Reward-based crowdfunding: what’s it all about?

Pre-sales, handcrafted merchandise, a wine-tasting course or appearing in the credits of a film. Among the different crowdfunding models reward-based crowdfunding is a great way to gather funds for start-up businesses, art projects or local initiatives. Campaigns that work with rewards typically offer supporters the opportunity to choose an amount of money to be invested in return for special perks. The more money supporters spend, the greater is their reward.

The beauty of crowdfunding lies in the special relationship between the project leaders and their backers. Different from a traditional transaction between buyer and seller, donating money towards a crowdfunding campaign is the start of a collaborative process between the entrepreneur and the crowd. When done right, rewards can be a wonderful way to establish this relationship. Not only are rewards a fun way to get the masses behind a project, they simultaneously allow entrepreneurs to thank backers for their support.

“Would I spend money on this?” is the first question that entrepreneurs should ask themselves when designing a rewarding system. Rewards need to be truly compelling to effectively get people excited to spend money. Though it may seem obvious, many entrepreneurs tend to forget that perks should reflect the value of the backer’s donation. Nobody wants to spend 25 euro’s on a sticker and a pen! Attractive perks, however, can add tremendous value to a project by sending out the message that the investment is worth money and effort.

The rewards of successful crowdfunding campaigns boast some kind of physical, creative or experiential value that emotionally ties the backers to the project. Pre-selling the finished product is an easy way to achieve this and is especially helpful when producing a gadget, film, book or CD. For instance, people who supported the Veronica Mars Movie Project for $30 received a digital version of the film, a t-shirt and a pdf-file of the script. Pre-sales are also a perfect way to entice people into spending a little more money: LithiumCard’s near irresistible offer to buy 3 chargers for $150 and get 1 free was taken up by more than 400 people.

Sometimes, rewards need to be kept within a tight budget. A great idea then is to reward backers with special privileges that entitle them to pitch ideas for the project. For instance by naming a character in a book or deciding on a colour for the final product. Another idea is to personally update backers on the development of the project with small tokens of attention. As an example, the project behind the Aquafarm self-cleaning fish tank provided behind the scenes updates for $1 pledges (as opposed to an educational seminar for $10.000). Alternatively, you can invite backers to the production floor, arrange a Skype-call with the project leaders, or simply send handwritten cards or polaroids.

As we know, the crowd is crucial to any successful crowdfunding campaign. Offering enticing perks and rewards and sharing the project’s story from a personal angle makes backers feel special and part of the bigger scheme. Carefully crafted and creative rewards, big or small, are therefore a great asset for entrepreneurs to grow a solid community of emotionally engaged backers.

Social Media Marketing Strategy: five essentials

In this day and age, the digital times we live in, no entity whether big or small can survive without Social Media. They can be a powerful tool, a leverage for impact, your step into someone’s life you would have never encountered.

But Social Media is more than just a Facebook page. It takes more than just a Twitter account and your occasional Tweet when a news report is out, you have to get a message out urgently or, well, you just thought it was time to tweet again. Especially if your are trying to raise your profile, gain more supporters and get yourself known you should be prepared to invest a significant amount of time and resources.

Here are six essentials that will help you build your Social Media strategy and unlock their true potential:

1. Build your story

In our fast paced lives and a world full of information it is not enough to get people wondering. In fact, wondering is not at all what you should be aiming at. No one neither has the time to wonder what you are trying to say nor do they have fun doing it. People are spoilt for clear messages. So know your story, sharpen it and be clear! And have it ready to be out there.

It might actually take you a while to sharpen that brand identity. Many fail here thinking a vague idea might just be as good and it will come with time. But knowing exactly what you stand for, setting key values and qualities is the basis for everything else to come. And most of all: BE AUTHENTIC! Try to be the best version of yourself instead of a second best version of someone else.

So, in this list of essentials, number 1 ist truly the first step that needs to be accomplished.

2. Know your audience

Whether it is by locality, age or interests find out what the main traits of your target group are. Build a profile of your typical user, maybe using the personas method where you actually envision that person going over and using your site. This will also help you clear your website from things that might have been a great idea to have on there in theory but certainly are of no use to your real target audience. Once you have an idea who your target group is, try to put together specific topics they are interested in.

