StartingBloc Returns to Boston in 2014

StartingBlocStartingBloc — 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.

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The Rise (and Fall) of Niche Crowdfunding

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.

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Crowdfunding in the Developing World

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.

kivaSome 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.

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Monday News Round-Up: Kick Off Your Week World-Cup Style

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.

The Favela Experiencefavelaexperience

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.

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Crowdfunding University Research: Keeping Politics out of Science

When Susan Nagel — a professor and researcher at the University of Missouri — sought funding for a project on the environmental and public-health impacts of hydraulic fracturing (or ‘fracking,’ as it is commonly known), she ran into some not-so-unexpected opposition: politics.

“EPA announced three years ago that they would be funding research about the safety of fracking,” Nagel told Salon. “However, before they began accepting applications, that program was canceled.”

So she decided to take a slightly unorthodox route to funding. Nagel created a campaign on a scientific research crowdfunding platform, looking to raise $25,000 to get her project off the ground. At last count, she has raised more than 75% of that amount with over a week remaining.

Nagel’s campaign is part of a greater trend in the research community. The majority of traditional funding grants tend to be in a select few research areas, and are generally given to studies that are the most politically popular. Nagel’s study ran afoul of Republican politicians who have been taking aim at research that is critical of fracking, making her bid for funding a political bust.

The trend is a prime example of the democratizing influence of crowdfunding, allowing the crowd to promote research that they want to see conducted, regardless of the political ramifications. By partially isolating the allocation of funding from the political system, crowdfunding has the potential to drastically alter the way that scientific research is conducted in this country, and all for the better.

Find out more about how white-label crowdfunding solutions from Launcht could help your college or university host a platform for student and faculty projects and research.

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Protecting Consumers in the Donation Crowdfunding Market

On Monday, Smithsonian published an article projecting that transparency issues in the donation crowdfunding market will eventually lead to “a big, public fallout” as donors who have been duped into contributing to misleading tech campaigns begin to hold platforms responsible.

Crowdfunding, the article claims, is “a ticking time bomb.”

What the article doesn’t tell you, however, is that many organizations have been working to  mitigate the risk that donors face when they participate in crowdfunding.

BancBox LogoCompanies like Bancbox and CrowdCheck are already providing transaction and evaluation services for both funders and organizations, doing the due diligence to verify that offerings are not misleading in any way. As the products and services offered via crowdfunding become increasingly technical, these companies take much of the burden of identifying illegitimate offerings off of the donor by providing third-party verification.

Many of the developments that have already occurred have been centered on the equity crowdfunding market — where the risk to investors is far greater than in the more traditional donation or rewards-based segments of the industry — but, as the Smithsonian article points out, the technology is just as relevant to these more traditional markets.

At the end of the day, crowdfunding remains the most transparent way to raise funds. The evaluations and consumer protections might be lagging slightly behind the market — as they would in any emerging industry — but these issues are little more than growing pains that will be worked out as the industry continues to grow.

Consider this a projection for the future: crowdfunding will only become more secure and consumer-friendly going forward. There is simply too much money being exchanged for the market not to maneuver to weed out the legitimate offerings from the scams, as it is already developing the capability to do.

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Platform-Free vs. Ad-Hoc: What’s the Difference?

When the founders of Lockitron — a keyless entry hardware system — had their project kicked off of Kickstarter in 2012, they took an uncommon route to launching their campaign: coding their own crowdfunding software. They then released that software freely under the name Selfstarter, which remains the most popular ad-hoc crowdfunding system on the web.

So what’s the difference between ad-hoc systems like Selfstarter and platform-free systems like Launcht?

While both models allow users to take command of their crowdfunding campaigns by hosting them on their own sites, they arrive at that end in very different ways

Ad-hoc systems are essentially chunks of open-source code that are freely available over the web. While they avoid the fees associated with other types of crowdfunding, users must have both the technical expertise and time to work their branding and material into the existing code. Because the code is open-source, there is generally no support available for users to troubleshoot any issues that arise.

Platform-free systems, on the other hand, combine flexible template options with user support, rather than relying on the user to customize their platform from scratch. Platform-free systems are thus just as user-friendly as the most recognized third-party platforms, in addition to the flexibility that the model provides.

