Mike Del Ponte of SOMA Water
Trish Costello of Portfolia
Kerryn Gerety of Fundraise.com
Barb: Alright everybody thank you for coming to the Crowd-Funding panel. We have an awesome panel line up with diverse experiences. Before I ask them to introduce themselves, if you haven't been to a BlogHer event before, we like to keep these sessions very conversational. You don't have to wait until the end. We want to address your questions and your needs. In service of that, I want to do an informal poll.
Who is here to run a crowd funding campaign (most hands).
Who is here because they did a Crowd Funding (one hand)
Mike: I'm cofounder of a company called Soma. We make a beautiful glass decanter with a water filter in it. We did a crowd funding campaign on Kickstarter that went well.
Kerryn: We are in Boston Mass just opened an office in Wash DC. We give back 92.5 cents on every dollar that is raised. Online fundraising. We invest time building the technology. Two products: A consumer product, to build a fundraising page. And then we have an enterprise software for organizations. We have worked with the Red Sox in Boston. At Fundraise we are super passionate about technology and people. People are raising the money. Giving people the correct tools to reach out to people they know. I have one of the coolest jobs ever. I get to try and be that change. We can give them the tools.
Trish: CEO of Portfolia, a new company just launching in area of equity crowd funding. If you wanted to invest in Pinterest you would have to have 1 million in liquid assets. It's the ultimate private club. Micro-investing is from legislation that went into effect in April. Now you can invest up to 5% of your income in a portfolio. What it does for an entrepreneur, is completely crack open an event of cash for you to pitch to. My two partners, also women, have been venture capitalists for many years. We are creating a whole different platform. Portfolia allows you to create a social platform. Allows you to invest $1000 a year in 2 or 3 companies. We actually create a platform for you to pin your investments to your social networks. If your friends click it pulls the social graph back to you and you can get points to buy more stock. You'll create, you'll decide who the next Pinterest is. If we get this right it will change everything. To create wealth and create change. I'm committed to changing the power base for us.
Barb: I'm the director of biz dev, largest consumer electronics site online. Now more on the business, financial side. Difference between traditional crowd sourcing and equity crowd funding. We want to make sure we set the ground work on what the actual stages are you need to be thinking about.
Kerryn: Were we are at fund raising is helping people to activate their network. Some of this platforms do a great facade of you put up a page and boom you have investors. But you know we encourage people to rethink your crowd. Who are they, brothers, sisters, friends. How do you tap them to raise that money. It really is hard work, where do you start, where do you end. It's not an easy thing to do. It is a planned process to have a crowd funding program. When you infuse technology it becomes sustainable.
Mike: We ended up $150K in one month and 2000 users. It was strategic and well planned. We wrote an article called hacking kick starter. WE wrote step by step everything we did. Email campaigns, custom dashboard to manage your campaign. #1 get extremely strategic dedicate a couple of months to doing it. #2 is luck. But before you start your campaign, you should really ask why. Do people actually want what we're selling? We are a company so we need proof of concept. We want a customer base we can learn from. And the third thing is social proof.
Barb: What are some of the things you should think about getting started?
Kerryn: Accessibility. Even though you are not building a fundraising from a phone, build it. Access to social media to spread your story quickly.
Trish: There are probably 100 sites you can choose from for Crowd Funding. Some are really specialized. Some are in the Arts, some focus on music and film and other areas like that. There's sites for solar and trips and medical. Get into a site that's focused on your type of work. Really bring your social network there.
Kerryn: Rather than taking a platform to bring you a donor base, take the time to explore all the tools being offered. If you have shared the story on Google, Facebook, etc. people want to contact you to be more involved. The tool kit is much more powerful than the people that are at the site.
Trish: If you just look at the equity piece, it's a 300 billion dollar market, almost twice as large as the ecommerce market. If you have a specialty food company there's a group called Circle Love. That's all they do. Starbucks and Ben and Jerry's are involved. When you are looking going forward take the time up front to investigate to see what's bubbling up out there.
Barb: Who should be thinking about traditional vs. equity CF?
Trish: If you can get it basically for free that's the best way to go. Step 2 if you're creating a company and you want to validate your product. It's more than the money it's showing the data that 200 people invested in my company...that you can't buy as an entrepreneur. You have to look at all of those kinds of things. If you want to launch a company that's going to grow, look at the business piece.
Barb: Any questions before we move into the next phase?
Question: One comment, it's not cheap money. When you do the fulfillment of things you've promised it takes time and you have to deliver a lot of stuff. The number of Kickstarter stuff, the amount of work that goes on behind the scenes is enormous it's not cheap money.
Trish: You want to fulfill what your customer is buying. If you want to make music and you're going to kickstarter and it feels more like a business. One thing I do know that I've seen, there's a whole infrastructure around the crowd funding world, to fulfill for you. You click on it and it does all your ecommerce. I think you'll see a lot more options. Were you unhappy with Kickstarter?
Audience (Jan?) Absolutely. On the back end we worked 24-7. It was just insane, my mother and my husband all working. You mine the people you know. You just don't show up unless you are that 1 percent. My sister had success because she had the word Oscar in hers and it was about her movie. It's very difficult.
Audience (Pincus): The question we all have is what is the best platform to amplify our voices. If we talk to the people we already know, we could figure out what platform. But then it's just a numbers game. What I would be looking for which platform would help me amplify my message. How many people will see it other than my mother's cleaning lady. How will you help that message to be amplified. What other tools can help us get new contributors and partners to work with us now and long term and to broaden that.
