Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
Disrupting Charity: How rapid growth in crowdfunding is affecting the nonprofit sector
The Agenda (TVO) by Tim Alamenciak | March 24, 2015
When three-year-old Elijah Marsh wandered into the cold on a freezing February morning in Toronto, the whole city mobilized in an effort to find him. Neighbours searched city streets, while emergency responders rallied every available set of boots. Elijah took over screens and airwaves until the moment he was found—alone and frozen to death.
His story sparked the sympathies of thousands, but a local technology reporter and father of two was among the first to act. He channeled his emotion into a crowdfunding campaignon the website Tilt.com. The goal was straightforward: raise money to help pay for the toddler’s funeral.
The donations would soon outstrip the ambition of an otherwise modest idea, topping $170,000 by the end of the campaign.
“Hopefully, this money will also help [Elijah’s mother] support herself in the time that she's not able to work because of what happened,” said Justin Kozuch, 36, who started the campaign that kicked off a conversation about the changing dynamics of charity.
Related: Google Hangout with Chimp: Charitable Donations and Crowdfunding
Philanthropic giving is shifting dramatically. Digital funding platforms that allow potential donors to contribute directly to a cause quickly and easily are highlighting undercurrents that have been developing for more than a decade. The changes present both significant challenges and significant opportunities for the non-profit sector.
“It's been a challenging time for charities. That isn't a woe-is-us comment—things really are evolving,” said Nicole Nakoneshny, the editor of Philanthropic Trends Quarterly and vice-president with KCI.
Increasingly donors want their dollars to go directly toward helping the cause, rather than supporting other activities that indirectly contribute to a larger goal, such as staffing, infrastructure and marketing.
“If you have a peer-to-peer campaign saying I need money to build infrastructure, nobody will give to it. What's sexy and emotional about that? Nothing. But it's what's needed,” said Marina Glogovac, CEO of CanadaHelps, the first Canadian organization to move charities onto the Internet with its online donation platform.
Despite its high profile, the crowdfunding market is actually only responsible for a tiny portion of charitable giving. The crowdfunding economy—the total pool of dollars given to everything from charitable causes to potato salad through crowdfunding platforms—is estimated at $5-billion according to Massolution, a crowdfunding research group. By comparison, charitable giving in Canada alone reached $12.8-billion in 2013, according to Statistics Canada.
View also:
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Crowdfunding: An Emerging Opportunity
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RESEARCH: How and why individuals are exploring new ways to advance social good
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Crowdfunding raises money … and tax questions
Contributions to charity are actually trending upward, increasing 14 per cent from 2010 to 2013. The type of donor, however, is changing. Overall, there are fewer donors, but those same donors are contributing more on average.
To match the growing importance of impact, charities have changed their appeal strategy. Rather than marketing their work and asking for more money to support it, the trend is offering potential donors the perception of direct engagement.
“We're always trying to tap into exactly what this feeling of crowdfunding is,” said Doug Wayne, manager of national digital marketing for the Canadian Red Cross.
The Canadian Red Cross’ 2014 Christmas campaign is a prime example of the drive to mimic crowdfunding’s emotional appeal. A slick interactive web interface allows a donor to fill their virtual cart with items to help the less fortunate enjoy the holiday season. Clicking the icon for a hot meal ($70 for one week’s worth) puts a plate of turkey and potatoes on the table while notching up the user’s donation tab.
“We're trying to make giving resonate a little bit more—you're not just going on a donation page and paying $30 and entering your credit card information,” said Wayne.
But unlike crowdfunding efforts, the money is distributed by an organization with experience supervising large-scale aid programs. Spontaneous giving campaigns lack an infrastructure to distribute money efficiently.
Kozuch is still wrangling with how to get the massive amount of money he raised in his crowdfunding campaign to the Marsh family.
“We're working on that process right now—there are a lot of moving parts. As I've learned, it's not as simple as giving them this incredible amount of money,” said Kozuch. “It's a very complex situation, but we’re working on it.”
As of the publication of this piece, Kozuch said he was ready to pick up a bank draft and would deliver it to the family this week.
In another case of crowdfunding, James Robertson, a Detroit man who walked 21 miles to work each day, was given $360,000 in public donations. Though the fund was originally created to buy him a car, it quickly surpassed its intended mark.
