Crowdfunding, the practice of raising small amounts of money from large numbers of people, has enabled people around the world to start new businesses, fund initiatives, and raise money for themselves and others. Yet, not all crowdfunding efforts reach their desired goal. Why do some succeed, while others fail? This course will reveal the science behind successful crowdfunding, drawing on data from hundreds of thousands of campaigns. You’ll learn different types of crowdfunding approaches, and receive detailed advice on what to do (and what not to do) when crowdfunding. You’ll also have the unique opportunity to go behind-the-scenes with key players in the field with exclusive interviews from the founder of Indiegogo to successful campaign creators, to get the information you need to set your crowdfunding initiative up for success.
Interview with Slava Rubin
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來自 University of Pennsylvania 的課程
Crowdfunding
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從本節課中
Module 1
This module was designed to give you a deep understanding of what crowdfunding is and what it does. You’ll learn the definition of crowdfunding, compare the two most prevalent types—equity and reward-based—and understand how crowdfunding is different from other approaches to raising capital. You’ll explore critical components of crowdfunding, and discover the importance of community and social networks in a successful crowdfunding campaign. By the end of this module, you’ll gain a better understanding of how crowdfunding works, and use your power of social connections to ensure success for your campaign.
與講師見面
Ethan MollickAssociate Professor
Associate Professor of Management- Wharton School
So I'm here with Slava Rubin the founder of
Indiegogo and I'm really excited he's able to take the time to talk to us.
We've talked a little bit about
regular reward crowdfunding and I want to start
off by talking a little bit about equity crowdfunding which is new,
and exciting, and being done by very few places so far.
There's like 100 platforms competing but most of them are much lower profile.
Can you tell us a little bit about why you started to head into
that direction and sort of a little bit about equity crowdfunding in Indiegogo?
Well, the interesting thing about Indiegogo and
equity crowdfunding is we came up with the idea in 2006 for Indiegogo;
we launched in 2008.
We actually always wanted to do what is now called equity crowdfunding on day one;
that was always the original idea.
It's only because we did our research in 2007 and
figured out the regulatory hurdles and all the compliance issues,
that we started out with a very simple MVP nimble approach
of what we now call Perks Crowdfunding.
And then years later we were able to help change the laws;
the Jobs Act of 2012,
and then it goes live in 2016.
Indiegogo just launched in November 15 2016 with our equity crowdfunding offering.
So far it's going really well.
So what do you think like differently for
equity crowdfunding as opposed to perks or reward-based crowdfunding?
As the entrepreneur or as the backer investor?
Let's take the entrepreneur side for now.
As the entrepreneur, I mean you need to think about; what are you looking?
Are you looking to offer different products in return or are
you looking to get people financially invested involved?
That's one way to think about it.
Also are you really going be able to pass the threshold to be able to get approved?
So with Indiegogo it's wholly open,
anybody can start a campaign.
There is literally no hurdles as long as it's within our Terms of Service.
For equity, we have the FCC and FINRA is highly regulated.
So there is significant diligence that needs to get done.
As part of that we need to evaluate the financial health of your company,
the team, all of the various patents for IPs,
the growth, the customers.
So if you have a brand new idea with no traction,
you probably should go towards the perks approach.
If you actually have some revenues, have a team,
have something there that maybe a VC has already invested in,
you've already done your crowdfunding campaign on Indiegogo,
you've delivered your perks,
you already are in an incubator,
have some traction, equity can be really interesting for you.
Now on the other hand if you've been around for
a few years and you're trying to validate a new product,
you can actually go completely either way.
You can go straight into equity and use those customers that you have already built up,
turn them into investors,
or if you go a perks-based approach;
obviously you can follow up with us and our team will help navigate that choice with you.
So why would someone choose equity crowdfunding over other ways of raising money,
like raising angel money or venture capital money or loans or other methods?
That's really a personal choice.
I think that it's really a tool belt.
There's lots of different tools out there,
and at the end of the day being a small business or a new business,
it's very hard to get access to capital which is why Indiegogo is
able to be growing now for the last eight years.
Equity crowdfunding is just another option.
Some people will max out their credit cards,
some people will be able to get grants from different institutions,
some people will be able to get the VC money.
But maybe those options aren't there for you.
Not every business model fits for your company.
For example, a restaurant or a pizza shop
definitely is going to have a hard time getting VC money.
But interesting enough on Indiegogo,
we've already had a restaurant,
a coffee shop, a distillery,
all raise equity crowdfunding.
So it's really a matter of which tools you want to
optimize and I think equity crowdfunding is a great option.
So what should people think about if they're going to an equity crowdfunding campaign?
