Crowdfunding and Craft Beer

Back in December, Michigan joined the host of states that have preempted the completion of the JOBS act by passing their own intrastate equity crowdfunding exemption, allowing non-accredited investors to invest in startups within state lines. Five months later, Tecumseh Brewing Company has become the first organization to make use of the new Tecumseh_logolegislation.

Tecumseh is far from the first microbrewer to recognize the potential in crowdfunding. Scotland’s BrewDog pioneered the market back in 2009 when they brought over 1,300 investors onboard through their Equity for Punks campaign. Now – five years and two more equity campaigns later – BrewDog has opened 13 brew-pubs and is Scotland’s largest independently owned brewery.

Craft brewing – with its focus on high-quality, innovative products – has shown to be a perfect fit for the crowdfunding model.

“Crowdfunding is a great way to democratize your company and it fits well to the craft beer ideology,” Pyry Hurula, CEO of Sori Brewing told Drinks Business Review. “Financing is not only for the business sharks and banks anymore.”

Microbrewing remains one of the U.S.’s fastest-growing industry segments, with $14.3 billion in sales in 2013 and over 400 breweries opening each year around the country, according to the Brewer’s Association. As that trend continues, entrepreneurs are increasingly turning to crowdfunding to help make the brew of their dreams a reality.

Check out how the Launcht 506 Offering System offers everything you need to launch your own equity platform.

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Launcht White Label Crowdfunding Client WeRaise in the Press

weraiseWe could not be happier to see, long time Launcht Client, WeRaise profiled on CrowdSourcing.org. They continue to do a great job in rallying christian communities around worth initiatives through their Crowdfunding Platform. To see our thoughts about their work have a look at the profile we wrote about them recently. Well done WeRaise!

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Is Equity Crowdfunding Right for Your Organization?

To say that equity crowdfunding has exploded in the past twelve months is an understatement. Check out this Google Trends chart, which maps the frequency of web searches for ‘equity crowdfunding’:googletrendsEDITED

With all this web traffic, it’s easy to see why so many organizations have taken to equity crowdfunding. But how do you really know if the equity model is a good fit for your organization?

Donation and rewards-based crowdfunding are still great options for many businesses and organizations. Donation-based crowdfunding is used most commonly by charities and other socially motivated organizations. Many for-profit startups – particularly those that are producing a tangible product which can be easily sent as a perk to donors – are still having success with the rewards-based model. Both models have the benefit of simplicity, and are essentially risk-free for both the startup and funder.

Most of the development in crowdfunding over the past year, however, has come in the equity sector. Even while the SEC continues to hammer out the finer points of the JOBS act, several states have taken the initiative of passing their own equity crowdfunding legislation. Meanwhile, organizations like CrowdCheck and Bancbox are working to make equity crowdfunding more secure than ever, leading more and more entrepreneurs to take advantage of all that equity has to offer.

Have a look at what Launcht’s equity platform can do for your organization.

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Why You Should Read the Terms of Service

WePay LogoEarlier in May, a story surfaced on the blogosphere about WePay – one of the web’s most popular API payment services and a Launcht partner – shutting down a crowdfunding campaign created by adult-film star Eden Alexander. Alexander had violated WePay’s terms of service by retweeting an offer for nude photos in exchange for campaign contributions and, while the specific reasons for WePay’s ban on adult content remain contested, the story serves as a reminder that the terms of service have much more bearing than users often think.

Crowdfunding creates a far more open marketplace than do more traditional financing models, but WePay’s move to shut down Alexander’s campaign suggests that this openness only goes so far. WePay currently bans a lengthy list of activities; most are illegal in the first place, but a few clash instead with the moral standards that the industry has chosen.

WePay remains the best payment service out there for crowdfunding platforms. But – for better or worse – there are some things that do not mesh with the industry’s values.

For most users, the terms of service seem like a technicality, but oftentimes they are actually worth reading. Check them out. You might be surprised by what you see.

