Congratulations to Vassar College. Their success in educational crowdfunding continues to make waves in the fundraising space with this recent Fundraising Success Magazine article titled Big Data, Crowdfunding and the Fundraising Technology Craze
When I accepted Freeman’s offer to join the Launcht team as an intern back in February, I had little idea what I was getting myself into. I was familiar with crowdfunding — mainly, I will admit, with the big third-party platforms — but I wasn’t sure exactly what this white-label thing was all about, or what it had to do with “Democratizing Access to Capital.”
Even before I had begun to acclimate myself to the industry, crowdfunding was connecting me with people who were doing real, cutting-edge work in their fields. These were people who wanted to talk about the social impact of their organizations just as much as their financials.
In the hours of industry research and headline-monitoring that I have done since then — as trends and fads would come and go through the industry — I have seen time and time again that the core model of donation-based crowdfunding shines brightest. Colleges and universities, businesses and other organizations all across the globe are making their own success with crowdfunding, realizing that small donations from many can lead to something great.
That’s why “Democratizing Access to Capital” isn’t just another meaningless corporate slogan; it comes astonishingly close to describing the daily work of people in this field.
So while many of my peers will leave their summer internships with jaded cynicism about their ability to contribute to anything significant, I leave mine with an entirely new skill-set and a whole lot of hope for the future of this truly unique industry.
I have realized over the past six months that there will always be a place for crowdfunding in this world, because there are a lot of projects that just don’t fit very well with traditional models of financing. These projects, it turns out, tend to be the ones most worth doing.
As the summer starts to heat up, so does the crowdfunding news. While you were enjoying the Fourth of July weekend, we were monitoring the headlines and scouring the blogosphere for the latest crowdfunding developments. Here are a few highlights:
“Super PAC to End All Super PACs” Reaches $5M Crowdfunding Goal
Just last month we reported on MayDay.us, a campaign finance movement launched by Harvard professor Larry Lessig to combat the growing role of Super PACs in American political finance. MayDay.us kicked off two rounds of crowdfunding this summer, raising their initial $1 million goal in less than two weeks back in June.
Now, less than four weeks later, they have soared past their larger $5 million goal — which they raised from over 50,000 individual donors — to arrive at the final sum which Lessig intends to use as funding for five candidates in the 2014 election cycle who have demonstrated commitment to campaign finance reform.
The success of MayDay.us is showing that crowdfunding is a viable alternative to less transparent financing models, and proves that larger-scale crowdfunding campaigns are not only possible, but effective.
UC Berkeley Announces Crowdfunding Platform
The University of California, Berkeley announced earlier this week that it is in the process of creating a self-hosted crowdfunding platform. The platform — which will be the fourth of its kind in the UC system — will provide a venue for students to seek funding for their research and other projects directly from donors.
With the announcement, UC Berkeley becomes just the latest university to embrace the self-hosted crowdfunding model in order both to increase the flow of funds to campus and to publicize student work. These platforms range from voting systems for student pitch competitions to alumni fundraising campaigns, and can be used to fund students directly — as UC Berkeley has chosen to do — or indirectly through the administration.
To learn more about bringing crowdfunding to your campus, check out college and university crowdfunding solutions from Launcht.
The vast majority of the news stories that we cover on the blog are centered in the United States, and rightly so: the North American continent accounted for $3.7 billion of the $5.1 billion global crowdfunding market in 2013, according to the Wall Street Journal. The lion’s share of that amount was raised in the U.S..
But did you know that over a quarter of the world’s crowdfunding market is in China — second only to the U.S. — and that countries all across the globe have passed their own J.O.B.S. Act-style legislation legalizing equity crowdfunding? Clearly there are things going on overseas that are impossible to ignore.
After European banks reined in their lending habits in the wake of the global recession, the E.U. has found a badly needed source of investment in crowdfunding. Europe has emerged as a haven for progressive equity-based crowdfunding ventures, capitalizing on a more lax regulatory environment than currently exists in the U.S..
Meanwhile in Asia, crowdfunding has come on strong in just the past year. While many of the most popular Western platforms do not operate on the Asian continent, locally-grown platforms like Pozible have led to viable crowdfunding markets in China and, increasingly, Japan.
The latest good news out of Asia is that regulators in India recently announced that their country was passing legislation to legalize and regulate crowdfunding for small businesses.
As home to over half of the world’s population and over a third of the global economy, Asia could be just the market that crowdfunding needs to continue its expansion over the next decade.
To learn more about creating your own customized crowdfunding platform, check out white-label crowdfunding solutions from Launcht.
The upcoming July Fourth holiday means that it’s a well-deserved short week here at Launcht, but that doesn’t mean we’re taking our eyes off of the crowdfunding newswires. Here are a pair of storylines that have been getting press over the past few days. Whether you’re headed to a sunny beach for the holiday or to your mother-in-law’s backyard barbecue, you can feel good about staying up to date on the latest developments in crowdfunding.