The effect of the money on Robertson’s life was profound. He moved twice after receiving threats against his life and filed a court order against his ex-girlfriend, who wanted a cut.
Crowdfunding is likely to grow even more, according to Michael Johnston, founder and president of Hewitt and Johnston Consultants, a company that advises charities on fundraising.
“We see donors across all ages are omnivorous in that they use multiple channels and approaches to help a charitable organization,” said Johnston.
Continue to the full article --> here
VIDEO: The Agenda with Steve Paikin: Charity Goes Viral
6 Myths Of Equity Crowdfunding
Forbes | Ryan Caldbeck | Mar 19, 2015
Online equity fundraising platforms — also known as equity crowdfunding platforms — are becoming increasingly popular, and growing in size. As a result, they are attracting more and more attention from anxious investment bankers, which in turn has led to rhetoric suggesting wise investors stay clear. As the founder and CEO of CircleUp , a platform for equity investing in early-stage, high-growth-potential consumer companies, I routinely hear variations of the following arguments:
- “You’ll get too many investors in your cap table.”
- “People will see all your company’s proprietary information.”
- “People will see you are raising.”
- “It’s bad for your brand to be seeking funding online.”
- “Only companies that can’t raise offline raise online.”
- “I already have connections to investors, so you don’t need to use an online platform!” (Said every small investment bank ever.)
Let’s unpack each.
1) “You’ll get too many investors in your cap table.”
I agree that having 75+ investors is not good for a young company. What an investment banker won’t tell you is this: top equity funding platforms put the entrepreneur in control. Entrepreneurs on CircleUp, for example, decide both the minimum dollar amount per investor and the total number of investors in each round.
I’ve seen our entrepreneurs close online rounds with just one investor; while others have wanted more investors to gain a larger network of passionate brand advocates to help grow their brand.
View: Dispelling myths from 'popular delusions of crowdfunding'
2) “People will see your company’s proprietary information.”
Most online platforms have private deal rooms which allow entrepreneurs to determine and approve which investors get access to sensitive information. And before they do so, entrepreneurs are given tools to assess a prospective investor’s background, as well as the option to open a conversation with them before providing access to business financials and other sensitive information.
Contrast the control you have in this model with a small investment bank creating a pitch book with all the business’s data and financial models that is then sent out to a hundred investment firms – with no assurances of raising capital.
That decision—to flood the market with your Private Placement Memorandum (“PPM”) – is a common one with small, and candidly desperate, investment banks. They care much less about your long term health, and much more about their own short-term revenue. Consequently, your company’s PPM lands in the inboxes of hundreds, if not thousands, of investors. Most of whom are irrelevant; all of whom now have access to your company’s sensitive financial and operational information. I’ve seen this one too many times. (Read about just one example here.)
There is no scenario in which there is zero risk of releasing sensitive business information. And that applies to any form of investment—serious investors demand to see all pertinent information. But to suggest this risk is greater online than with conventional financing is wrong.
3) “People will see you are raising.”
What do Airbnb, Snapchat and Photobucket have in common? They’ve been in the news recently because they are raising capital. Similarly, Uber disclosed intentions last fall (and several times since) to raise more than $1 billion. These are public discussions — and I candidly don’t understand why that hurts the company.
It is common to see news reports about tech companies seeking capital. Strong, fast-growing companies with promising futures aren’t afraid to let the world know they are raising capital. On the contrary: it’s often seen as a sign of strength.
That said, leading online funding platforms allow businesses to guard information about a capital raise. (As mentioned above, the entrepreneur maintains complete control, deciding who can view confidential information and when.)
Continue to the full article --> here
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 950+ 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 About Us or visit ncfacanada.org.
Why Amazon has a big opportunity in product crowdfunding
GigaOM by Ross Rubin | January 31, 2015
Crowdfunding has helped to bring us some of the most avant garde devices of the past few years. Some, such as the Oculus Rift, Pebble smartwatch and Hidden Radio, have helped to jumpstart whole new categories. And more categories may be pioneered by products such as the Narrative Clip (formerly Memoto), Dash smart headphones, Melon brain-training headband, Ubi home intelligent agent, Romo smartphone-driven robot, Canary security system, and Galileo remote conferencing accessory.
