Crowdfunding: New Opportunities, New Risks
OLC was in attendance this week at the Wednesday, August 1st Gotham Media Ventures Event on Crowdfunding: New Opportunities, New Risks. The event, hosted by Wix Lounge on West 18th Street was a panel discussion moderated by Jerry Spiegel, a partner in the law firm of Frankfurt Kurnit Klein & Selz P.C.
The panelists included Slava Rubin, the Co-Founder and CEO of IndieGogo, the world’s largest global funding platform. IndieGogo.com provides anyone with an idea the online tools they need to raise money. Since its 2008 launch, IndieGogo has distributed millions of dollars to more than 55,000 crowd funding campaigns.
Rubin opened the discussion with a quick timeline of significant events in crowdfunding history: during the 1880’s, Joseph Pulitzer enlisted a $140,000 crowdfunding campaign to fund the construction of the base of the Statue of Liberty. Another significant milestone in crowdfunding was the 1933 Securities Act, which created the concept of an accredited investor, someone who is both smart and rich enough to lose money investing. Finally, twenty years ago we saw the rise of e-commerce which avoided further regulation in the spirit of “let the markets figure it out”. Finally, today, crowdfunding has become a critical component of job creation as many campaigns are targeted specifically towards future hires.
Rubin enumerated four reasons why someone funds a crowdfunding campaign: 1) belief in the person requesting the investment, 2) the perks being offered, 3) the opportunity to participate in the campaign’s community and 4) the profit motive. Rubin emphasized that the first three motives vary by individual but in most cases they exceed the fourth, the profit motive.
Another panelist was Brian Meece, Co-Founder of RocketHub, another one of the world’s top crowdfunding platforms. An accomplished speaker, Brian has lectured at SouthBySouthwest, TED Brooklyn, Columbia University, NYU and many other venues.
Brian identified three core components of a successful crowdfunding campaign. The first, an awesome project and awesome people, creates the magnetic passion that successfully funds the project. In his experience, crowds will fund an idea that shows passion and the principles the founder stands for. The second component is a core network or community of supporters which enable a founder to turn social capital (i.e. trust) into real capital. The campaign’s followers act as evangelizers and convert a fanbase into a marketing base. The third component is cool perks and rewards, ideally with multiple tiers of impact. Brian emphasized that the most successful RocketHub campaigns had all three components.
Brian’s Money Quote:
Return On Change was represented on the panel by Sang Lee, Founder//CEO and represented in the audience by marketing maven and spouse, Grace. Sang, a former investment banker is an industry evangelist, serving on the boards of both the Crowdfunding Professional Association (CFPA) and the Crowdfund Intermediary Regulatory Association (CFIRA).
In Sang’s estimation, all funding is crowdfunding. Crowdfunding, however, fills the need for businesses that are somewhere between idea and reality. Sang encourages crowdfunders to find investors who will become consumers and ultimately, evangelizers.
Sang’s Favorite Quotation:
“Be the change you want to see in the world” - Gandhi
Check out future Gotham Media Ventures events at www.gothammediaventures.com
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