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Rollins College and The Riddle of Success

Now, building off of the recent post about the success of matching grants, here is a riddle: What is better for a 24-hour crowdfunding campaign than a matching grant?

The rather obvious answer: TWO generous donors.

Rollins College in Winter Park, Florida was lucky enough to live out this riddle with their recent campaign, the 501 Challenge.

Screen Shot 2014-05-28 at 11.22.45 AMAs Meghan Moist, Assistant Director of Annual Giving for the Rollins Fund explained, the original plan was the now almost usual set-up for a crowdfunding match grant challenge of prioritizing quantity of donors over pure quantity of dollars. If the Rollins Fund received donations from 501 donors on May 1 (5-01…get it?) then a generous Trustee of the college would donate $50,000.

The 501 Challenge went live at midnight on May 1. As several other of Launcht’s clients have noted, getting initial community buy-in to a crowdfunding campaign is an enormous boon to the overall campaign—donors like the sort of race against the clock aspect of campaigns, but also want to contribute to something with a strong likelihood of success. It helps to have a few pre-donors, and Rollins had 230 pledges of support before the campaign even went live. At 2:30 in the afternoon—with everything going quite well towards that initial goal of those 501 donors, another Trustee announced that if 750 donors contributed, they would personally add a $25,000 to the original match.

Mr. Fred Rogers would be quite proud of the sharing nature of his fellow Rollins alumni. All told, 860 members of the Rollins community—the campaign was open to students, parents, and employees as well as alumni—donated to the 501 Challenge. With the double matched grants, the grand total for the Challenge was $209, 433.28.

Not bad for 24 hours of work, really.

Moist mentioned the highlights of the campaign having been the crucial campus community buy-in, that welcoming current students and their families, as well as faculty and staff to the challenge “made the whole experience easier and much more fun—everyone joined together to reach and surpass the goal.” Donors have reported to her team that they felt very connected to the crowdfunding experience, and that it was really empowering for donors to share the campaign, their interest and—literal—investment in it through social media. Which, in turn, of course, allowed the campaign to succeed.

Through the grapevine of higher education funding—which she has found to be very open and sharing of best practices—Moist had heard of Vassar’s successful campaign this winter and was encouraged to explore crowdfunding as an additional tool for 24-hour campaigns. “We’re all conscious of how we can keep things new and exciting.”

Crowdfunding and matching grants and generous Trustees and an excited, engaged donor community seems like a great way to launch into this brave new world.

Inclusion of Rollins as a Launcht success story does not equate to an official endorsement by Rollins College.

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Crowdfunding: A tool for change in Latino Philanthropy

Screen Shot 2014-05-13 at 4.01.22 PMThirty years ago, a group of Latinos working in various philanthropic organizations became increasingly aware of the lack of diversity within the sector. Latinos were neither well represented in the donor base nor were projects and programs within the Latino community receiving any significant portion of grants.

In order to support both Latino philanthropy and Latino projects, Hispanics in Philanthropy (HIP) was founded.  For over thirty years, HIP has worked successfully as an advocate for increasing diversity within the philanthropy sector, with most specific focus on helping philanthropic foundations to consider Latino concerns within their grant-making agendas.

In addition to its advocacy work, HIP also took the initiative to make its own investments, its own grantmaking vehicle —as a way to be more proactive in meeting the needs and lacks and gaps in funding they had witnessed in the first sixteen years of HIP’s existence.

Now, fourteen years after launching its collaborative grantmaking vehicle,, HIP has branched into crowdfunding with HIPGive. As Alexandra Aquino-Fike—HIP Director of New Initiatives—and Valerie Maulbeck—Grants Manager and Communications Specialist—explained “crowdfunding is a really powerful way to take ownership of the narrative of Latino generosity and that Latinos are “givers” not takers,” and show the world that Latinos are philanthropists.” Having spent half the organization’s existence with a strong focus on the needs of the Latino community, the crowdfunding vehicle of HIPGive.org provides a powerful and innovative way to highlight the fact that Latinos are givers.

