Difference between revisions of "Plattformen"

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== Reward-based Platform ==
 
== Reward-based Platform ==
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Investigated platforms<br>
 
Investigated platforms<br>
 +
Reward-based Crowd funding platforms are especially used in the field of creativity works such as music, literature, film, theatre and product design. It attracts a large number of people because these platforms can make an entrepreneur, a designer, a producer out of everyone who possesses a computer with Internet access, a bank account and has the time and skills to serve a camera and to run social media work. Customers also need a sales talent because they are going to advertise their products by their selves. Of course it already appeals if it’s known that the creator who stands behind the product is a person like you and me or even an acquaintance of yours. Further it makes someone thinking that if anyone can do it, I should try it too. That makes it a rather successful concept.<br>
 +
In general a new customer of the platform with the idea of a prototype or the wish to produce a record of music runs through several phases to reach the final aim, which means the needed financial support for the production. Users of the prevailing platform or other people attracted by the customers advertising work prepay a certain amount of money to get some goodies often related to the product or the final product itself. The prepaid money belongs for the most part to the creator to realize the desired product, but only if the defined total was reached. Thereupon supporters get their rewards. Otherwise their money will be returned to their bank accounts.<br>
  
 
1. INDIEGOGO (USA)<br>
 
1. INDIEGOGO (USA)<br>

Revision as of 08:30, 2 December 2014

Crowdfunding and the dynamics of the market

Crowdfunding as a new webbased funding modell has a relative short history. At a closer look the phenomena crowdfunding often seems nebulous. It seems that the sheer spectrum and diversity of the crowdfunding plattforms offers a suitable projection screen for quite different interests.
Some financial newspapers see positive trends within some sectors whereas other papers write about the decline or even the disappearence of plattforms. Very otfen during the research also the facts seem vague and unclear: forecasts often second hand informations.[1] But very often they tend to speculation and hype.
But the sheer mass of forecasts for the capital market make one thing clear: the economy recognized the potential of the new financial model.[2] In the background enormous sums are flowing. In the year 2012 the crowdlending-based credits worldwide totalled $1.2 billion.[3] It`s the interest and the speculative nature of the markets which are changing the concept of crowdfunding (since there ever was one concept) substantially.
New markets are discovered [4] and market places are shifting also geograhically.[5][6] Since the highrise of the lending-based crowdfunding in the US in 2006-2008 as a indirect reaction of the banking crises the economic markets recovered and the banks are looking for strategies for regaining the territories.[7] But not only banks – some plattforms are sold to listed public limited companys with clear economic interests.[8]
Often the looks are only focused on the initiator of the crowdfunding campaign or the investors mostly consisting out of anonymous internet users – whereas the influence or the interest of the plattform itself is overlooked. The information of the economic interest of the plattform is cryptic and hidden under the catchwords of creativity and engagement.
The follow closer look at the plattforms shall make aware of the structures behind the plattforms. For a general overview we point out that we made a distinction between (...) since the plattforms itselves constitute genre specific behaviour. If they take fees and how much is often not so obvious.
One has to find for the hidden risks and guidelines that are the base of this newly grown industry, carefully.

List of References

Crowdlending

investigated platforms

1. Zopa (UK)

2. Lending Club (USA)

3. Ratesetter (UK)

4. smava (Germany)

5. auxmoney (Germany/Austria)

6. bankless24.de (Germany)

7. ThinCats (UK)

8. Zencap (Germany)

9. Finmar (Germany)

10. Lendico.at (Germany/Austria)

Description

Lending based crowdfunding is structured like a bank credit. There are three actors involved: The Borrower, The Lenders, which means people (the so called crowd) who are investing their money, and the platform. Usually, when there is a discussion about crowdfunding or peer2peer lending, there are just the two actors: Borrower and Lender under the highlights of Researchers. The interests, that the platform itself and its subcontractors have is neglected. But if you look closer there is a lot to discover.