3. Use the right channels

Not every Social Media platform is the right one for you. In fact, when you go through the process of building your strategy you will most probably decide against some of them. Your main criteria for choosing the right channels: All your energy and efforts should be going into those platforms that are used by your target audience.

4. Embed in your platforms

Once you’ve decided on your platforms and you set up your profiles, don’t forget to integrate them in your site. Many fail here thinking that your supports will actually search for you on Facebook etc. Having Social Media Buttons on your main frontpage, blog or article pages or single projects pages will take you a long way.

5. Track, report, learn

Every Social Media platforms offers insights on how your fans, followers and friends are interacting with you and how the information you are offering is being re-used via shares, re-tweets etc. There is also more extensive information on your users: age groups, gender proportions, even location. While these figures are interesting per se, they are also most valuable for polishing your Social Media strategy. Try to build on these insights by studying them frequently. If your aim is for interactions with your brand, you should be pulling off more of these tweets and posts that were able to gain lots of traction. If you are looking for conversion – actual visits on your websites – try for engaging and inspiring contents with some form of incentive for your supporters to click on.

In Summary

A successful Social Media strategy needs to be exactly that: strategic. It all starts with building your story being authentic and clear about it, knowing the people you are reaching out to and knowing where and how to interact with them.

Essential Must-Knows For Successful Crowdfunding

You have a mind-blowing idea and the world needs to know it. The only hurdle standing in between you and success is a lack of cold, hard cash to realize your master plan. Luckily, there are options out there to finance your project without turning to the bank or exploiting your personal savings. Crowdfunding has become one of the most popular subsidizing methods for entrepreneurs. By Irene Broer

It may sound like the latest trend, but crowdfunding has been around for centuries. The digital age has dramatically boosted its popularity, with websites such as Kickstarter and SeedInvest giving rise to successful campaigns in the creative industry and beyond. The Coolest Cooler, a blender with an integrated speaker set, USB-charger and LED light, raised over $13 million in 2014. The road to success seems simple: find a group of people willing to donate money to your project and you’re good to go. As always, reality is more complex. We’ve put together the 5 must-knows of crowdfunding that entrepreneurial spirits should keep in mind before trying their luck.

1. Polish your project

A great idea on its own is not enough: a thoroughly designed business plan is crucial for any successful crowdfunding campaign. First of all, make sure there’s a market for your Next Big Thing: what’s in it for the future investors? You need to work out your project in detail and set concrete goals in terms of money and time. Calculate how much money you are going to need to launch your project and take into account production and shipping costs. Design a reasonable timeframe to gather funds, execute your project and deliver back to your supporters. Don’t forget to prepare for setbacks: what happens if a prototype comes out wrong, or you encounter a manufacturing delay?

2. Type of funding

Consider which form of crowdfunding suits your project best: simple donations, a reward system or investments. The most well-known type is donation in return for special perks. Often, investors choose from several amounts: the larger the donation, the more sizable the reward. For a full-priced donation, supporters might for example “buy” the finished product: a prototype, tickets for a premiere or a CD. Another popular option is crowdinvestment, in which supporters buy a share of the start-up. This typically involves larger sums of money which help the project to take off quickly, but also means you will have to share your successes … and losses.

3. Choose your platform

The amount of crowdfunding platforms out there can make it hard to choose the right one for you. Some focus on music or apps while others exclusively showcase projects that are socially or environmentally sustainable. Almost all take a share of the donations, usually around 5 per cent. It’s important to consider what happens when your project doesn’t reach the goal. Platforms deal differently with this situation, so make sure you don’t run into any surprises. Like most, Kickstarter hosts all-or-nothing campaigns: the money goes back to the investors if the project doesn’t meet its goals. Indiegogo lets you keep the donations, but takes back 9 per cent.

4. Campaign, campaign, campaign!

 It’s time to put the “crowd” into crowdfunding. Getting your project out there is the first step in finding donators. Videos are a great way to present your idea: keep it short, personal, entertaining and make sure to visualize the final result. Future donators will want to know what they gain by supporting you, so do your best to engage them with cool perks and rewards. Set up a separate website on which people can learn about the project in detail and even pre-order. Needless to say, social media are your friend and you’ll want to Tweet, Facebook and Instagram as much as you can. Your own personal network can be a wonderful asset, so get your friends and family involved to spread the word.