Maulbeck continued “crowdfunding works really well with younger demographics, and allows us to mobilize the young Latino giving community. It’s a vehicle that may transform giving.”

Aquino-Fike adds that, through crowdfunding, “we’re better able to practice what we preach—it’s important to diversify funding sources and crowdfunding fits well with that and our mission of capacity building.”

As to their experience working with Launcht, Aquino-Fike and Maulbeck were first really pleased with the company as a “lower-risk, lower cost way to enter into crowdfunding.”

Once on fully on board as a client though, they were impressed with Launcht’s “personal attention and articulated commitment to growing with us,” said Aquino-Fike, “they really went above and beyond with building us a customized site, that included bi-lingual capabilities.”

For other organizations considering crowdfunding (and specifically, we hope, considering Launcht), Maulbeck and Aquino-Fike underscored that despite all the planning and preparation and getting projects on the site as soon as possible, the launch day will still involve some stress and requires a lot of flexibility!

As reshaping traditional modes of thinking and fundraising are likely to be. But absolutely worth the effort!

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A Look Inside the Colby Entrepreneurial Alliance Business Competition

When Jonathan Kalin was a sophomore at Maine’s Colby College, he founded Party With Consent, an innovative sexual-violence activist organization that hosts prevention-themed events with the goal of drawing college students to the cause of violence prevention.PWC

“I identified an unmet need in my community,” said Kalin. “I saw there was an opportunity to be creative and to create a conversation.”

Now as a senior, Kalin brought Party With Consent to Colby’s Entrepreneurial Alliance Business Competition – in which the college teamed up with Launcht to create a platform for student businesses to compete for funding. What he ended up getting out of the competition, however, was more important than simple funding

“I met some great people through the alumni network and some people that I consider mentors,” said Kalin. “The entrepreneurial pitch competition mirrors as closely as you can the educational experience that aspiring entrepreneurs need.”

While Kalin looks to continue growing his organization after he graduates, he will continue to use that education to drive the social change that is his ultimate goal.

“I had to consider whether I wanted to let this energy shrivel away and go into a different profession, or to take a chance and be able to sustain it with something that seems to be needed.”

Find out how Launcht can help your college or university host its own pitch competition.

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Matching Grants + Participation Challenges = Unmatched Success

Crowdfunding is frequently lauded as a great tool for innovation. It only follows then, that there would be innovations within crowdfunding as well.

One of the most promising trends Launcht has seen emerge among its clients lately is the unprecedented success of matching grants and participation challenges. If you’ve ever listened to a public radio fund drive, this will sound familiar, but to use such a tried and true method in the new sphere is its own particular brand of awesome.

“Basically,” said Launcht co-founder Freeman White, “you set up a challenge to encourage participation, and then you just crush it.” Turns out that in all things, people want to be part of something bigger than themselves, working towards a common goal. This nearly universal truth—happily for Launcht and its clients—seems to include interactive, participation challenges.

University crowdfunding has had the greatest success—so far—with matching grant style challenges. What Vassar College and Rollins College have both done with their successful campaigns is to work with an existing, consistent, generous donor to put a certain amount of money on the proverbial table. The donor agrees to give the money if certain conditions—usually a set number of donors—are met within a very specific timescale. Although not an official place of higher learning, The Prospect Park Alliance had similar success with their recent campaign run on similar lines.

The key is that the goal is a number of donors, rather than a dollar amount. Think of the public radio drives—“if thirty people call right now, we’ll get a gift of $3,000 from Suzy Q. Totebag.” It’s a much more pleasant way to involve a community in fundraising project. And, while fundraising could be coldly viewed as being all about the money, the truth is that it is about human relationships as much as money. By requesting a donor of any amount, the door is opened to more people, rather than those who have the freedom to give more. And, somewhat serendipitously, once the pressure of a dollar amount is removed with a matching grant donor drive that focuses on participation, the average amount donated per capita seems to increase.

