, ScoutsView CEO

Press members please RSVP at (512) 627-6622 to attend.
Remote reporters can also dial-in and walk through online demo
by calling conference number (213) 493-0358; use PIN: 29804 

4:00 pm to 5:00 pm – Jennifer Welter, first female running back with men’s pro football team

5:00 pm – 8:00 pm – Open, please call (512) 627-6622 to setup ESPN interview

Monday, March 10^th from 3:00 pm to 8:00 pm

4:00 pm – 5:00 pm –  Kai Sato – FieldLevel social network for coaches and Entrepreneur reporter

6:00 pm – 8:00 pm – Open, please call (512) 627-6622 to setup ESPN interview

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EarlyShares Announces New Equity Crowdfunding University Video Library

By Robert Hoskins

EarlyShares announced the launch of EarlyShares University to educate investors and business owners on Crowdfunding best practices and industry trends. The company will release an unprecedented series of educational videos, white papers and infographics on equity-based Crowdfunding for investors and entrepreneurs, and plans to expand the service in the near future.

EarlyShares University will be a searchable catalog of videos and other materials that provide an engaging and interactive way for members to learn about equity-based Crowdfund investing, creating a Crowdfunding campaign, specific information on vertical market opportunities, and the rules and regulations surrounding Crowdfunding. Crowdfunding platforms will have to meet basic SEC and FINRA requirements in order to provide funding portal services. EarlyShares is proud to be at the forefront of meeting and exceeding these standards by ensuring prospective Crowdfunding investors have free and easy access to investing fundamentals prior to investing in a Crowdfunded offering.

EarlyShares members who utilize the University will have the opportunity to participate in the company’s rewards program, which is still in development. Once members watch a video, they are able to gain rewards points for their training. The points can later be redeemed for various things like discounted services through the EarlyShares affiliate program.

“These courses are designed for members to learn more about us and our industry. If there is ever something that they want to be featured in an EarlyShares University course, they should let us know,” said Steve Temes, co-founder and chairman of EarlyShares.

“With so many entrepreneur and investor signups, we take our responsibility to educate potential EarlyShares investors seriously and wanted to provide them information to assist them in making informed decisions. Launching this University is part of our commitment to assist EarlyShares investors in learning all about Crowdfunding investing,” says Temes.

“Investing in a Crowdfunding company is an entirely new type of investment opportunity, so we want to take the time to make sure all of our members, both investors and entrepreneurs, have the information they need before they decide to move forward,” said Heather Schwarz-Lopes, CEO of EarlyShares. “Like Congress and the SEC, we believe that education and investor protection is key for this new industry.”