But this method of bringing products to market has been fraught with challenges. Not surprisingly for those who have navigated the rough waters of device development, many products listed above — such as the Pebble, Clip, Ubi and Galileo — missed their estimated original shipping windows. Indeed, many high-profile crowdfunded tech gadgets — such as the AGENT smartwatch (over a million dollars raised in June 2013), the ultra-thin CST-01 e-paper watch (over a million dollars raised in February 2013), and the Jorno folding keyboard (over $100,000 raised in October 2012), have still not shipped (although its otherwise non-communicative inventor last updated the shipping date to March 2015). Delays such as those of the Jorno have been so profound that what once seemed like an innovative product has been overtaken by crowdfunded competitors and radical new designs.
Related: 8 Things About Hardware Crowdfunding We Learned From 20 Campaigns
The Kickstarter manifesto that it is not a store has led to a number of companies seeking to offer more assurance to those who preorder devices. Christie Street, an early effort by Ring inventor Jamie Siminoff, has been dormant since failing to achieve critical mass. Crowd Supply, which sells products after they’ve been funded, has has a number of wins related to open source projects such as the chunky Novena laptop. Prelaunch.com seeks to capitalize on the buzz crowdfunding generates, but with more established companies. More recently, Crowded Rocket launched with a handful of cool tech products and the support of a number of online personalities with large followings, including Robert Scoble.
Related: Kickstarter dumps Amazon Payments in favor of Stripe
But these companies have all been startups, and have struggled to compete with the large traffic flow and audiences of Kickstarter and Indiegogo. What if, though, a company that was a store stepped in at the intersection of crowdfunding and product development and that company was unabashedly a store? Amazon.com, which has long been the primary payments provider used by Kickstarter, would be well-equipped to be that company.
Here’s why:
- Like other tech retailers, Amazon.com sources its own branded goods. More so than any other tech retailer, though, Amazon has been engineering its own products for a decade and is well-acquainted with what it takes to bring products to market.
- The company has exactly the kind of distribution that device makers are looking for after they receive funding and could retain valuable exclusives by tapping into the product innovation pipeline.
- The company has already been experimenting with crowd feedback to determine which of its original pilots should move forward into production.
- Amazon has a stellar customer service reputation, a dramatic contrast to the lack of accountability on crowdfunding networks.
- Amazon has the Web’s most mature affiliate model— a no-brainer that is surprisingly ignored by the big crowdfunding sites — that would be a natural fit for driving preorders via the social links that crowdfunders utilize.
Related: Product versus Equity Crowdfunding (pros and cons)
Amazon may be finally waking up its potential as a leading source for crowdfunded or products that are offered for preorder while in development. As reported by Hacked.com, the company has a job listing for a senior manager of product management to “build the world’s best end-to-end platform for startups.” The company seeks those “inspired by inventors who develop and launch new products” and “see the opportunity to connect these entrepreneurs with Amazon’s hundreds of millions of customers.”
Continue to the full article on GigaOM.com --> here
Digital Life: How to cure crowdfunding fatigue
USA Today by Steven Petrow | January 31, 2015
USA TODAY columnist Steven Petrow offers advice about digital etiquette.
Q: More and more of my friends are launching Kickstarter and Indiegogo campaigns, which can be great ways for them to raise money for their projects. Now I'm finding that I'm being hit up a couple of times a month to contribute — to a new documentary, a creamery, even a "next gen washing device." I can't possibly contribute to them all but I feel bad if I just ignore a request. I'm also finding myself irritated with the volume of requests. Can I just say "no"?
– Name withheld
A: I'm going to start by giving my 2 cents (sorry it can't be more) to all those using "crowdfunding" to raise dollars and cents for their new projects: "Kickstarter fatigue" is setting in, and if you aren't more judicious in your "asks," fewer of the really cool, deserving projects will get funded. And your friends will get vexed — with you.
Related: Secrets of a Crowdfunding Master (from Ben Webster of Mass Fidelity, Canada's most successful crowdfunding campaign to date)
I certainly like to help friends follow their passion or create a new project. But people have their limits (not to mention cash limits, too). That being said, here are my crowdfunding etiquette rules:
- Make your appeal personal, and keep it to people you actually know: Don't solicit from strangers — or friends of friends you can tag on Facebook. Just because you can deploy your entire email list with a few keystrokes, resist.