You know, what preparation should they do before hand besides obviously
filing disclosure forms and
the others sets of material that you go through on your website?
Well you want to apply,
so to get yourself into the funnel with Indiegogo
and then we'll take you through the diligence process.
The diligence process is
your typical information that you need to raise money from any organization,
but maybe you've never tried to raise money from another organization.
So that includes things like your financial health,
how you are doing on your income statement,
your profit and loss,
do you have all of your own corporation documents?
All of your legal documents regarding to your team,
IP like your copyrights, your patents?
Also, what makes you different,
what other validation have you had?
You want to have your books evaluated in terms of accounting.
So we'll need to have a legal review and a audit review.
And these are all things that we help you navigate through as part of the process.
At minimum, this will take two weeks and that's very fast.
But on average, this could take about four weeks from the point that you say I
want to launch an equity crowdfunding campaign to actually be able to launch.
If your things are not all in order,
this could take several more weeks.
Got it. And how does actually running a campaign differ,
not just in terms of the technicality of there is disclosure forms to
file and the different amounts of people back and all of that but just in terms of,
if I'm putting together you know the pitch and if I'm putting together,
you know the feedback to my backers.
How does that differ from a perk-based to reward-based to a equity-based campaign?
Yeah, it's definitely little bit different.
For example one of the best things you could do as part of a perks campaign is really
build up the expectation for your campaign before the campaign launches on day one.
So you do all this pre-work and tell the world about something that's coming soon.
For an equity crowdfunding campaign that is strictly not allowed.
Day one of your campaign is day one that you're allowed to tell anybody about it,
which makes it very different.
Also if you're following up with questions and answers on a perks-based campaign,
you could do one off discussions.
With equity, you need to have it all centralized on your campaign
offering page so everybody is exposed to the same information.
Really in generality, what you don't see here as an equity campaign,
everybody needs to have the exact same information at the exact same time.
Perks you could be a little bit more creative as to how you
split up the different information or how you do different marketing.
And so from the early results so far,
who is succeeding at equity and what are they doing that's in a special or different?
What advice would you give?
So there's been a number of different platforms that have launched.
So far Indiegogo just came out several months ago on November 15,
2016, and we're really excited; we've been off to the races.
So, so far we've launched eight companies and all eight have fully hit their targets.
We've done over two million dollars of investments,
and our ninth company just launched.
We've actually had a very diverse set of companies on purpose,
so we've had a video game company,
we've had a film organization, small business,
Hardware, Internet companies and all of them have done well.
What we're really noticing is in
a perks type campaign people would like to get the product,
or maybe they know the person,
or maybe they like the cause or the idea.
Which is all fine and good;
that brings in a lot of different types of backers.
But some people actually give money because they want to make profit.
They want to give $1 and get $5 back,
and this really is able to bring out a whole new market of
funders which is investors on Indiegogo for equity crowdfunding.
What we're seeing so far is you need to be able
to still put time into your equity campaign;
obviously with equity crowdfunding in Indiegogo we're providing a lot of amplification,
but it's not one of those things where you just throw it up on the site and walk away.
It is quite a bit different than perks-based
like we mentioned because you can do the marketing in advance,
but it's important to still be invested into it.
And so, for your equity-base campaigns,
are they all offering the same sorts of equity or
their safe agreements and other sorts of approaches people are taking?
And I guess you would need to speak to an accountant or
a lawyer or do you help that with that process?
In terms of how to structure the offering,
there you can be quite creative.
We've basically seen a few different standards that have been established,
we help you walk you through all of those things and we definitely
help with the accounting reviews and also the legal reviews.
The main options we're seeing is in equity investment where somebody does price around.
Let's say this is a $1 million raise on a $5 million pre-money valuation,
and so each of these shares are being sold.
In that situation, you're betting on a longer term exit,
because sometimes it might take years before somebody is able to IPO or get acquired.
Another option is to be able to have a revshare.
So this is much more ability to get money in the near term.
So for example maybe for
every dollar that you put in the company will pay you back $1.50,
up until you receive 200% of your money,
and they'll pay you quarterly out of their revenues.
So we are actually seeing that happen out of companies
that have a little bit longer history of revenues,
like the restaurant that's been around for 11 years which is called Texas Zebo;
which is interesting then for investors who don't want to wait maybe years or
even five 10 years before an equity investment is able to come through.
Here you're actually getting paid every quarter.
And there are safes and other types of structures.
We definitely work with the entrepreneurs to get the best structure for them.
Do you find that the people doing investments in equity
crowdfunding look similar to backers or supporters and other kinds?
I mean at least is there some of that that comes from the friends or family,
from community, from customers,
or fans or is it really just investors sort of looking for a good deal?