Lending based Crowdfunding works like that:
You register to a platform, either as a person, who has a idea and wants to get money from a crowd for it, or as a person who want to invest his/her money, and get i back with interest rates between: 5-12 %. The Lender has to reach the fixed amount, in a certain time window, if not the Borrowers get their money back. If he or she reaches the amount the Borrower hast to pay back the money in a given time to a given interest.
The Legal background is not always that clear. Most Peer2peer Lending Platforms cooperate with ordinary banks, to verify the accounts and check the credit worthiness of the registered Borrowers. The Platforms are just agents that bring together people with different interest , but the involvement of the bank is usually not promoted or hidden.


Registry and privacy policy

Who is adressed

Appearance of the platforms

Who is behind the platform

Risks and criticism

Links

List of References

  • Beck, Ralf Prof. Dr.: Crowdinvesting. Die Investition der Vielen. Kulmbach: Börsenbuch Verlag 2014.
  • Luddabeh, Jens: Horizonte Crowdfunding. Die Masse macht's. in: Technology review, 10/2012, 10, S.32-38.


Crowdfunding

Crowdfunding in the US – The JOBS Act

Crowdfunding´s rising importance in the capital market was only recently given notice through the legislation of the JOBS (Jumpstart Our Business) Act in the United States of America, signed into law on April 5th 2012. So far, crowdfunding has been regulated in the Securities Act of 1933 and therefore has only been accessible for accredited investors, i.e. those who meet a certain level of wealth defined by the US Securities and Exchange Commission - SEC. The SEC is the US capital markets regulations authority.

Title I and II of the JOBS Act were designed to ease restrictions on capital-raising, from IPO´s to start-up seed financing. It enables businesses to solicit securities-based funding from the general public.
Regulations are with the SEC, and they are currently delayed in rulemaking. One of the last provisions that are still missing to be implemented is equity based crowdfunding for non accredited investors:
Title III of the JOBS Act wants to democratize equity based crowdfunding by providing an online mechanism that allows non-accredited investors to participate and invest online into private companies, in small amounts. On September 23rd 2012, the proposal was implemented by the SEC, but has not been legalized until November 2014.

The SEC is heavily delayed with the rules, as they were supposed to be finalized within 270 days. So far, only a 585-pages rule proposal exists. The reason for the delay is that the SEC is in a conflict with two of its core missions: the protection of investors and the promotion of capital formation.

Crowdfunding Platforms and the JOBS Act

The motivation on side of US crowdfunding platforms like crowdfunder.com or circleup.com - which currently are doing crowdfunding for accredited investors only - has naturally been very high and a lot of wellknown names can be found on the supporters list. The team of crowdfunder.com, for example, got involved in crowdfunding legislation and regulation early on in November 2011, as the first crowdfunding legislation was introduced to the House of Representatives and has since then, been engaged with leadership in Congress, the SEC and the White House. Now, platforms are waiting for Title III of the Jobs Act to get legal, in order to facilitate non-equity based crowdfunding with non-accredited investors. Crowdfunder.com CEO Chance Barnett is even “thrilled at how swiftly the SEC picked up crowdfunding rulings”. He is waiting for the “Democratization of Crowdfunding” and sees his company as part of a historic movement.

Many suppporters of equity based crowdfunding, i.e. also many crowdfunding platforms, are talking of a revolution in investing, a victory against sexism and racism, the democratization of capitalism and other predictions that go out on a limb.
On the contrast, critical voices are warning of too much expectations of equity based crowdfunding. First, crowdfunding will not increase the supply of investment capital in a substantial amount. Besides, the so far proposed regulations are very complex: they seem to be to heavily regulated for businesses to use and still earn money and too weak to protect investors. The SEC estimates that it would cost $39.000 to pay accountants, lawyers and the crowdfunding portal to raise on ly $100.000 new funds.