- Don't go back to your friends to remind them to make a donation: One time is OK, but if they haven't donated by then, bad news, they passed.
- If you promise me something for my donation be sure to deliver it: I contributed $100 to a friend who was creating a healthy catering business with the promise of an apron and cookbook. Never got them, even though he raised all the money. Now I worry that others will also make false promises.
- Believe in your own project: Some folks decide to launch a crowdfunding campaign because they think it's easy money, even when they have no idea how to execute their plan. A project with no plan is a no-go.
Related: The A to Z guide to media relations for crowdfunding
Don't get me wrong: well-thought-out crowdfunding campaigns have supported some amazing projects, like LeVar Burton's push to bring back Reading Rainbow ("opening books, opening minds") and get it online. The $5 million he raised allows free access to kids around the planet.
Continue to the full article --> here
Fearless Look at Canadian Crowdfunding 2015
About NCFA Canada | Bret Conkin, Ambassador | Jan 5, 2015
Crowdfunding hit the mainstream in Canada in 2014 with a record Rewards campaign for wireless speaker The Core by Mass Fidelity raising $1.3M to lead the way. This raise was 60% higher than the $817k raised for the top 2013 campaign for the magnetic Polar Pen/stylus in 2013. Donation campaigns supported many more causes and individuals than ever before. Equity and Lending models both gained traction with the promise of much more funding access to come.
What will the New Year hold for alternative finance and crowdfunding in Canada? Here is a quick look back at 2014 and some fearless crystal ball gazing from Advisors and Ambassadors of the National Crowdfunding Association of Canada as we look to the coming year. For more on predictions for the past year, visit the post, How well I predicted Crowdfunding in Canada for 2014.
What was your favourite Canadian campaign of 2014?
This question generated a mix of responses spanning entrepreneurs to causes from the top grossing campaigns of the year including the VanHawks Valor smartbike ($820k) on Kickstarter and the Plexidrone photography drone ($1.2M) on Indiegogo to several campaigns for the family of fallen soldier Nathan Cirillo ($400k+), the first cross-border equity campaign for WAFU dressings and mayo to a new Opera for schools adaptation with an anti-bullying rallying cry, Stickboy for Vancouver Opera, by Black Press 4 Good.
Suzanne Paschal (@suzannepash) of Indie Ink Publishing: “… a super-smart campaign focused on all the ways they could help potential customers buy this product before it went to market, as well as have a say in product design. They got great market research, and kept in contact with their contributors - used stretch goals to follow through on what their customers said they wanted to see...”
What was your favourite International campaign of 2014?
Two of the most covered Kickstarter campaigns also captured the attention of the experts: The Coolest Cooler and Potato Salad. Sunny Shao (@explicitivity), NCFA Advisor pointed out, “Coolest Cooler was such a simple yet innovative concept and Potato Salad because it was just so dumb yet got everyone talking about crowdfunding.” I have to admit I’m waiting for the delivery of my cooler in 2015 myself and the communications to backers have been excellent.
Other favourites included Literacy and a Science campaign that literally asked, “What’s in your Gut?” The relaunch of Reading Rainbow aims to continue to promote literacy for digital natives and the disadvantaged. “Well executed in all respects and found a way to connect to a whole new audience,” stated Shahab Khan (@shahabkan). Daryl Hatton (@darylhatton) of FundRazr suggested American Gut: “This is a great example of an innovative application of crowdfunding technology to help fund scientific research.”
Bruno Rakotozafy (@seedingfactory) of Seeding Factory offered up French platform Wiseed’s campaign, Rachetonslaeroportdetoulouse, for citizen ownership as a testament to crowdfunding’s impact.
What stood out to you/was significant about Canadian crowdfunding in 2014?
The themes included the greater focus on equity crowdfunding and that crowdfunding had hit the mainstream in 2014:
(DH) “The most significant thing about crowdfunding in Canada in 2014 is that it entered the mainstream with a significant component of the population starting or participating in crowdfunding campaigns.”
Gil Michel-Garcia of WAFU (@WafuBrand) pointed to Title II of the JOBs Act and Rule 506 (c) of Reg D: “which for the first time allowed both US and non-US companies to publicize their securities offerings on the Internet.”
