Category Archives: Crowdfunding Opinions

How Big Data is Transforming the World of Crowdfunding

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NCFA Member post | Jan 26, 2017

Big data

Big data refers to the mining of data that has been collected over the years from telecommunications metadata to genetic codes. Analysis of “big data” allows doctors to find otherwise buried links between medications and side effects or successful treatment of otherwise “orphan” diseases. SEO is entirely based on internet usage “big data” analysis. Analysis of the massive amounts of data on financial transactions allows businesses to better correlate spending patterns with life events. And in this vein, big data and the analysis of it provides a major opportunity to crowdfunding groups.

More Accurate Predictions of Success

Prior to the Trump election, it would have been reasonable to say that big data and its analysis allows organizations to call an election based on polling and early voting returns. Trump’s election proved that human factors like fear of disapproval if the person supported a politically incorrect candidate skews voting polls, affecting political predictions. The 2016 Presidential election will provide fodder for students in online master of information degree programs for years to come.

That type of bias in financial predictions doesn’t occur. One reason is the sheer volume of financial data, preventing the skewed results created by a few percent points in a political poll when those polled hide their true opinion. The second reason is that financial data is collected as actions occur, providing the actual results, instead of using stated intent as a prediction of the future.

See:  Data Reveals: Rewards Crowdfunding is the New Seed-Funding

Analysis of “big data” on fundraising campaigns allows crowdsourcing investors to predict the odds of success for a given campaign.

Social Media’s Role

Social media has become so important it is one of the top three signals for the ranking of content by Google’s search engine. Social media also plays an important role in the success of crowdfunding campaigns. The University of Illinois found a direct link between social media activity regarding a campaign and crowdfunding success.

That study found that Twitter and Facebook were the most important social media platforms for getting the word out. This is also a case where targeted social media campaigns and SEO improve the odds your crowdfunding campaign will get the recognition and funding it needs. And whether tailoring SEO of web content or crowdsourcing campaign videos, there are ample job opportunities for those who learn how to do either via an online MLIS program from Rutgers Online University.

Crowdfunding Dynamics

Ethan Mollick’s 2013 study on the success of crowdsourcing found that longer exposure and larger funding goals make a campaign more likely to fail. Conversely, increased social media sharing and being featured on the crowdfunding platform increased the odds of success. As more data on crowdsourcing campaigns are compiled and analyzed, crowdfunding campaigns can be tailored to maximize their odds of success just as websites and business directories are tailored to rank as high as possible in search engine results.

As we gather more information, learn how to analyze it more accurately and account for biases due to data collection and human emotions, predictions based on analysis of Big Data will become more accurate. Social media and SEO impact the success of crowdfunding campaigns as well as provide demand for MLIS graduates. As we learn more from crowdfunding platforms and specifically how to tailor crowdsourcing campaigns to maximize their odds of success, expect to see crowdsourcing campaigns seek out “crowdsourcing optimization” experts, just as they seek SMO and SEO gurus.

Source:  Member post

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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4 Reasons The Fintech Potential Remains Untapped For 2017

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Nasdaq | | Jan 4, 2017

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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A Personal Perspective on Title III Investment Crowdfunding

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Crowdfund Insider | | Sep 9, 2016

title-3-personal-perspecitve

“So why did you leave law to pursue crowdfunding?”

Over the past couple years, I’ve received this question more than any other.  Prior to starting NextSeed in 2014, I was a lawyer for over 7 years specializing in private equity fund formation and private investments.  I left my legal practice, and my amazingly talented colleagues left their established careers in law, finance, marketing and technology because we all believed that investment crowdfunding can fundamentally change how the private capital markets work for small businesses and small investors.

We came together to try to build our crowdfunding platform into a sustainable small business investment marketplace, where we could help connect businesses with people in their community to create opportunities for everyone.

The 28 million small businesses in the US drive the US economy, accounting for 54% of all US sales volume and creating 66% of all new US jobs since the 1970s. Despite serving as the backbone of every community and the literal grounds upon which people congregate and share their life stories, small business financing has largely been restricted to institutional or wealthy private investors.