PayPal Freezes Popular Crowdfunding Campaign
While PayPal offered a cryptic explanation for their actions, media outlets have been critical of the payment processor’s off-and-on relationship with the crowdfunding community, which has involved countless incidents of campaign-freezing that critics decry as inconsistent enforcement.
Launcht works with PayPal competitor WePay as our payment processor of choice. We have long felt that WePay not only has a superior payment API for crowdfunding, but also understands the crowdfunding industry better than PayPal does.
Civic Crowdfunding in the Headlines
Civic crowdfunding has been getting some press recently as a potential remedy to funding shortfalls for community works. Many of these headlines revolved around The Civic Crowdfunding Project, a two-year study on the effects of civic crowdfunding conducted by MIT.
While civic crowdfunding isn’t exactly a new idea, the number of individual community-focused platforms springing up on the web — and the number of campaigns that these platforms attract — has reached a peak over the past several months.
If you’re interested in learning more about launching a civic crowdfunding platform, take a look at white-label software from Launcht.
Less than a month ago, I reported on a few recent crowdfunding developments which suggest that the industry is headed in the direction of favoring platform-free services over the traditional platform-based models that consumers are so familiar with.
Now add another big tick-mark to the platform-free column.
Late last week, Youtube unveiled a slate of new features for content creators that features a self-hosted crowdfunding option. That option — which will allow creators to solicit “tips” from fans in order to fund future projects — makes Youtube the biggest name to have jumped into the crowdfunding plug-in fray, further signalling that businesses and organizations are increasingly unwilling to let the crowdfunding that their sites trigger slip away to third-party platforms.
The plug-in model originated with built-in WordPress platforms like IgnitionDeck and gives sites added flexibility to conduct crowdfunding campaigns on their own sites without the often-strict oversight of a platform, while also providing financial benefits to larger campaigns — all hallmarks of the platform-free model.
While crowdfunding plug-ins are not completely platform-free, they are shifting the industry in the direction of decentralization, providing another alternative to the big platforms which increasingly fall short of meeting users’ demands. Perhaps more importantly, though, they are proving again and again that the market is ready for crowdfunding models that are truly platform-free.
Youtube appears to have realized that crowdfunding has the potential to add value to its business, creating a marketplace of creators and fans that all revolves around Youtube’s home site and branding. That a company which holds over a 40-percent share of its market sees crowdfunding as crucial to its ongoing marketing strategy should be a signal to marketers all over the web that the future of crowdfunding is platform-free.
Interested in learning more? White-label software from Launcht has everything you need to make platform-free crowdfunding a part of your organization’s online presence.
StartingBloc — a Launcht partner organization which equips aspiring social entrepreneurs with the tools to create change in the world — recently returned to Boston for a five-day institute, one of five that they will host in 2014.
“Boston has been one of our key cities for years,” said StartingBloc CEO Cesar Gonzalez. “Coming back to Boston was a no-brainer. We have a really big community there of people in the space and fellows.”
StartingBloc institutes feature programming designed to give fellows the tangible skills that they will need to start their own organizations, while simultaneously giving them access to a network of fellows that is committed to positive social change.
“Those are the two main parts: what you need to get up out of the chair and go, and what’s going to sustain you on the path of working on shit that matters,” said Gonzalez. “The community tells you that they believe you can start this company, even though now it’s only an idea.”
StartingBloc partnered with Launcht to create a platform for fellows to crowdfund their tuition for each five-day institute. The platform makes StartingBloc’s programming accessible to everyone, while also providing a venue for fellows to sharpen their marketing skills as they spread the word about their crowdfunding campaigns.
In past years, about a third of inbound fellows have used the Launcht platform to crowdfund their tuition.
“We couldn’t do it without crowdfunding,” said Gonzalez. “On the organizational side, it’s great because hundreds more people than are attending learn about StartingBloc through the platform.”
At the Boston institute — the city’s first since 2012 — StartingBloc was able to use crowdfunding not only as a funding source, but as a beacon to spread the word about the organization and its broader social goals.
“What we deliver for $1,000, I think, is hard to come by,” said Gonzalez. “And yet the real outcome that matters is in terms of people’s minds and the communities that they build.”
Find out more about using white-label software from Launcht to jump-start your conference, incubator or business-plan competition.
It all sounds pretty good in theory: local, self-hosted platforms that serve one specific niche in the overall crowdfunding market. These platforms could consolidate all of the crowdfunding traffic in their chosen community or demographic — be it cat lovers, cycling enthusiasts or residents of southern New Hampshire — creating a vibrant marketplace of campaigns and ideas.