View: Early Bird Ticket Deals for 2015 Canadian Crowdfunding Summit
(BR) suggested the establishment of “the first Canadian Crowdfunding Summit” to be held March 2015 as a significant milestone.
Other comments included the emergence of NCFA, greatly increased media coverage, new venture funding models and increased interest from the financial sector. Several comments pointed to the progression of legislation in various provinces but that homogeneity was unlikely from the securities regulators.
Which model of crowdfunding will grow the fastest in Canada next year?
Which model will grow fastest in 2015?
The experts predicted Lending would see the fastest growth, based on it’s current small base and success in other markets, with Rewards close behind and Equity taking longer to establish itself.
Lynn Blanchard of Creekstone Consulting commented, “Regulation will remain a barrier for equity based Crowdfunding however reward based Crowdfunding will continue to grow and mature as another arrow in the entrepreneur’s capital raising quiver. More attention and awareness is building about Crowdfunding in Canada which will eventually lead to a broadened adoption cycle.”
(GMG): “2015 will bring the finalization of Canadian equity crowdfunding regulations and the final implementation of the regulations for Title III of the JOBS Act by the US SEC.”
(DH): “The lending sector is likely to grow the fastest as a percentage next year given it is starting from a very small base but is a huge market and proven model in the US and the UK.”
(SP) “This is a tough one between lending and rewards. I know most people might say equity, but I think the struggles with regulations and the need for the business infrastructure and ecosystem to develop will hold that growth off until 2016.
Lending is already in place and is growing in awareness, so I believe it may be the fastest to grow. Increased education and support tools for rewards may make it the fastest to grow in terms of success rates, though.”
What are the 2 biggest issue facing the Crowdfunding sector next year?
Biggest issues for Crowfunding 2015
The two biggest issues had wide agreement: 1) Awareness/Education/Lack of Market Data and, 2) Bureaucracy and Regulations. Market maturity will help address the first issue. Let’s hope the regulators can strike the right balance to support the growth of venture capital and personal alternative finance while maintaining reasonable levels of investor, entrepreneur and creditor protection.
Interestingly, Fraud/Scams, Investor Confidence and Lack of Venture Capital were not considered as significant issues but Expertise/Best Practices was noted as the next most significant issue.
Fearless Predictions for Canadian Crowdfunding in 2015
The experts predict the emergence of new support services to increase funding outcomes, better educational resources, new models, platform concentration/consolidation and progress, albeit slower than anticipated, for equity crowdfunding regulations and infrastructure. Here are their fearless predictions:
(BR) “I hope the booming crowdfunding scene will experience a concentration wave in 2015. It'll prove some actors are becoming big enough to secure the business and guarantee a sound growth. “
(DH)
1. The equity crowdfunding market will continue to emerge but much more slowly than everyone wants. This is because the confluence of lack of market awareness, the difficulties of getting the model "right" and the wariness of the regulators in their goals of prevention of fraud will continue to great major friction in achieving adoption.
2. There will continue to be consolidation in the crowdfunding market with many small market entrants closing their doors.
3. Crowdfunding and cause marketing will continue to strengthen their relationship inviting much larger corporations to participate in the game and reaching many more consumers. This will shift the funding of many causes from "donations only" to a "give to get" model that rewards commercial behavior while supporting philanthropic activities.
(LB) “Education will begin to focus on "how to launch a winning CF campaign" with tools and seminars dedicating to improving the odds of a campaign's success. This means that education will expand from general awareness to more nuts and bolts implementation.”
(SP)
1. “Support services for campaign development & implementation will proliferate dramatically in Canada as both established marketing services and start-up entrepreneurs see the opportunity to serve an emerging market of funders…
2. Provincial securities regulators will continue to struggle to … create an appropriate equity crowdfunding business environment in their relative markets. Saskatchewan will continue to be a maverick and go with its own first-out-of-the-gate model.
3. A first-of-its-kind book about the crowdfunding industry will emerge late in 2015 that will not only create a unique picture of the industry and its impact on Canada, but will challenge the way non-fiction books are created and published.”
View: Canadian Crowdfunding Ambassadors (learn more)
(SK) “Will become standard approach in marketing effort and test bed for startups developing MVP. Will be viable alternative to VC/Angel funding with larger rewards targeting that segment of investors. Will be officially recognized as equity investment alternative.”
