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.