In practice, however, these niche platforms face several imposing problems that curb their ability to attract campaigns and, ultimately, donor contributions.
Their limited scope — the hallmark of any niche platform — means that these platforms are working within a small market, which makes low deal flow a chronic issue. Particularly as they are starting out, platforms that cater to only one group lack the flexibility to adapt to the market and, as a result, tend to face funding shortfalls.
The smaller the niche, the greater the funding problems; a platform for real estate, for example, will have more traffic than one that targets real estate in Baltimore.
Niche platforms will often attempt to compensate for low deal flow by maximizing penetration into their chosen market. While this is theoretically a viable strategy, it somewhat naively assumes that the platform will be able to steal away a large proportion of their vertical market from popular third-party platforms.
One primary reason why these niche platforms often fail is that market penetration on the scale that they require can only be possible with extensive, long-term marketing strategy — which carries a price tag that most startup platforms simply cannot afford.
The reality isn’t that niche crowdfunding is somehow intrinsically doomed, but that niche platforms that try to frame themselves as ‘The Kickstarter of _________’ face long odds in establishing credibility and gaining sufficient market share.
“My advice to someone starting a niche crowdfunding platform would be to make sure that their model either includes other revenue sources other than just percentage fees on transactions or that they don’t look at it necessarily as a business,” said Launcht Founder and CEO Freeman White.
As White suggests, these platforms must take a less conventional route.
“It could be something they want to do for reasons other than business,” he said. “There are lots of good reasons to be involved in a certain niche, other than just to turn a profit.”
Successful past platforms have built themselves around a single event or competition, capitalizing on the momentary attention of their market and then fading into the background. Platforms that hang around for too long tend to go the way of the infamous Dole/Kemp ’96 webpage — attracting more dust than donors.
Back in October, the World Bank issued a formal report on the potential impact of crowdfunding in the developing world. That report presented an optimistic vision of effective, democratic funding which could help remedy some of the greatest hurdles that developing nations face.
The most obvious comparison to be drawn in the area of development is between crowdfunding and more traditional microfinance.
Microfinance is really more of an umbrella term — referring to any funding strategy that involves extending financial services (generally low-interest loans) to individual entrepreneurs. While this can be accomplished in a variety of ways, the commitment to socially-conscious distribution of capital which forms the core of microfinance applies just as well to non-profit crowdfunding.
Some organization, including Kiva – which was founded all the way back in 2005 — essentially combine the two, using crowdfunding to gather funds which they then distribute as microloans to support entrepreneurs and social innovators in the developing world. Kiva has emerged as the leader in this space, having distributed over $578 million in loans sourced from over one million investors.
What the World Bank was talking about, however, was something slightly different.
That model of crowdfunding in which the World Bank sees so much potential isn’t meant as a new avenue for foreign aid, but as a means for local communities to invest in their own projects and innovations. In that sense, the community-development projects that the World Bank has in mind are hardly different from the projects that pop up on crowdfunding platforms in the most developed parts of the world.
Crowdfunding has shown itself to be incredibly effective at honing local support into real, tangible change — a tactic that the World Bank believes will translate just as well in El Salvador or Pakistan as it does in Boston or Los Angeles.
If you’re interested, learn more about how white-label crowdfunding solutions from Launcht can help you create a platform for community initiative in your own backyard or around the globe.
If you’ve been living on this planet during the past few weeks, you’ve probably noticed that many of your friends and co-workers have suddenly turned into life-long football (i.e. soccer) fans. Whether or not you’ve caught the bug, we’ve found a pair of crowdfunding stories that will help keep you up to date in anticipation of Thursday’s big USA match.
As hotel prices skyrocketed in cities throughout Brazil in the lead-up to the World Cup, entrepreneur Elliot Rosenberg had an idea: have tourists pay to stay in the favela neighborhoods of Rio de Janeiro, giving them access to an authentic Brazilian experience in close proximity to World-Cup events, while providing a source of income for local residents.
The Favela Experience has since raised over $30,000 through a crowdfunding campaign, with a donation of $250 or more earning a donor a five-night stay in Rio during the World Cup, well below the market value of a hotel. Once the final match has been played, much of that money will stay in Rio and go towards local community development.
Crowdfunding a Professional Football Club
Meanwhile, back in Europe, professional football club SD Eibar has turned to crowdfunding to raise money for a roster overhaul and to meet the minimum capital requirements for La Liga — the top division in the Spanish professional league. Eibar — which plays home games in a tiny stadium in the Basque region — moved up to the top division after a spate of historically high finishes at a lower level.
With the 1.7M euros that they hope to raise when their campaign goes live in August (shares start at 50 euros), Eibar will be able to boost their budget by nearly 50 percent. They still wouldn’t be able to afford the expensive talent that larger clubs can, but the extra money will help the club in its bid to defend its spot in La Liga in 2015.