(SS) “More equity crowdfunding attention - Crowdfunding due diligence and fraud prevention - More charities and non-profits adopt crowdfunding.”
(GMG) “2015 will see the first simultaneous cross border equity crowdfunding offering in Canada under the new regulations and in the United States under Rule 506(c) (Title II of the JOBS Act).”
Anything else you would like to share with those interested in crowdfunding in Canada?
(SK) “This is now a viable alternative to allow startups to test and get feedback on their minimum viable product. It has matured and is now a decision point in their early stages.”
(SP) “One of the most important tasks and responsibilities facing the industry, and those who want to see it grow, is the development and encouragement of qualified education resources to help increase that low percentage campaign success rate... If you're doing it right, crowdfunding isn't just about funding. In fact, in some instances, the money you raise might be the smallest benefit at the end of the day. That's an incredibly important educational message.”
(LB) “… Entrepreneurs wishing to get involved in Crowdfunding have to ask this one basic question. Is my company or organization making a valuable contribution to society? … there will be a trend toward a deeper education of entrepreneurs in the “art of the start” … We will see a shift away from "post a page and they will come" to more digitally based education mechanisms … This means the quality of the organizations wishing to launch campaigns will increase in 2015 ….”
(GMG) “The rise of equity crowdfunding is going to be transformational event for Canadian small companies, because it will allow them to turn customers and social media followers into shareholders.”
(SS) “More cross-border collaboration in crowdfunding data, research, and support.”
(DH) “Canadian consumers, startups and established businesses need to start or continue to support our local market entrants by using their products. If we insist on simply using and promoting platforms developed elsewhere in spite of the quality of domestic competitors we will lose our ability to compete and control this market with the resulting loss of innovation and jobs in Canada.”
There you have it. A look into the crystal ball at the year ahead from the Advisers and Ambassadors at the National Crowdfunding Association of Canada. Please leave a comment with your thoughts on what is ahead for 2015 alternative finance below. For more 2015 predictions by ITBusiness.ca bloggers visit our Technology Predictions post here.
Source: Bret Conkin, CEO, Crowdfund Suite and NCFA Ambassador
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Learn more About Us | Crowdfunding | Support
How well I predicted crowdfunding in Canada for 2014
IT Business | Bret Conkin | December 17, 2015
Twelve months have passed since my predictions in ITBusiness.ca on how the 2014 Canadian crowdfunding sector would unfold. So here’s a look back and scorecard using a one to five scale (with five = 100 per cent accurate, and one = 100 per cent wrong) for my past prognostications. I will look into the alternative finance crystal ball for 2015 in a follow-up post coming soon.
1. Alternative Financing not a trend ~ 5
Exhibit 1: Lending Club’s IPO valuation of $9 billion last week made it larger than all but 14 banks in the U.S. Investor Interest in Lending Club (NYSE:LC) has continued to soar with the stock trading recently as high as $27 up from the $15 IPO price. The appetite on the lending side of crowdfunding appears very strong with OnDeck (NYSE: ONDK) up next with an IPO planned this week to raise $175 million. Banks beware.
Equity, donations and rewards have all shown dramatic growth internationally and the latter two models in Canada, as well. The growth of equity is covered below and while crowdlending in Canada has been mired in regulatory red tape, recent expansion in Quebec and Nova Scotia by Vancouver’s consumer lending platform GroupLend point to continued growth. The second “marketplace lending” entrant BorrowWell announced their intentions to launch Q1 2015. This restrictive lending regulatory environment also led the Vancouver co-founders of award–winning business lending platform InvestNextDoor.com to focus on the U.S. Market for now.
2015 Predictions: 5 Changes that Can Influence Crowdfunding
2. Plug ‘n Play on High Traffic Websites ~ 4
One of the more interesting developments in 2014 has been the implementation of “Crowdfunding as a Service” on some of the major print media publishers including FundAid.ca for Glacier Media, FuelLocal.ca for Metroland Media and Blackpress4good.com introducing the Power of Good (see image) – all Powered by FundRazr. While stand-alone sites, the campaigns, technology and promotion are integrated to varying degrees on their community news sites. (Full disclosure: I am a former FundRazr executive).