Key Points of CROWDFUND ACT under The JOBS Act

  • A company will be able to crowdfund up to $1 million over a 12 month period.
  • Individuals with annual income or net worth of less than $100,000 may invest up to $2,000 or 5 percent of their annual income or their net worth, whichever is greater, over a 12 month period.
  • Individuals with annual income or a net worth of $100,000 or more may invest up to 10% of annual income or net worth, capped at $100,000 maximum aggregate amount, over a 12 month period.
  • Investors can fund one company or several companies as long as they remain within these annual limits.
  • Minimum Review & Checks: Companies that seek to crowdfund a securities-based round must have background checks done on all principles with 10% or greater ownership in the company and provide full and adequate disclosures with a business plan and a full description of their ownership and capital structure.
  • Crowdfunding portals, alongside the legally required background checks, must do a full review of the company, disclosures and the raise in order to approve a company prior to fundraising.
  • An investor must wait a minimum of 12 months before selling her/his securities unless the sale is to a family member, the issuing company, or an accredited investor, in addition to other restrictions normally placed on the transfer of securities.
  • A crowdfunding round does not prevent a company from raising capital through other legal channels.
  • Companies crowdfunding will be exempt from the 500 shareholder cap pursuant to rules and regulations of the SEC.

https://www.crowdfunder.com/blog/knowledge-center/crowdfunding-law/ copy paste!

Conclusion

So one can suspect that only companies really in need of money would use non-accredited investor crowdfunding. And even those will try out every other option first. In conclusion, non-accredited investor crowdfunding needs better regulations in order to work and benefit both investor and company and subsequently the platforms.

List of References


Crowdsourcing

Description

The web is always more often used to raise fund, and the crowdfunding platforms allow the movement of a huge flow of money. But there are also web platforms, which apply themselves to the flow of knowledge, ideas and skills. These are the so-called “crowdsourcing” platforms, which work in a way that we could define distributed problem solving [1] or collective mobilization [2]. Since the aim of this “problem solving” process is to address as many people as possible, in order to confirm the Rule of big numbers, the stakeholders come from an online-community, available thanks to some dedicated space, i.e. the platforms, rather than from traditional employees or suppliers. Also the name crowdsourcing refers to this huge, undefined public, the “crowd”, which represents the external help: the open call is launched outside in the web (therefore sourcing, from out-sourcing, externalization) without knowing who exactly is going to answer. [3] The word was coined in 2005 by Jeff Howe and Mark Robinson, editors at Wired Magazine.

Types of platforms

While getting into the constellation of these platforms, you might come across many terms, whose meaning is not clear at first, but that can help you to understand better which is the aim of the platform and which project does it support. We could assume a categorization of the crowdsourcing platforms according to the flow they are dealing with:

  • Knowledge: these kinds of platforms host the projects which goal is to collect information from the users.

The motto is that everyone can add what he knows and probably the most famous example come out of them is Wikipedia, the free encyclopedia that uses a Wiki platform. Also OpenStreetMap emerged from a Wiki platform. It provides localized information for the whole word, thanks to 1.6 millions users working on it. If we talk about flow of knowledge it is also appropriate to include in this category the platforms that promote the so-called crowd-voting: it occurs when a website gathers a large group’s opinions and judgment on a certain topic. [4] The sphere of application of crowd-voting goes from market strategies to political issues, since that the received feedback can be exploited in druthers of upcoming decisions. Terms related to this crowdsourcing: open data, distributed knowledge, wiki platform, crowd-voting

  • Ideas: these platforms host the stakeholders who make an open call for successful ideas.