While, in its purest form, ad-hoc crowdfunding offers the lowest-cost access to crowdfunding solutions, it does so at the expense of all of the user support that platform-free systems offer. For most users, that’s a tough deal to take.

Learn more about creating your own crowdfunding platform with white-label crowdfunding solutions from Launcht.

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The Rise of Platform-Free Crowdfunding

When Launcht came onto the crowdfunding scene in 2011, it provided a product that was the first of its kind: a white-label crowdfunding system that organizations could wrap their branding around and build into their existing webpages.

Now, just three years later, platform-free crowdfunding is starting to carve out its own chunk of the broader industry marketplace.

More and more organizations are taking their campaigns off of Kickstarter and centralizing them on their own pages, realizing that the model allows them to display all of their community’s campaigns in one place and gives them control over those campaigns. The organization hosts the campaigns, and the campaigns help beef-up the online presence of the organization — it’s a win-win.

“As larger and larger campaigns start realizing that they’d like to save money and increase their brand exposure, I think we’ll see a lot more people host platform-free campaigns as opposed to going on one of the larger platforms,” said Launcht Founder and CEO Freeman White.

In late May, WordPress crowdfunding plug-in IgnitionDeck acquired Fundify, a smaller competitor in the crowdfunding plug-in market. While the terms of the acquisition were not released, the success of several WordPress plug-ins — which do for WordPress blogs what other platform-free services do for traditional webpages – is just one more reason to think that platform-free crowdfunding trend is here to stay.

And the old third-party platforms appear to be thinking the same thing.

Earlier this year, Indiegogo announced the upcoming launch of a new self-hosted service called Indiegogo Outpost that will introduce them as a player in the self-hosting space. The move is an acknowledgement that traditional platform-based crowdfunding is not the best solution for many businesses and organizations who want a better way to merge crowdfunding campaigns with their existing web content, and Indiegogo is betting that the momentum in the industry will only shift further in the direction of platform-free.

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Crowdfunding as the Future of Campaign Finance

When most people think of Super PACs, they think of shady groups in which multi-millionaires come together to exert their influence on national politics. That’s what Harvard professor Larry Lessig had in mind when he created MayDay.us in May, which he described to FastCoexist as a “super PAC to end all super PACs.”MayDay

MayDay.us is unique in the campaign finance world. Lessig’s goal is to raise enough money through crowdfunding to influence five 2014 midterm elections. That campaign — if successful — would then serve as a pilot for a larger crowdfunding endeavor in 2016, with the final goal of getting enough pro-reform politicians elected to pass measures that would put an end to Super PACs once and for all.

It’s an ambitious goal for Lessig, but if he gets his crowdfunding campaign right, he might just get there. The success of the first campaign suggests that he will — MayDay.us reached its initial $1 million goal in just two weeks.

MayDay.us is just the latest example of crowdfunding being introduced into a new arena with immediate results. And no wonder, because crowdfunding’s commitment to democratizing access to capital is relevant in virtually any setting in which funding occurs — business, art, technology and now politics.

So where is crowdfunding going to take hold next? If you’re interested in using crowdfunding to take you organization or cause to the next level, take a look at the white-label crowdfunding solutions from Launcht.

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The Scoop on Intrastate Equity Crowdfunding Exemptions

When its newly-passed legislation went live on June 1, Wisconsin became the 11th state since 2011 to pass its own intrastate equity crowdfunding exemption, allowing general solicitation of funds within state borders. These 11 states have all taken matters into their own hands as the Securities and Exchange Commission (SEC) continues to mull over Title III of the JOBS act, which could allow general solicitation to unaccredited investors on a national scale.

While the intrastate exemptions are not replacements for national legislation, in many states they are the next best thing. Organizations in large states with a large number of potential investors such as Florida, California and Georgia have been quick to make use of their own intrastate exemptions, and with strong results.

But they don’t work so well everywhere: those in smaller states stand to benefit the most from being able to seek investment out-of-state. In Kansas, as Forbes reports, fewer than 10 companies have utilized the legislation in its three-plus years on the books.

While they are not perfect, the intrastate exemptions have been showing firsthand that equity crowdfunding works, that it is safe for investors and that the market is ready for it. If Title III comes through as expected, we can only expect to see companies warm-up to the model even more, as the real potential impact of equity crowdfunding will finally come to light.

To learn more, take a look at the 506 equity crowdfunding system from Launcht.

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