Overall, the trend for more high traffic websites to follow suit by offering crowdfunding as a service has been slower than anticipated. The traction of the new sites above is still unclear, but this trend will be very interesting to watch.
3. Fraud largely kept in check ~ 5
While the incidence of fraud continues to be low, there were some campaigns with a profile that have been under scrutiny, especially the delivery of international hardware campaigns including the HealBe Gobe calorie counter and the Cicret bracelet (see Brian Jackson’s article on Cicret here). The platforms continue to use and reference the systems in place for fraud prevention but “open” funding sites like Indiegogo largely employ caveat emptor and asking their communities to be whistleblowers.
The equity side is just getting off the ground via sites like SeedUps Canada with no indication of fraud to date. Overall, there has been less buzz around fraud on the equity side and the lending sector has seemingly developed data analysis, systems and algorithms such that risk mitigation of default is manageable and spread across multiple borrowers. As predicted, the move online does not appear to have increased incidence of fraud vs. offline.
4. Enter Enterprise ~ 3
I predicted that franchisors would see the funding and marketing benefits of crowdfunding and Aussie Pet Mobile recently launched an innovative equity campaign to launch new franchises in Ontario on SeedUps.ca. Social enterprise also gained significant traction with the launch of SVX Social Venture Exchange and campaigns like Saskatchewan’s Affinity Credit Union’s Business-for-Good Social Venture Challenge.
Internal crowdfunding by Enterprise has not emerged significantly even after IBM’s successful experiment in 2013 improved innovation and morale. More growth has been seen on the crowdsourcing and ideation side within enterprise. South of the border, Dick’s Sporting Goods Foundation introduced SportsMatter and promptly matched $2M in funding for youth sports teams. It is unclear whether the program will continue in 2015 and lead to follow ons in Canada.
2015 Canadian Crowdfunding Summit (Save the Date - March 3, 2015)
5. Away from Destination sites ~ 2
This trend has not yet gained substantial traction given the strength of well-funded destination sites like Kickstarter and Indiegogo ($56M in VC funds to date). Indiegogo’s launch of OutPost as a self-hosted solution, powered by Indiegogo, launched sites like FanRepublic.co.uk but there has been little noise around it since early in 2014. For the most part, for fundraisers it is still about the destination sites.
Lockitron finally delivered on it’s product in 2014 after a successful direct crowdfund on their own site in 2012 after rejection by Kickstarter. They then offered up their open source code (http://selfstarter.us). The Cicret bracelet mentioned earlier also launched a direct appeal, carefully asking for “donations” vs. offering pre-order and claims to have raised 14% of it’s goal. White label offerings have proliferated including Calgary-based Katipult so we will see if this trend firms up in 2015.
6. Crowdfunding meets Corporate Social Responsibility (CSR) ~ 4
GreedyGiver.ca has been an innovator with their Perks Marketplace and Raise on Behalf functionality for Canadian charities. It appears to be an indirect marketplace in that the gift cards utilized are not a formal CSR program by brands like Starbucks and Cineplex but some of the benefits, brand halo/confidence/value, still accrue. Other attempts at sponsored perks, like The Crowdfunder Show on Fox TV, came and went in 2014.
As mentioned above (in 2.) Canadian community print publishers have been early adopters of the benefits of accomplishing their corporate social responsibility while actually helping fund their customers, both readers and subjects of their stories.
7. Growing conformity on regulations ~ 3
While there are provincial differences and abstainers like Alberta, 6 provinces have indicated interest in following Saskatchewan’s “Startup” exemption and 5 provinces indicated interest in following Ontario’s proposed “Integrated Crowdfunding” exemption (a good summary can be found here).
In the U.S., seven states have adopted intrastate crowdfunding laws and 13 more are pending (learn more and see a map here). There are commonalities on certain aspects such as caps, reporting, qualifying issuers and so on. Once the Feds, finally, introduce JOBs Title III in the US and after the new provincial exemptions have some time in market, expect the move to cross-border conformity to accelerate.
Continue to the full article --> here
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Learn more About Us | Crowdfunding | Support
Canadian crowdfunding record set by compact speaker system
The Globe and Mail by Diane Jermyn | December 10, 2014
(Photo: Mark Blinch For The Globe and Mail)
About 4,000 people from 92 countries preordered the Core speaker, and frequently its companion subwoofer. The Core, which measures 15 by 15 by 10 centimetres, can play music via a wireless Bluetooth connection from a smartphone, laptop, tablet or streaming website. Delivery is promised in early 2015. The product received rave reviews from The Wall Street Journal, Tech Hive and other publications.