The motto is that it is easier to get good ideas when there are more brains working on it, and that what makes a project a great project it’s exactly the idea itself, rather than the economical involvement in its realization. Crowd-creation is a broad field, which includes many stakeholders; depending on those you can find some categorizations of the process. For example, in some web sites it appears to be a clear difference between the terms open innovation, co-creation and crowdsourcing, while in others the words are used indifferently. Regarding the platform Wazuko [5] open innovation is the “oldest” term and means creating and innovating with external stakeholders: customers, suppliers, partners and the company’s wider community. It allows a real democratic exchange and the exceeding of the strict borders between demand and supply parties. While open innovation suggests active collaboration between different organisations and the sharing of intellectual property, co-creation relates more specifically to the relationship between an organisation and a defined group of end users, its customers. Co-creation means that these end users help the vendors to improve the quality of a product or service with their own personal engagement. According to Wazuko the difference with crowdsourcing is that while in this one there is first one open call and then the solution of the problem by the crowd, in co-creation the crowd works with the company. Generally speaking we can state that this bottom-up process is having a really large impact on the market strategies and that crowdsourcing is representing now a new possible model of production. The use of social input for many companies can make the difference between them and their competitors: in a world of widely distributed knowledge, where the boundaries between a firm and its environment have become more permeable, companies cannot afford to rely entirely on their own research and ideas to maintain a competitive advantage. [6] But it’s not all about private companies and the market: there are many platforms that support flow of ideas addressed to the common good. One example is the platform 10.000 ideas, which aim is to switch the perception of the Latin American megacities into human scale cities, built from the people who live within it. Crowdsourcing -collaborative creativity- is the essential cornerstone of the project: participating is really easy, for instance you can contribute to the final success by simply saying that in one precise point you need a traffic light! [7] Terms related to this crowdsourcing: open innovation, co-creation, crowdsourcing, crowd creativity, participatory design

  • Skills: microtasking, cloud labour, crowd-testing, citizen science… to be continued

Co-creation

  • inspire participation
  • select the very best
  • connect creative minds
  • share results
  • continue development

Platforms screening

References

Reward-based Platform

Investigated platforms
Reward-based Crowd funding platforms are especially used in the field of creativity works such as music, literature, film, theatre and product design. It attracts a large number of people because these platforms can make an entrepreneur, a designer, a producer out of everyone who possesses a computer with Internet access, a bank account and has the time and skills to serve a camera and to run social media work. Customers also need a sales talent because they are going to advertise their products by their selves. Of course it already appeals if it’s known that the creator who stands behind the product is a person like you and me or even an acquaintance of yours. Further it makes someone thinking that if anyone can do it, I should try it too. That makes it a rather successful concept.
In general a new customer of the platform with the idea of a prototype or the wish to produce a record of music runs through several phases to reach the final aim, which means the needed financial support for the production. Users of the prevailing platform or other people attracted by the customers advertising work prepay a certain amount of money to get some goodies often related to the product or the final product itself. The prepaid money belongs for the most part to the creator to realize the desired product, but only if the defined total was reached. Thereupon supporters get their rewards. Otherwise their money will be returned to their bank accounts.

1. INDIEGOGO (USA)

Description

Indiegogo is an online crowdfunding venue for people and entities seeking to raise funds for their own Campaigns and to contribute to the Campaigns of others. Campaign Owners can offer gifts or rewards in the form of tangible items or intangible services (collectively, "Perks") to Contributors. Indiegogo was created by Danae Ringelmann, Slava Rubin, and Eric Schell, launched on 2008 /USA, which supports many categories : Animals-Art -Comic -Community -Dance -Design –Education- Environment- Fashion -Film Food –Gaming- Health –Music- Photography –Politics- Religion -Small Business -Sports Technology -Theater -Transmedia -Video/Web and Writing. Donors, investors, or customers who are willing to order a project or a product can donate and receive a gift depending on the offers.