The most important pieces of a successful participation-based matching grant challenge—as far as we can yet tell in this newly discovered territory: are having the initial generous donor, an existing donor community to engage with (perhaps why schools and public green spaces have been so successful—there is a vital community already involved), and a set time scale. “It’s important to communicate to the donors that they need to show up at this website, at this time, and to allow the donors to see the challenge being met in real time,” explained White.

There are few enough times to be able to see how your drop in the communal bucket moves your community towards a common goal. With the countdown clocks and donation counters on Launcht-built sites, it is easy for clients’ donors to see that they are part of a community, and part of a solution.

Nothing matches that.

 

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Crowdfunding on Campus: Part 2

Colleges and universities around the country that have incorporated crowdfunding into their traditional fundraising efforts have seen the benefit that the model can bring to their students, alumni and other donors.

Earlier this year, Vassar College used a Launcht crowdfunding package to raise nearly $150,000 in a single-day alumni giving campaign. In Vassar’s case, the goal wasn’t as much a dollar amount as it was a number of donors, and the campaign was just as successful in that regard, drawing in 1229 donors representing every class since 1945.

Others are finding out just how flexible crowdfunding can be.

Colby College and the University of San Diego are using the Launcht platform to hold business-plan competitions. Meanwhile, the University of Vermont worked with Launcht to hold a forum for student-run initiatives to raise funds directly.

Whatever their angle, these platforms have the added benefit of forming a direct connection between student projects and the donors that they hope to attract. Alumni and other donors can be assured that their donations are directly benefiting students and, as a result, feel more involved in the campus community.

Check out how Launcht can help you bring crowdfunding to your campus.

 

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Two Years Since JOBS Act Signed – Americans Still Waiting for SEC to Allow Average Citizens To Participate in Equity Crowdfunding

Over two years ago on April 5, 2012, President Obama signed the JOBS Act into law.  The goal was to support startups and  small businesses by helping them get access to capital in new ways.  While some parts of the JOBS Act are now in place, the Title III section permitting equity crowdfunding for non-accredited investors is still under review by the Securities & Exchange Commission (SEC).  Title III would permit average U.S. citizens to buy ownership in startup companies through crowdfunding.

I commend the SEC’s intention of trying to safeguard the investing public to the extent possible.   I acknowledge that some monetary losses will occur and that some unscrupulous people will attempt to defraud the public.  However, despite these concerns it is past time for the SEC to finalize the Title III rules and release them so that average U.S. citizens can participate in equity crowdfunding…as the wealthy are already allowed to do.

Some might argue that startup firms are risky and that average citizens should not be allowed to take the risk of investing in them.  I completely disagree.  It’s irrational to allow people to enjoy mountain climbing, scuba diving, and skydiving while forbidding them to invest $1,000 in a risky startup company.  I believe in personal freedom and allowing neighbors to invest in neighbors just makes sense.

I recognize that the SEC is coping with complex issues and that some appropriate balance needs to be found that provides reasonable safeguards while granting citizens the freedom to choose their investment. It is also clear that there are thorny details to figure out so that implementation of the rules will establish a viable marketplace. For example, the SEC has to figure out a way to let investors invest through a special purpose LLC and to simplify any long term reporting requirements on the issuers. That said, it’s been two years already and it’s time to move forward.

The Empire State Building was the tallest building in the world for about 40 years and it was built in less than two years.  The Normandy Invasion of World War Two involved over 5,000 ships; over 10,000 aircraft; and over 1,000,000 men.  It took under two years to plan and execute the Normandy Invasion.  The world’s largest cruise ship, Oasis of the Seas carries over 7,500 passengers and crew and was built in less than two years.  All of these incredibly complex projects were successfully completed in less time that the SEC has already spent working on the JOBS Act Title III regulations.

The JOBS Act was intended to support the growth of more businesses to create more jobs and strengthen our economy.  America has a grand tradition of creating new inventions and launching small businesses that spring from garages all across our nation.  Title III of the JOBS Act is the fuel many of these business visionaries need to move forward.  The SEC needs to finish its work so that the rest of us can start ours.

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