“The technology we’re using is really cool because it eliminates the need to have multiple speaker setups. You can hold it in the palm of your hand and it sounds like two widely spaced hi-fi speakers,” says Ben Webster, Mass Fidelity’s co-founder and chief executive officer.
The Core will be sold for $600 (U.S.) on the company’s website and in high-end Canadian and U.S. audio stores beginning in spring.
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The company has two paid employees in addition to Mr. Webster and his co-founder Neil D’Souza. The pair financed their own research and development over the past five years. They plan to use the crowdfunding money to increase production of Core but also to develop a sales team. Mr. Webster believes the Core system has the potential to be a mass market success and he would like to take the product to international markets.
Mass Fidelity has chosen to focus on sales online and at independent retailers – not at big-box stores, yet. The company has one person looking after the United States and other international markets. Past experiences with international distributors and distribution companies have mostly been disappointing. Plus the company still has limited funds and can’t attack every market, Mr. Webster says.
“We need to move on with an international sales team,” he says. “Leads I get now can be confusing and frustrating, so we need to have a more focused drive in specific markets.”
With manufacturing already well established in Guangdong province in China, Mr. Webster says they’re ready to scale up if things go well. But which markets should he start with? And how should he use his resources?
The Challenge: How can Mass Fidelity develop an international sales team when it has limited funds and can’t attack every market?
THE EXPERTS WEIGH IN
Nina Rosenbusch, assistant professor, School of Business & Economics at Wilfrid Laurier University, Waterloo, Ont.
Entering the European market gives you access to a large, wealthy consumer base. However, long-term growth there might be constrained by unfavorable economic conditions and an aging population.
Entering Asian markets could be difficult due to significant cultural, administrative and economic differences, but there’s a high potential for long-term growth. Tech-savvy consumers in highly developed Asian markets such as Japan, Korea, and Singapore are known to be early adopters of cutting-edge tech products. As living space in these countries is very small, consumers should also value the size of your products. Success in the developed Asian markets can build brand recognition in the region and eventually serve as a gateway to high-growth emerging markets such as China.
Whoever is responsible for marketing and selling in the host country needs to be an industry and a country expert plus well networked. In China, networking is one of the main success factors.
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So the question is whether you can hire someone who has these characteristics or whether it is better to work with a distributor who has these characteristics and puts effort into marketing and selling the product. Hiring someone gives you more control, however it might be difficult to hire the right person. In Japan, even large Western firms have difficulties hiring talent because the big Japanese corporations are much more attractive to potential employees. In this case, working with an excellent distributor could be the better choice.
I’d suggest having a regional manager on the ground who co-ordinates activities across several countries. That becomes increasingly important as you grow in different countries within one region.
Kelly R. Askew, managing director, retail strategy, Accenture Canada, Toronto
Overseas, I’d want to target markets similar to the ones where they’ve seen success. If their brand is one of best quality audio in a compact package, they need to make sure that they tie up with a sales force that can sell it as such.
Selling into audio-focused retail outlets in places such as Britain should be pretty easy. Europe is a natural fit. Mobile penetration is very high there – well over 100 per cent – and most people have more than one device. Once they have a foothold in Europe, China may be an easy landing point since they already have a manufacturing presence. Their manufacturer may be able to help them connect into some of the retail environment. There’s an appetite for devices in China where disposable income is high.
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My inclination is to find a channel partner who knows the market do distribution. They need to deliver profitable growth for their distributor if they choose that route. If there isn’t room in their financial structure for that kind of relationship with a distributor, then they might test out having their own dedicated sales force who’s going to chase those retailers themselves. They’ll want to find somebody already present in that market, someone experienced in electronics who also lives there. They need to have laser focus, test out a couple of regions and see how they go.
Also, there are no borders on the Internet. They should certainly be targeting people around the world with educational programs about why their product should be part of a consumer’s electronic mix in their home. Their Indigogo campaign should give them some leverage. What it says is that enough people believed in it to put over a $1-million behind it.
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