On the flip side, 97% of all Americans are non-accredited investors who have had limited investment options to plan their future.  We believe investment crowdfunding can change this reality for the better.  In the first 90 days since Regulation Crowdfunding went live, there’s already been tremendous activity and interest across various Reg CF funding portals.  We’ve seen increasing demand on NextSeed as well – over the past year 11 businesses crowdfunded over $2 million in debt through our debt crowdfunding platforms (prior to launching our national funding portal, we had launched a Texas-only portal in 2015 pursuant to Texas intrastate crowdfunding rules), and substantial repayments have already been made back to the investors on our platforms.

During my legal career in private equity, I witnessed first-hand the immeasurable power of information and capital when PE firms were able to act upon them quickly.  The global PE industry has grown into a multi-trillion-dollar market today because it solved real problems for businesses (lack of access to capital) and investors (lack of access to sufficient investment opportunities) that weren’t being fully addressed by the public markets.

However, the PE industry was limited to Accredited Investors only and therefore the focus was on the capital needs of large or hyper growth-oriented companies that can satisfy the return expectations of large investors.  As a result, the vast majority of small businesses and small investors in the US are woefully underserved by our current financial system.

See:  SEC Approves Title III of JOBS Act, Equity Crowdfunding with Non-Accredited

So when the JOBS Act was announced in April 2012, I was genuinely blown away.  Theoretically, small businesses could now leverage technology and the internet to raise capital directly from anyone, and small investors could access many more investment options than the stock market.

My ultimate eureka moment occurred in December 2012 when I had the opportunity to visit Bangladesh to see microfinancing in action.

By any measure, Bangladesh is a developing nation. Children walked barefoot on dirt roads and rusted sheet metal mounted on wooden posts passed for roofs on family homes.  And yet, I saw with my own eyes how an innovative alternative financing structure like microfinancing was creating opportunities for local entrepreneurs and growing their local economy, supported by other members in their community and the microfinancing lender who kept account of the borrower’s success by pen and paper.  Even without a sophisticated banking system or regulatory structure, community-based microfinancing has proven to be a viable mechanism to fuel local economic growth in many developing countries.

So if this simple system works in unsophisticated markets, just what might be possible in the US if community-based financing could be structured, regulated and administered using the latest technology? The JOBS Act legally provided the framework to test these ideas for the first time in US history, and we were determined to find out.

Check out:

After carefully contemplating how the proposed JOBS Act provisions could be effectively utilized in practice, we started our platform with a focus on debt financing for Main Street small businesses (restaurants, cafes, hospitality businesses, etc.).  Many of these businesses are not typically looking to raise massive amounts of capital by selling equity, but need relatively small amounts to expand or establish their business.  For many of these small businesses, however, traditional financing has been getting more difficult to access in the aftermath of the Great Recession.

Ironically, big banks have become even bigger (the top 6 banks now control over 67% of the entire US banking industry assets). Due to increased compliance and operational costs, many big banks are focusing on more profitable capital allocation from their balance sheets than making small business loans.  A multitude of alternative lenders and merchant cash advance services have swooped in to fill the void, sometimes causing more harm than good for the small businesses that utilize these services.

In this context, debt crowdfunding allows small businesses to obtain flexible financing while showcasing their business to the public and establishing trust with their investors. Even the individuals who invest amounts as small as $100 can become loyal customers and brand ambassadors for the local businesses they invest in as they develop an emotional connection with the businesses they support.  On NextSeed, businesses are also required to make monthly payments back to their investors, thereby reducing their overall risk profile (e.g., relative to equity investments that may not pay out until a liquidity event occurs years down the line).  In turn, based on member feedback we now understand that our members are drawn to small business investing because it offers a level of transparency and simplicity unavailable in most other investment options.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Fintech founders choose their favourite business books

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City AM | Harriet Green  |  Aug 8, 2016

Fintech founder summer book reccos

Hiroki Takeuchi, co-founder of GoCardless, the online direct debit provider

Five dysfunctions of teams, by Patrick Lencioni

I love books that introduce me to concepts that change my world view. Sometimes that’s on big things (like the idea of black swans), and sometimes it can be on smaller topics. This short book (you can read the whole thing in a few hours!), is about smaller concepts. It’s about the pitfalls teams face as they work together. Through a really relatable story, it introduces a few concepts that I’ve found invaluable as we scale. Embracing conflict is the main one that I’ve kept with me. In the past, I’d always found it easy to shy away from difficult conversations. But by turning towards them, I’ve been able to improve my relationship with my team mates and create more productive discussions. I’d highly recommend this book to anyone interested in leading teams to work more productively together!