Registry and privacy policy

Launching a campaign, sign up and contribute to a campaign is free and the minimum age for registration is 18, for the ages 13-17 they also could register and use the Services with the consent and supervision of their parent or legal guardian who is at least 18 years old, provided that the parent or legal guardian also agrees to be bound by the Terms and agrees to be responsible for the use of the Services. Indiegogo offers two funding models :Flexible and Fixed Funding. In case of reaching the goal with either a Flexible or Fixed Funding campaign the inventors keep what they have raised, but be charged a fee of 4% of the funds. If the campaign is Verified Nonprofit, the platform fees would decrease to 3%. If the inventor doesn't reach the goal within the deadline in case of a Flexible Funding campaign, inventors also keep funds they raised, but be charged a fee of 9% of the funds. And in case of a Fixed Funding campaign, all of the contributors will be refunded but there would be an additional payment processing fee of 3-5%, depending on the payment options. $25 wire fee charged once when non-US campaigns have raised funds in USD via Direct Credit Card. The funds are wired in one lump sum to a non-US bank account after the campaign has ended and additional currency exchange fees may also apply. Campaigns raising funds in EUR (€) or AUD (A$) will be able to accept contributions via PayPal only. In addition there are no additional fees to create and use an Indiegogo Partner Page. The Website offers a publicly accessible blog. Any information you provide in these areas may be displayed publicly and read, collected, and used by others who access them.


Appearance of the platforms

Indiegogo features campaigns on the main homepage, category pages, blog, newsletter, and social media pages. Campaigns earn featured spots by staying active and the system measures a campaign activity with an algorithm called gogofactor[1]. 224 countries & territories. 5 currencies. 4 languages offered by the Platform. Display on the Indiegogo Partner Gallery is limited to Partners who have accumulated a minimum of 3 campaigns that have amassed a total of $15,000 in contributions between them. Indiegogo uses many type of cookies which are Strictly necessary or essential cookies, Performance cookies, Functionality cookies, Advertising and targeting cookies.

Who is behind the platform

More than 100 organizations have Partner Pages on Indiegogo. Current Partners include the American Film Institute (AFI), Fractured Atlas, Startup America, Google, Whole Kids Foundation (non-profit arm of Whole Foods), the Architecture for Humanity, Stanford, The American Red Cross, and many more. For credit card funds raised in USD, Indiegogo will be able to send money to any non-U.S. bank account via bank-to-bank wire transfer. For credit card funds raised in CAD($) or GBP (£), Indiegogo will only be able to send money to a bank account located in Canada for CAD($) or UK for GBP (£). Contributors from outside the US will only be able to contribute if they own a US-issued credit or debit card for now. Apple announced that support for international credit cards is planned for 2015. There are 3 options for managing payments: Standard Payment Management Each campaign is a separate funding entity. The campaign owner raises money and receives disbursement payments from Indieogogo. Partner Managed Payments (Fiscal Sponsors) The money raised through each campaign can go directly through to the Partners PayPal account. The Partner is then responsible for disbursing funds to the campaign owners (most often used with Fiscal Sponsor Partners). Non-profit payment management Campaigners who are raising money for a 501(c)(3)[2] can choose to raise money directly for a non-profit organization The money raised through each campaign can go directly to the Partners non-profit account. This will only apply if the NPO has a PayPal account. Otherwise the for-profit partner model is applied.


Risks and criticism

In general there are many risks by using any type of Crowdfunding Platforms regardless of how organize or how creative the campaigns are, however there are main three risks may we consider which are the Market risk, Execution risk and the Financing risk. Indiegogo is valuable for mitigating all of these risks. When people fund an idea or product on Indiegogo before it actually exists, it’s a testament that they really want it, demonstrating reduced market risk. And data collected from an Indiegogo campaign is real market data, not just hypotheticals from a focus group. Also the legal responsibility for ensuring that a given project isn't fraudulent or otherwise illegal falls squarely on the funder's shoulders, Indiegogo doesn't guarantee that Contributions will be used as promised, that Campaign Owners will deliver Perks, or that the Campaign will achieve its goals. Indiegogo does not endorse, guarantee, make representations, or provide warranties for or about the quality, safety, morality or legality of any Campaign, Perk or Contribution, or the truth or accuracy of content posted on the Service. Indiegogo is not responsible for the performance of PayPal or any third party credit card processing services [3].


Links

[1]* http://support.indiegogo.com/hc/en-us/articles/527476-The-Gogofactor
[2]* http://www.501c3.org/what-is-a-501c3/
[3]* https://www.indiegogo.com/about/terms


2. Pozible (Australia)

3. ArtistShare (USA)

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