5. Give back to the crowd

If the masses loved your idea, you’ll now have a comfortable amount of donated money waiting to be put to good use. The next steps can daunting: you need to get the production and shipping process going, thank your donators and keep them updated. Now that you’re in business, make sure there’s a cash flow independent of the donated money. By setting up an online shop you can avoid production coming to a screeching halt when the donations have run dry. Of course, you’ll want to express your gratitude to the crowd that funded you. What about sending them all a neat printed t-shirt for starters?

Donation-based crowdfunding: a window of opportunity for charities

We all know the routine of old-school charities where someone knocks on the door, kindly asking for a donation. You might throw a few bucks into the collection bin, pat yourself on the back for being a good philanthropist and trust that the dolphins shall be rescued according to your generous contribution. Or … was it the kidney patients, oil spillages or abandoned pets instead?

More and more, non-profit organizations are finding their way towards crowdfunding platforms. Some even exclusively cater for social purposes: Causes, Buzzbnk, StartSomeGoodCrowdrise and Sosense Engagements to name a few. Crowdfunding is an attractive option for those looking to get donations – not only because spenders are easily reached from behind their laptops, phones and tablets, but also because it helps to create a solid community of engaged, enthusiastic and involved supporters. Traditionally, donations for charities are gathered into a large pile of money to be spent on an overall mission, after which the organization itself decides how to further allocate the money. On crowdfunding platforms, donators are given the opportunity to browse campaigns for specific causes that require money, pronto. For example, instead of donating a few coins towards worldwide animal wellbeing, philanthropists find themselves in the position to financially support the renovation of the animal rescue center around the corner. Or perhaps they can help pay for the local theater group’s next play, or help contribute to the tour of a kids’ orchestra in Paraguay.

Of course, donation-based crowdfunding is not only interesting for charity purposes: many donations have been spent on successful campaigns for music photography and theater projects as well. In any case, the opportunity to financially contribute to individual projects rather than supporting the elusive greater good for all, helps donators to feel more engaged with the cause. The success of crowdfunding campaigns depends on the support of an enthusiastic, emotionally involved network of donators. This sense of community is one of the unique characteristics that distinguishes crowdfunding donations from its traditional counterparts and is one of the reasons so many potential well-doers, big and small, turn to crowdfunding platforms. Creating and maintaining this sense of community is a two-way street, with a large role to play for the creators of the campaign.

Unlike in reward-based crowdfunding, supports of donation-based campaigns don’t expect anything in return for the money spent. The satisfaction of having contributed to a good cause is enough – philanthropy at its finest. However, part of the attraction of donating money towards a crowdfunding campaign lies in the opportunity for backers to stay closely in touch with the projects they support. Not only are donators excited to see how their money is being spent, they also expect to see tangible results of their contributions at some point. In this sense, keeping donators informed about and involved with the project is part of the reward that creators can offer their communities. A first step is to publish and send out the budget plan, perhaps in relation to a personal message to all donators. Also, consider sending out handcrafted thank-you cards, or arranging a Skype-talks with the crowdfunding-team. Recording short videos and sending out photos made on location are other quick, easy and effective ways to keep backers involved with the project.

This level of transparency is one of the unique points donation-based crowdfunding has to offer, both for instigators as for donators. Embracing such openness is not only a great way to maintain a mutually beneficial relationship with backers, the good rep may even get more backers for this campaign or the next one. All in all, crowdfunding offers exciting new opportunities for aspiring well-doers to get involved with projects of their liking, and to see them through until the world is a little better – one donation at a time.