Anil Stocker, co-founder of Market Invoice, the invoice financing firm

Made to Stick: Why some ideas take hold and others come unstuck, by Chip and Dan Heath

This was actually recommended to me by John Kerry’s speech writer. There’s no right answer when it comes to standing out from the crowd in business, but Made to Stick is almost it. Creating a compelling message, or telling a memorable story is vital in the early stages of any business, be it for making hires or pitching to investors. I’ve found this book so useful for effectively communicating the vision of the business to others, and learning how to make a message resonate with a stranger. It uses a series of anecdotes to show why we choose to remember and engage with some ideas and not others. It’s especially relevant for entrepreneurs thinking about brand values and promises. It’ll also play a big part in getting an audience to really buy in to what you’re saying.

See:

Tom Blomfield, founder of Mondo, the mobile bank. (Tom is also a founder of GoCardless.)

The Hard Thing About Hard Things, by Ben Horowitz

This is a brutally honest collection of essays about leading a startup as “wartime” chief executive, recounting the battles Ben fought to keep his company from failing. Ben now runs one of the world's most successful venture capital funds and, as his co-founder Marc Andreessen explains, “running a startup is like eating glass. You just start to like the taste of your own blood”. He tackles many of the tough problems that founders face, from laying off senior executives to poaching staff, all the way through an IPO to his company’s eventual sale for $1bn. It’s a must-read that explores the gritty reality of running a company.

Christian Faes, co-founder of LendInvest, the online mortgage lender

Too Big To Fail, by Andrew Ross Sorkin

Published in 2009, this is an oldie but a goodie. It sets out in minute-by-minute detail the events that played out when the world fell apart back in 2008, and the battle commenced to save Wall Street (and London). I recommend it to anyone who needs reminding of how badly financial services can be run – and what massive steps forward we’ve taken in a relatively short time since. We all know how the credit crunch played out, but for those of us who don’t let a spoilt punchline get in the way of a good story, his tales from the frontline of the world’s biggest banking crisis make for a gripping read.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Dead in the Water: Canada’s Crowdfunding Exemptions

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Crowdfund Insider | | July 27, 2016

Canadian provincial regulators

Canada is the second largest country in the world by land mass and the 10th largest economy by nominal GDP. At around 35 million in total population, Canada is a country that has consistently punched above its weight class economically. The extensive border with the US has helped as the two countries have a robust trading environment. The combination of solid infrastructure, rule of law and a highly educated population, makes Canada a great place to live and work (if you don’t mind a bit of snow in the winter). What is missing from this North American country is a robust innovation-driven economy. Access to capital, always high on the list of fostering creative entrepreneurs, is an area Canada can do better.  According to one alternative finance expert, a lot better, as Canada’s crowdfunding exemptions are dead in the water.

Crowdfund Insider recently spoke with this individual who, because of their interactions within the securities industry and crowdfunding sector, requested not to be named.

If you are not in the habit of working in the Canadian securities realm it can be a convoluted and confusing labyrinth of rules and regulations. There is no national securities regulator, everything is managed at the provincial level. Yes, the US is encumbered by a litany of state rules on top of federal exemptions but the Feds have the power to override the states in certain situations which means a more manageable playing field (at times … not always).

Crowdfund Insider’s update on the Canadian crowdfunding environment is below, along with several suggestions that regulators can embrace, to make things more workable for early stage companies.


Crowdfund Insider: Please describe the Canadian / Provincial approach to regulating investment crowdfunding?

