Seven key facts on the Crowdfunding Market

1. Research report forecasts that $2.8 B will be raised worldwide this year, up from $1.5 B in 2011 and $530 M in 2009. 
2. There are over 450 crowdfunding platforms worldwide. Including 4 China. 
3. Kickstarter is America’s largest platform. 
4. Indiegogo is Kickstarter’s closest rival, and is available in Canada. 
5. In terms of amount of money raised, the NA crowdfunding industry CAGR is 63%
6. Pebble raised 10.3 million dollars from 68,929 people after the inventors posted a pitch on Kickstarter. The previous record was 3.3 Million set in March by Double Fine Adventure, a video game. 
7. Seven projects have raised $1M – something that had never happened before February this year. 

Sources: Techvibes, Massolution, ITBusiness

What is Crowdfunding? How does it relate to Social Media? How is it creating New Business Models and More Rapid Job Creation?

Below is an excerpt from Invest Crowdfund Canada's National Webinar, held 29 June 2012. 
Guest author: Andrew Weir

Broadly speaking, crowdfunding is about using the Internet to ask regular people to help fund you project or idea. There are a number of different models for this. The most globally prevalent model right now is donation-based.  For a benefactor in a donation-based system, it is about being willing to pay in advance for a product or project that you believe in. In most cases, donators will receive the product in exchange for contributing.

You asked how cowdfunding relates to social media. The most notable platforms in North America right now are IndieGoGo and Kickstarter.  They’re social in the sense that users log in, browse, discuss and ask questions before decided to donate or not. People looking for funding often include videos explaining their project. On some platforms (though not necessarily all), a project must have reached its funding target before any money is released. If the target is not met, no money is transferred.

What we’re talking about today is the next generation of crowdfunding: Crowdfund investing. Recently made legal in the united states and already available in other geographies, it takes the crowdfunding model a step further by allowing people to invest in companies and ideas in exchange for equity.

What this is about then is opening up new ventures and ideas to the capital and wisdom of the crowds. It is social in the sense that business plans and project ideas need to be able to stand up to the scrutiny of the social network. If one potential investor questions the logic or sustainability of the plan, the person or group seeking investment is going to have to adequately defend themselves to the entire crowd or fail. And its important to remember that the crowd is diverse – the scrutiny will come from people of all different expertise and interests. 

You asked about job creation.  New ventures are a crucial source for new job creation.  In the US for instance, of the modest increase of 119,000 jobsin April, only 4,000 of those came from big firms. Half of those new jobs came from small businesses and startups. We have established that it is anything by easy right now in Canada to obtain funding through banks or VCs. Opening up crowdfund investing provides these new and innovative companies with the funding they need to grow. 


Click here for our Whitepaper on Crowdfunding in Canada


For more information and to access our petition, visit the i-Canada page. 

What types of business applications are most often used for social media?

The top 5 applications most often used for social media applications are:

• Citizen Engagement/Services Communication Applications: there are a number of approaches that are being used to improve citizen and services communication using social media tools or community interaction portals to allow organizations to socialize their ideas. In addition, blogs and social networking tools like Facebook have become effective ways to rally target audiences around key conversations of community relevance.
• Employee Engagement: Use of social media for employee engagement/internal communication is a major focus for organizations in both the private and public sector. For example, blogs can be a very effective communication channel for management to get key leadership messages out, but also invite employees to engage in the conversation, post questions, add comments, etc. A popular form of employee communication internally is using low cost Twitter look alike tools like Yammer (recently acquired by Microsoft).
• Learning & Development: Social media tools are very effective in supporting internal training, and learning and development needs. Popular uses include YouTube or other video services to set up lower cost training tools, supported by social networking engagement tools so employees can continue to ask experts questions, use of wikis and social networking tools are also very effective tools to support learning and development practices.
• Customer Services: Many government organizations are using Twitter for issuing alert services on transportation, safety or health messages to reduce call volume traffic.
• Collaboration: Organizations use collaboration and social media platforms like IBM Connections/Collaboration Suite, Igloo, Jive, and Microsoft Share Point  to share project information, departmental communication, manager/employee communication centers.

Who in government is world class in social media use?

There are many role models in government organizations successfully using social media. Here are three great examples:

• The Ontario Provincial Police (http://www.opp.ca/) have been innovating with social media for several years.

• The Province of British Columbia Citizen Engagement (http://www.gov.bc.ca/citz/citizens_engagement/some_guidelines_master.pdf). See this link for the province’s guidelines on using social media within the organization.

• United States Environmental Protection Agency (http://blog.epa.gov/blog). This social media presence is recognized as a world-class example of government organization social media use. The EPA’s general audience stretches across the United States.The blog is a very good example of effective organization. A general blog is updated daily by EPA employees with relevant, accessible and wide ranging articles. More specific blogs run by the EPA are aggregated under a “blogversations” area and tweeted out by a common Twitter username.

How difficult is it to measure ROI for social media?

• Social Media is a channel to reach an audience that is on the internet.
• It is no different asking what is the ROI for using radio, or television, or newspapers to reach an audience.
• Like other communication channels, to determine an ROI, you need to think carefully about the audience that you are trying to reach: are they using social media? It is important to understand how they are using it and identify what social channel they are using.
• The top social media benefits are driven by having a clear problem that you are trying to solve with a desired outcome.
• Social media can be easily measured using many metrics if you know:
• the audience that you want to reach,
• how you will reach them (i.e.: where are they),
• the type of conversation that you want to have and how long you want to have it for,
• your end posts, (goals/outcomes),
• Metrics include: # of comments generated, # of retweets, length of the conversation, reach of the conversation (beyond NA borders, etc.).
• Many organizations do not have the right social media measurement tools or are not clear on why they are using social media, so they do not secure a value outcome.
• ROI is NOT difficult to measure in highly targeted social media campaigns that sell specific products as they are driven by a specific goal, incentives, guided conversations with expert moderators, and typically have strong tracking tools integrated.
• However many organizations do not design a clear vision, develop a clear set of goals on why they are using social media, so often many organizations make the mistake of thinking social media is just the right thing to do without seriously understanding what the goals are, who you want to reach, where are they located, and why would they want to have a conversation with you, and more importantly why would they want to sustain the conversation with you.