I would say that equity crowdfunding does have an overlap with perks-based funding
but it would definitely be in a whole new market of backers because there now investors.
You definitely are looking for that early inner circle of friends and
family and fans and then you get into your customers and other audience.
But there is literally people that have no idea about these companies,
they're finding out about them as an investment opportunity and they're
investing because of the amplification and the exposure that's happening on Indiegogo.
Excellent. Any other early thoughts on
equity crowdfunding and then as to a couple of things?
I think equity crowdfunding is super exciting.
It just got launched obviously in 2016.
For America, we launched at the end of the year.
Like I mentioned, this is something we've wanted to do since the inception of Indiegogo.
So it's almost like it's taking us a decade to finally go beyond our beta
and now we're finally in a real product that we always wanted to have.
Like Indiegogo 2008, 2009,
2010, it took a little bit of time to get that momentum for the marketplace.
I think the equity crowdfunding is going well so far,
but I think it's quite small.
Where it'll be two, three years from now I think we would
be very impressive and very disruptive.
Excellent. And you do a bunch of other things to help
support crowdfunding campaigns turning to businesses, right?
So maybe lay out some of the other approaches people use
besides equity crowdfunding to take what may start off as a perp-based,
reward-based campaign and then turn that into something that is an ongoing business.
So when we launched Indiegogo in 2008,
we thought the problem we were solving is getting access to capital.
So we went from 1 customer to 10, to a hundred,
to a thousand, ten thousand,
a hundred thousand, kept adding more zeros.
And as we saw adding another customer it was interesting.
What we're learning as they're not having as much struggle now gaining the money,
they figured out that entrepreneurship was hard.
So we started to figure out what can we do to improve
the ecosystem so we can reduce failures and reduce the challenges.
Well customers would say to us,
"Why don't you figure out the idea, do the manufacturing,
do the design, do the retail, do the distribution,
why don't you completely,
vertically integrate the entire chain?"
And that's obviously not something that's possible for us
but we have really moved into a partnership network,
brought on some great companies.
So now really Indiegogo is becoming
a springboard for entrepreneurs beyond just a crowdfunding platform.
We want people to think that they are completely empowered not just gain
the money and power to create a great idea and bring it to life.
So for someone who wants to be an entrepreneur it just goes
to launch a one-off kind of experience or project or something else,
what should they come to Indiegogo with?
Like what is the profile of someone who ends up being successful doing this?
Well, an entrepreneur who is ready to move forward with their idea.
Obviously, they can come at any stage whether
its as early as concept or they could already be years into it,
coming out with a new innovation or a new iteration.
The further along you can have your concepts so having
some more proves something that can be validated, the better.
And I think that Indiegogo was less about the one-off side creative project.
It's really about people that want to create lasting businesses.
They're just not sure if they should because they need to check about
the validation from the market or they just don't know what should the price point be.
What should the colors be.
What should the marketing message be.
What should the channels be.
It's a great way to use Indiegogo to validate all these different answers.
It's also a great way to raise your valuation if you're going
for VC funding or grant funding or some other way
that you're looking to get approved because it really removes
the opinions and you get to use a lot of data to help navigate all this.
Yeah, and initially there was
this feeling that venture capitalists and angel investors were
nervous about crowdfunding and that maybe in equity as kind of perp-based, reward-based.
Have you seen a way to do it now more positive to have done these things?
I would say that the VC community not only does not look at it as negatively.
I think we become their best friends.
Off of Indiegogo, there has been over a billion dollars of
VC in venture money that has followed on into the Indiegogo companies,
and that's because often these venture companies and VCs are saying,
we're not quite ready to invest
yet because we just don't feel we have enough information.
Go right in Indiegogo and we'll be able to see
a lot more reality as opposed to have to debate opinions.
And this has really improved and become very complementary to the VC ecosystem.
Excellent. So where do you see crowdfunding going from here?
I think it's super exciting.
I think access to capital is still a challenge.
I think entrepreneurship, whether it's the education of it or the experimentation of it,
is something that is still not done as much as it should be.
So not educated or become mainstream enough.
I think crowdfunding is able to help stimulate all of
that whether it's a brand-new little idea,
a one-person shop, or a massive enterprise.
I really do think that
crowdfunding will become part of the fabric of how entrepreneurship and
innovation gets done just the way
social networking has become part of the fabric of how communications gets done.
Excellent. Anything else to, anyone to know before
thinking of a crowdfunding as an idea or anything you want to add?
No. I just think I'm very bullish.
But then again, I'm very biased.
So I think people should experiment on their own and they'll learn a lot.
Excellent. Thank you so much for being here.
Thank you.