Canada has three specific crowdfunding exemptions: (1) The “integrated crowdfunding exemption [NI 45-108]; (2) the startup crowdfunding exemption [CSA notice 45-316] and the newly adopted (3) startup business exemption [ASC Rule 45-517] that was adopted in Alberta today. Canadian issuers can also rely on the accredited investor exemption and the offering memorandum (OM) exemption, which is similar to Regulation  A+ in the US to raise capital through crowdfunding their securities.

These crowdfunding exemptions are not available across Canada but only in certain provinces. The integrated crowdfunding exemption is available in Ontario, Saskatchewan, Manitoba, Quebec, New Brunswick and Novia Scotia. The Startup crowdfunding exemption is available in British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick and Novia Scotia. The startup business exemption is available in Alberta (Nunavut had been looking to adopt this exemption as well when introduced in 2015, but has not done so as of today’s date).

Availability of the Crowdfunding Regimes in Canada
Saskatchewan,
Manitoba, Québec,
New Brunswick
and Nova Scotia
British Columbia Ontario Alberta
Start-up crowdfunding exemptions Yes Yes No No
Integrated crowdfunding exemption Yes No No No
Startup business exemption No No No Yes

These crowdfunding exemptions are not harmonized and vary considerably in terms of which issuers can use the exemption, offering limits, investor investment limits, disclosure requirements, and post raise filing requirements.

As a result, issuers in Canada do not have one clear crowdfunding road map.

It is too early to know how the startup business exemption will be received by issuers in Alberta as it was only adopted this week. The start-up crowdfunding exemption which came into force in May of 2015 has had modest use in the participating provinces.  There have been no offerings under the integrated crowdfunding exemption which came into force in January of 2016.

Crowdfund Insider: Ontario is the economic center of Canada, yet no one is using the Integrated CF exemption since it was adopted. Why?

There are no funding portals registered as “restricted dealer funding portals” under the integrated crowdfunding exemptions.  Registered dealers can amend their registration to include sales under the integrated crowdfunding exemption and there may be one registered dealer who has done so, but so far there are no active funding portals with issuers using this exemption.

There is also little to no interest by issuers in using the integrated crowdfunding exemption to raise capital. No one is using it. In fact, you would need to be a crazy person to use it if you were a tech startup or non-reporting issuer. The rule requires issuers to provide financial statements which are:

  • audited or reviewed by a public accounting firm if the cumulative amount an issuer has raised under any securities exemption since its formation is $250,000 or more but is less than $750,000, or
  • audited if the cumulative amount an issuer has raised under any securities exemptions since its formation is $750,000 or more.

Using a cumulative threshold pretty much guarantees most issuers considering using the exemption would require audited financial statements. This wouldn’t be so bad on its own, but if you raise capital under the integrated crowdfunding exemption once (regardless of the amount raised or type of security offered), the issuer is required to provide financial statements to its shareholders and regulators annually.

See:

Whether these annual statements are required to be audited is based on determining each year how much an issuer has raised to date. Issuers are also required to file other continuous disclosure documents such as annual disclosure of use of proceeds, and if resident in or raising capital in Ontario, New Brunswick, and Nova Scotia, notice of key events.

There is no reasonable sunset clause to these continuous disclosure requirements. An issuer must either become a reporting issuer, wind-up or dissolve its business, or have fewer than 51 security holders worldwide before it can apply to stop these requirements.

Could you imagine raising $500,000 under the integrated crowdfunding exemption using a debt security and then be caught for the next 20 years of your business filing audited financial statements with securities regulators?

It would be a losing proposition as the cost of ongoing compliance alone could outstrip the amount actually raised.

Crowdfund Insider: Are there any types of businesses that may be inclined to use the exemption?

The integrated crowdfunding exemption is best suited for: public companies, companies considering going public in the near future, funds (other than investment funds), real estate limited partnerships, and other businesses either continually raising capital or which have a limited life span.  All of these companies can take into consideration and absorb the cost of raising capital under the exemption and the cost of the ongoing continuous disclosure requirements. Its a very narrow band of issuers, which frankly, are already being served by other existing securities law exemptions which is why you have not seen any uptake to date by these issuers in using the integrated crowdfunding exemption.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Make 4% a year by lending to strangers

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Money Week | | May 30, 2016

Harness power of the crowd

Yet as the banks have cut rates available, other providers have stepped in, hoping to tempt investors and savers with more attractive potential returns.