The 5 Crowdfunding models you should know

Entrepreneurial spirits are increasingly enticed by the idea of crowdfunding their projects. Simply put, crowdfunding is a way to raise funds from the general public, often through online platforms and social media. Its appeal is obvious: setting up a crowdfunding campaign and having the vox populi decide is a breeze compared to the paperwork and nervous breakdowns associated with traditional bank loans and investments. While the crowd always remains crucial, the relationship between entrepreneurs and their supporters comes in many shapes and forms. From no-strings attached donations to equity investments, we’ve put together the 5 most common crowdfunding models out there. By Shila Meyer-Behjat and Irene Broer

1. Donation based crowdfunding

Donations are the most straightforward way to crowdfund a project. In its purest form, donations-based crowdfunding runs on philanthropy. The incentive to make a contribution is not financial return or gain. Instead, donators might find their reward in the satisfaction of knowing that their money is going to be used for a good cause, for instance in support of a local charity or by helping a band to record their first album. The public donation model is anything but new (think charity fundraisers), but online platforms have drastically widened the scope of this traditional subsidizing method. Directly supporting a charitable project in columbia or a project that changes child’s life has never been easier.

2. Reward based crowdfunding

The reward system takes donation one step further and is probably the best-known model in crowdfunding. This is what websites such as Kickstarter and IndieGoGo specialize in: supporters are given the opportunity to choose the size of their support and receive special perks in return. The more money is spent, the perkier is the reward. Besides the rewards being a great incentive for people to support, sending out merchandise, invitations to a launch party or mentioning donators in the credits of a crowdfunded film is a wonderful way to thank investors for their contributions.

3. Pre-sales based crowdfunding

Offering pre-sales is another popular method to enthuse the crowd for a project. It’s similar to the reward system in the sense that investors receive the finished product in return for their contributions. However, instead of the supporters deciding the size of their investment themselves, pre-sales come with a fixed price based on market value and production costs. Before offering pre-sales, entrepreneurs should therefore have thoroughly calculated the costs of manufacturing and shipment and be reasonably sure that their business plan allows for timely production.

4. Lending based crowdfunding

In countries that legally allow for it, crowdfunding platforms offer lending possibilities to entrepreneurs and investors. Unlike traditional lending agreements, peer-to-peer lending, or P2PL, cuts the institutional “middle man”, allowing lenders to choose an investment themselves and entrepreneurs to benefit from lower interest rates. Investors can opt for a social lending model with minimal or no interest at all, or even a forgivable loan where they receive their money back only if and when the project has become profitable. The downside of P2PL is that loans are not contract-based and that consequently, legal guarantees for either party are not easily obtained.

5. Investment based crowdfunding

Crowdinvestment, sometimes jokingly dubbed crowdfunding for grownups, allows for interested parties to receive equity in the companies they support. Investors are able to choose a project based on its future potential or even shared values. Typically, contributors buy shares, which may give them some kind of say in the project. Sometimes, investors only buy a share of the revenue. In this case, contributors don’t have ownership but instead receive a financial reward in case of profit. Obviously, entrepreneurs interested in crowdinvestment require a solid business plan and should be willing to give up some decision-making power to their shareholders.


Yunus Social Business partners with Sosense to launch a unique funding vehicle

“Yunus Social Business – Global Initiatives” has been co-founded by Peace Nobel Laureate Prof. Muhammad Yunus, the pioneer of microfinance from Bangladesh. The organisation is managed by two dynamic woman, Saskia Bruysten (CEO) and Sophie Eisenmann (CFO). Their aim: to kick-start new social businesses by providing them with mentoring & coaching as well as with the necessary financing. They have been incredibly successful in doing this. As of today, they created local chapters in 7 countries, including exotic but very challenging places such as Haiti where they work together with, among others, the Clinton Global Initiative and the Deutsche Bank Americas Foundation.

A key challenge for the YSB team is finding the right blend of capital for their incubator funds. Supporting early stage, socially oriented businesses, requires a blend of donations or grants and patient investment capital.

The new online platform which is operated by Sosense, achieves this goal: It allows to professionalize business partnerships that engage corporations in supporting a social business. The platform is designed to run crowdfunding campaigns, manage donations, issue donation vouchers, and – a new feature within Sosense’s product portfolio – to host an internal membership area designed to facilitate financial investments into a social business, such as a zero-interest loan.

A “Yunus Social Business” is an enterprise which solves the needs of the poor in a financially self sustainable way. Key areas are nutrition, affordable shelter, access to education, health services, safe drinking water, sanitation, energy or communication services. Muhammad Yunus defined strict criteria for any social purpose driven business to classify as a “Yunus Social Business”. Most importantly: The businesses shall create revenues and be financially self-sustaining, they should, however, not pay out any profits to financial investors. Surplus revenues should stay within the charitable system and be employed to further improve the services for the poor.