Trish: If you're doing investors, what we are bringing to the table we're looking at everyday experts. We are going out with American Pediatricians, people that are recommenders and influencers in specific categories. You are putting this out to groups who are expert in a space. So you're truly getting feedback from people that know. What Oprah was to publishing, we put the right investors, with those kind of people, we can identify the companies that can be the winners out there. Think shark tank but a lot smarter you don't have to invest with Mark Cuban.
Kerryn: The three of us on the panel are all doing crowd funding in different ways. We are in three different spaces, totally different.
Audience: How long have you been doing this and what is your success model?
Kerryn: Actually when we were building the software we thought it was consumer facing. Someone who sees something is wrong and they want to take action. Also make it super easy for the donor. We came out with the regular consumer product. First even was with a cancer hospital. Year prior they raised $5000. We helped with and event and raised over $200k. Now we work with organizations that have bigger fancier problems. Consumers raiser 43% more with Fundraiser and corporations raise 30% more. We help causes to make their messages louder online. 53% of our messages are socially assisted. We encourage people at the community level to share with their social network. If you ask every person, sometimes they can contribute money but sometimes they can ask a friend. Convert a donor into a fundraiser.
Question: What were the mechanics of Portfolia. How is it different? Mike also please share the highlights.
Trish: We are not out to the public yet. Beta test will be in June. Nobody under $200K can invest yet. The law passed but the regulations are not yet in space. We are hoping by third quarter. In the meantime you can do "fantasy investors". You can place investments like a gamification model. You can do convertible debt and equity.
Mike: When we decided to go with crowd funding we interviewed the top Kickstarters. Three big lessons: You have to have an amazing video. It's all about design. It's all about design. You can't skimp on the video. Second thing we learned is you have to win the race before it starts. Doing these campaigns is intensive time spent. Interfacing with press, social media. You have to lock up your plan. Last thing is that it's all about the first 48 hours. Ones that are most successful have a huge spike in the beginning and then go down. So not spreading out the campaign but put all your attention right in the first 48 hours. Place all the marketing there instead of spreading it out. Bloggers saw a flurry of stories.
Barb: How do you get bloggers interested?
Mike: #1 is relevance. We read their blogs before we pitch a blogger. Design and sustainability were ours. #2 we talk about our readership. #3 and most importance is relationship. My assistant looked up all the design blogs and sorted them and cross checked against my Facebook and Twitter to see who I knew. If we have a relationship...it's incredibly important. The last R is Reach. How are they going to reach out to back your product. There are niche blogs that put us in their newsletter and they drove a ton of traffic because they were committed to reaching. Ask them how they are going to publish the story.
Question: Do you think there's any value by creating a sense of urgency by not extending the campaign?
Mike: Campaigns that are 30 days are more successful than 45. I'm not sure about that those because a lot of people launch and then they have to relaunch. I think 30 days is a good amount of time. You'll know if you're going to achieve your goal. It is an immense amount of work. We did 9 days of marketing and then stopped. We hit our goal and then went back to developing our product. It's really taxing.
Kerryn: Go to the people you know to get a donation first. People want to go on your page and see you are moving in a foreward direction. Make them go first and don't let them wait till the last minute. You need to see the success in the first few days.
Question: What was your cost for customer acquisition? Did you figure that out?
Mike: We didn't calculate that. Spent over $10k on the video. The learning was the most important experience. We are fulfilling over 2300 orders. To be honest, I think it's a really high ROI platform. On your video you should spend 1000-5000 on a really great video. For us, our kickstarter backers had never seen or used the product. These people really, really want the product. They are going to really market it for you. They are going to help you get a lot of customers through referrals.
Barb: What happens when the campaign ends? How do you deliver on the promise?
Mike: NPR did a big story, this is a huge problem. Many backers never receive their reward or they get it late. We are very communicative about the process. Many people who have a good idea don't think through it. Do your homework and realize you are making a public promise to people. The second thing we learned is that if you are in good communication with your community, they are really understanding. We would make these iPhone videos. In three or four minutes we would take a video saying thank you and throw it up on the landing page and people loved it.
Kerryn: We are way more flexible for what we consider failure. For event clients, your even is over after it's over. We don't really handle any of the fulfillment, they just use our software. We have less of the worries than Mike or Trish. We're trying to make it easier on the people through technology.
Trish: It's not about the product it's you want to invest on a healthy company that's going to grow. You are being called on to be an evangelist with a company. It's more of a long term, it's gonna be 3-5 years that this company is going to grow. You are helping to make that company successful.
Audience: To Mike: I just ordered a carafe (laughter and clapping).
Audience: Do people just run from one of these sites to the next?
Kerryn: We focus on retention. We're focused on helping people fundraise. Fundraise is focused on the people side of it. We try to give everyone equal opportunity. Not everyone is a Gen Y or Millenial. It's partly our duty to help teach people how to be successful with these tools.
Audience: Is there a way to enter this process on the enterprise level?
Kerryn: We have retail clients that allow people to add a donation on. For enterprise clients we focus on the tools and technology for a solution.
Jan in Audience: Kickstarter is not there to fund a business, it has to be a project.
Trish: Come to me if you want to fund a business!
Barb: Thank you everybody!
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