Alternative finance is one such niche area that has emerged from nowhere in the last eight years, with pioneer company Zopa leading the way in providing what are called “P2P (peer-to-peer) lending accounts”.

So what are these, how do they work, and should you consider using them?

What P2P can offer adventurous investors

The idea behind Zopa and its big rivals Ratesetter and Funding Circle is very simple. Why have a bank act as an intermediary between savers and borrowers?

Go direct. If you’re an investor, then why not lend your money directly to a lender through a marketplace – the financial equivalent of eBay.

See:  UK Alternative Finance Grows by 84% to £3.2 Billion in 2015

Back when these P2P sites first launched, the idea was truly radical. You set the term (number of years) you’d want to lend over, and the interest rate you required. Then you’d wait for borrowers to accept your terms. The market in effect “set the rate” (that’s the idea behind Ratesetter as a brand).

Times have changed, of course, and now the big two platforms lending to consumers (Zopa and Ratesetter) operate much more like an online fund.

You lend your money into a pot. That pot of money is in turn lent out to borrowers, mostly prime or just below prime borrowers (the most creditworthy). The interest rate you receive depends on how long you want to lend for – and what protection you want in case of lenders defaulting on their payments to you.

The tables below explain the current investment rates on offer for lending on Zopa and Ratesetter.

Ratesetter

Term Interest Rate
1 month 2.8%
1 year 3.5%
3 years 4.5%
5 years 5.7%

 

Protection Fund size (see below for more on this): £17.7m, coverage ratio against expected defaults 133%

Total money lent: £1.11bn

Zopa

Product Interest Rate Safeguard Fees
Access 3.5% Yes 0% withdrawal fee
Classic 4.5% Yes 1% fee
Plus 6.5% No 1% fee

 

Protection Fund size: £12.24m

Total money lent: £1.39bn

Both of these reasonably well-known brands now offer real choice for income-orientated investors – even more so when you consider that both are about to launch Innovative Finance Individual Savings Account (Isa) wrappers.

At a time when the average high streets savings account pays well under 2% a year, the rates above represent a real boost for income seekers. And both of these brands have been working incredibly hard to reassure investors that their money is safe.

See:  Open Letter: lifting the veil on P2P in Canada

Boiling it down, there are four big selling points to using a P2P lender:

  1. You have a choice of products and terms over which you can lend your money. If you are ultra-cautious, you can lend for just one month or a year. The choice of risk is yours.
  2. The biggest underlying risk is that the borrowers don’t pay back their debts. Defaults are however, currently running at very low levels for both Zopa and Ratesetter, as both platforms have a good record of making personal loans to consumers (although Ratesetter in particular is diversifying and now lends substantial amounts to businesses as well).

Most historic data suggests that even in a recession, consumer default defaults remain well below 10% and most of the time stick below 5%. Current default levels are around 1% or less.

  1. Both platforms offer protection funds where a levy on transactions is used to build up a fund, which should be able to compensate investors for losses. The tables above contain details of these funds. Both platforms reckon that even if defaults doubled, they’d still have enough money in reserve to pay for any losses. If defaults went up five fold, there may be some loss of interest.
  2. Each platform has also developed fairly detailed plans to make sure that if they – the online marketplaces – go bust, you’ll still have your loans in your name. In this extreme example, an appointed specialist will wind down the loan book, collect your interest and make sure your loan is repaid.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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Crowdfunding tech can serve backers poorly, even when the thing gets made

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MacWorld | | May 27, 2016

Coolest CoolerCrowdfunding has always been risky, but several recent high-profile failures, delays, and significant shifts—including the CST-01 smartwatch, the Zano palm-sized drone, the Coolest Cooler, and the Glowforge laser cutter—reveal how fragile manufacturing-backed campaigns really are.

If your interest in a project isn’t so much “I want this thing to exist in the world” as it is “I want to place an early order,” it’s certainly wiser to wait until hardware products launch on the open market. But that seems especially so for projects that raise hundreds of thousands to millions of dollars.