“We are proud”, comments Patrik Elsa, CEO of Sosense, “to be part of this exciting movement to transform parts of our economy into a social benefit economy. It is initiatives such as Yunus Social Business – Global Initiatives which showcase how businesses can be designed as a means to produce a social good”.

Sosense and GEXSI engage in a strategic partnership

The Global Exchange for Social Investment (GEXSI) is an initiative that had been launched at the World Economic Forum in 2001 under the auspices of the Schwab Foundation for Social Entrepreneurship. In the meantime it evolved into a small, mission-driven impact investment advisory based in Berlin which is closely interconnected with the international impact investing community.

Sosense and GEXSI mutually benefit from their strategic alliance: Sosense benefits from GEXSI’s long standing expertise related to social business development and financing models that blend philanthropic and commercial capital, which is a recurrent theme in many of Sosense’s projects, such as the crowdfunding platform for Yunus Social Business which just has been launched.

GEXSI benefits from the impact cases that are being created: “ It is amazing”, argues GEXSI’s CEO Andreas Renner, “to see how a philanthropic corporate engagement and new investment circles that work with the Sosense technology help to fill the structural finance gap which social enterprises face. GEXSI had been searching for a long-time for effective means to address this challenge. With Sosense we found a competent partner which supports our mission.”

Sosense and GEXSI defined a target for 2015: To run a Digital Social Innovation Award which empowers social enterprises and other social purpose organisations to benefit from the power of innovative online platforms to leverage their social impact.

Sosense and PwC – Strong Partners in Social Entrepreneurship and Social Innovation

With a 3 year partnership with Sosense, PwC continues to strengthen its engagement in Social Entrepreneurship and Social Innovation.

PwC has supported Sosense since its founding , 3 years ago with know-how; networking opportunities and the pro-bono financing of a PwC employee and co-founder of Sosense. With this new partnership Sosense and PWC will intenisfy their collaboration.

With Sosense we found a partner that acts as a well-known catalyst for social entrepreneurship and social innovation in the Swiss market. Urs Honegger, CEO of PwC Switzerland

‘Companies should align their goals so that their work has a positive impact on society. At the same time many socioeconomic challenges can be addressed by using entrepreneurial interventions. Therefore PwC has made it of strategic importance to support social enterprises and social innovation,” explains Urs Honegger, CEO of PwC Switzerland. “With Sosense we found a partner that acts as a well-known catalyst for social entrepreneurship and social innovation in the Swiss market.”

With this partnership, PwC supports Sosense in developing technology and services for Companies and Foundations in the realm of Corporate Social Responsibility.

Partnerships and networking are of increasing importance when it comes to addressing challenges in our social environment. Market actors have realized that creating a sustainable impact is more effective when combining the competencies of different market actors. A win-win situation for anybody involved.

Patrik Elsa, CEO of Sosense, is thrilled about the partnership.

It is wonderful that we are able to encourage more companies to become engaged in social entrepreneurship. There are many companies in Switzerland that wish to become more socially responsible. We can show them the right way and thus create additional value for the good cause.

Crowdfunding Campaign: Soulbottles – Drink, and make the world a better world

Soulbottles, a glass bottle company, advertises tap water – in this way promoting probably the most underrated resource ever.

Water is flowing through a network of 50,000 km long pipes into every corner of Switzerland. Although the quality of tap water has never been as good as now, the import of mineral water has still tripled in the last 10 years. Water out of plastic bottles is probably considered to be healthier and even more drinkable. That’s when Soulbottles comes into play: the two founders Georg Tarne and Paul Kupfer, both 24 years old, sell glass bottles, in which tap water can and – should be bottled, as they emphasize: “There are many reasons why we prefer drinking tap water than mineral water.”

Tap water is not only cheaper than mineral water, but also less contaminated, as the regulations for drinking water, flowing through our pipes, are often stricter than those for mineral water. Whereas plastic bottles harm the environment,  drinking tap water is up to 1000 times more environmentally friendly as recently found in a study published by the Swiss fair consulting company esu-Services. Moreover, plastic bottles contain health-damaging plasticizers that can even cause cancer. Furthermore, Tarne and Kupfer are convinced that: “plastic bottles have simply no style.” The two of them met while working for a catering service. At that time Georg Tarne already had a rough idea of Soulbottles in his mind.

The bottles are made out of Italian glass, which makes them lighter than conventional glass bottles and should, thus, be better and easier to transport. In addition, you can order them with your customized design. However, one bottle costs 19 Euro –  a high price for a simple bottle, in which tap water is filled in eventually.

Nevertheless, customers rather proved the founders to be right: the first production of 12,000 bottles was financed with the help of crowdfunding.

One Euro for each bottle sold is donated to drinking water projects. Tarne and Kupfer could even convince restaurants of their project Soulwater in Vienna and Berlin, where the duo live. These restaurants sell tap water to their customers, generating revenues which flow back into water projects as well.

Crowdfunding with a cherry on the cake

It is like a story from the company book of fairytales: within just five months, Thomas Steinemann had collected the 1.5 million Swiss francs required not only to save the traditional Swiss watch brand DuBois et fils, but also to reposition it. And all without credit.

Steinemann used crowdfunding – with a special trick: anyone who participated with 500 francs not only received shares but also the right to buy a watch worth 9,000 francs for half price. Anyone investing between 3,000 and 10,000 francs received the right to buy a watch every year for 70% discount. A local company and its employees were therefore saved along with the social engagement that the traditional company in Le Locle had demonstrated.

Crowdfunding has become an important tool to raise the required initial financing that has been turned down by credit institutes or investors or not even requested from them in the first place. Especially for social enterprises, this method of participation online can pay off, says Patrik Elsa, CEO of Sosense

More and more people are turning to crowdfunding. The sums are often smaller than those required for the resurrection of the watch brand. Crowdfunding has become an important tool to raise the required initial financing that has been turned down by credit institutes or investors or not even requested from them in the first place. Especially for social enterprises, this method of participation online can pay off: on the Internet they are able to convince potential investors of their good idea. And as with Dubois et fils, the option is there of offering supporters specific advantages or influence. In this way, the Basel-based Christian Heyner from 3biobiz is currently looking for financial impetus for his idea, fairtrade fruit delivered direct from the producers in Africa and South America to customers in Switzerland. Those who support him receive in return a discount on the fruit subscription. There is a gaping hole here though. The crowdfunding platform Startnext shows that 3biobiz has currently few supporters or none at all: of the required €50,000, so far nothing has been raised.

“Every crowdfunding project is a success, regardless of whether one achieves the target sum or not”, believes Franziska Köppe. “Because you have also gained awareness. And you have learned something – who the takers are and where they are and where not. Facing up to this makes you more investible.”

The consultant and founder of Madiko recommends social enterprises to become involved in crowdfunding, also because large companies can successfully become involved. An idea that is in the open, that enthuses and then receives probably the best form of support – money – is always interesting to big companies. In this way even 3biobiz is aiming to gain a strong partner.

However, crowdfunding is not sponsoring. “Sponsoring for me is like indulgences – something that large companies like to do in the run-up to Christmas”, says Köppe. Crowdfunding in contrast offers companies the opportunity to think about how it can benefit itself from a specific social enterprise, its idea or its processes.

Crowdfunding works on a quid pro quo basis. However, one has to think in different terms than just money: working time, materials, services – Franziska Köppe has already made all these things available to her customers who have participated in the crowdfunding of a social enterprise. This can work very practically. For example, a medium-sized wood processing company that participated in a seniors’ workshop benefitted in return from childcare provided by the seniors during special events. In another example, a large metal processing company received for its participation better access to a supplier.

“What is important is that the social enterprise corresponds with the core business of the company”, explains Köppe. As for example in the case of Fairphone: in order to start production with their own means, initiator Bas van Abel needed 5,000 concrete orders. By June, 5,335 people were prepared to pay in advance the €325 for a telephone that is better for the environment and manufactured under acceptable terms, thus pre-financing the production. The production could start – and telecommunication giants such as the Spanish Telefónica, Vodafone from the UK and the Dutch mobile service provider KPN joined in the crowdfunding, ordering thousands of the smartphones.