As a percentage of all projects launched, the vast majority of crowdfunding projects achieve their promised goals, according to a substantial research project conducted last year. But hardware projects raise disproportionate sums, and so when a small percentage of them fail, they fail big, losing more money and disappointing more backers than sheer numbers of campaigns would indicate.

Other crowdfunding categories, like fashion or food, have their share of incomplete ignition or complete self-destruction, too. But those projects typically involve a lot less money and feature rewards that are often squishier, sometimes allowing a significant portion of rewards to be sent out, even if the main project doesn’t happen. Or, they were designed more like patronage, to let the creator advance his or her career, and a failure to deliver doesn’t necessarily make backers feel like their contributions went to waste.

There’s a gap been love and desire. If you don’t love the project, or at least like the creator, and you simply want the thing, you might become a backer for one of more of three reasons: to get an early crack at something other people will have to wait for; to get a discount off the ultimate list price; or to get a special edition or exclusive extras that won’t be available after the campaign.

With a number of prominent projects, even when they ship, only the “exclusive edition” factor gets met. Ultimate retail pricing may be discounted through sales channels and wind up not far off the “early bird” discount, and some prominent projects have put products for sale through retailers before all (sometimes any) backers received their goods.

See:

Bigger projects also probably don’t need your support. After they pass a goal stage and start running a total that’s 1,000 percent or even 10,000 percent of the target, your pledge doesn’t make a difference. For smaller projects, that’s more of a concern—but then, your motivation is more likely closer to patronage, too.

Before I get into the issues around backing, let’s start with some nitty-gritty about the state of a number of big crowdfunding projects.

The latest entrants in the tattered parade

Just last August, our sister site TechHive wrote “The FitNatic Nourish, and other cautionary crowdfunding tales,” in part to explain why TechHive had backed off further from covering crowdfunding campaigns. The article lists several major electronics projects that had failed to deliver, most in the $100,000s, and one in the neighborhood of $1.5 million.

Since then—less than a year—projects totalling nearly $50 million, about half raised at Kickstarter, have had creating firms go bankrupt, teeter on the edge of partial failure, or have seen a significant delay. And that’s just a tally of some of the highest-profile ones, not a comprehensive look at the entire field.

The two biggest collapses are the CST-01, a watch with an e-ink display, and a tiny drone called Zano. The company behind the CST-01 raised over a million dollars in early 2013 from 7600 backers, said it couldn’t fulfill the product in mid-2015, and recently filed for bankruptcy, noting it had $30,000 in assets.

The Zano drone crashed and burned faster. Its maker crowdfunded £2.3 million (about $3.5 million) in early 2015 and accepted another £600,000 ($900,000) in pre-orders. By November, the Welsh company was put into a form of bankruptcy, with £1 million ($1.5 million) in debt. It did ship some units that worked poorly and stopped functioning after required cloud services shut down. Kickstarter paid for an independent investigative report of Zano’s implosion, which appeared in January 2016. (I was paid directly by its writer for editing services.)

The Coolest Cooler raised over $13 million in mid-2014, with a delivery date of February 2015 for most of the units. Coolest is a wheeled cooler with a built-in Bluetooth speaker, USB charger, and ice-crushing blender. Most backers—about 50,000 out 62,000—paid about $200 for the cooler and U.S. shipping.

After Coolest pushed back the delivery date by months between its choice to upgrade some features and typical production delays, the company began shipping some units in July, even as workers went on strike at the factory originally contracted to make the blender’s motor. This led to months of work to find and test a replacement motor. In November, the company put the cooler up for sale at Amazon for $500 (now $400) when fewer than half the backers’ units had shipped. The company’s founder said it needed the infusion of cash from Amazon sales, and it would need $15 million to complete production for units owed. (Reviews are mixed: At press time, 50 percent were five stars, while 30 percent were one star.)

In April, Coolest asked backers representing the 36,000 coolers remaining to ship for another $97 for each unit to push them earlier in the shipping queue. The company says about 10,000 backers ponied up. It’s extremely unclear what the future for Coolest is, although it’s apparently restarted shipments with that infusion.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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