An infographic created by Wolters Kluwer and CT Corporation has revealed the top characteristics of the most successful rewards-based crowdfunding campaigns over the last 12 months.

Technology raised the second most amount of money per campaign after charities, which gained an average of $5m per campaign, next to $4m for technology-led products and services.

However, fewer campaigns were run for charities, while the technology market was a little more popular, taking around 42 per cent of all crowdfunding campaigns vs four per cent that were charitable causes.

Wolters Kluwer and CT Corporation analysed the top 50 campaigns on rewards-based crowdfunding platforms to see how they managed to raise so much money and it uncovered three very obvious trends: incorporation, video and social media.

Incorporation

Nine out of ten of the most successful campaigns were launched by incorporated companies, which, to investors, would offer some protection for their investments and therefore peace of mind. Additionally, for the companies involved, incorporations have certain benefits, such as better loans, grants and contracts that mean they were in a better position to tout their wares on a crowdfunding platform, with extra security against losses themselves.

Video

Every single campaign included in Wolters Kluwer and CT Corporation’s list had a video accompanying their campaign. This adds a certain amount of professionalism, again, making the campaign seem more trustworthy. Whether portraying the company’s story or simply showcasing the product, it shows dedication from the company, demonstrating they are willing to invest time and money in creating effective assets to accompany their campaign.

Social Media

In total, the companies behind the 50 campaigns had 310,200 social media followers, which allowed them to drum up interest in their product. The key social networks the leaders were active on were Facebook, Twitter, YouTube, Instagram, LinkedIn and Pinterest.

Take a look at the full infographic below.

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BrioBolt is a professional music, graphics and video production house that helps make better crowdfunding pitch videos. We caught up with MD, Aeron Jones, who shared five expert tips you should ensure your crowdfunding investment follows.

What is the core message?

The core message that you are a good choice for investment.  This can sometimes get lost in details that are important to your relationship with the business but not necessarily important to the pitch, taking up time at the risk of losing the interest of the viewer.  The core message is that you are a good choice for investment. Your viewer’s should be as convinced of that as you are.

You need us more than we need you

An attractive situation for most would-be investors is one in which your product is in such demand that you already have customers poised to buy every single one you make. Your personality will come across in the video, so keep your ego under control, but describing your business as one that needs investment cash in order to survive is not going to attract anything like as much investment as convincing them that this is an opportunity they should be hungry for.

Stick to the script

Presentations in meetings are a human experience and a bit of improvisation and digression is perfectly acceptable. Even if this is one of your strengths, don’t rely on it for your on-camera presentation. Once the red record-light goes on, every little pause will be magnified. It doesn’t matter if you develop your script all alone or if you work with a seasoned crowd funding pitch producer, practice it in advance, OUT LOUD with a stopwatch, to the point where you know every comma and can deliver it comfortably within the target time.

Attention span

Everyone has an opinion on this, but most (including ourselves) think 2-4 minutes is about the optimum length for your video. This should be your target, but despite the general consensus there have been many successful campaigns with longer pitch videos than this.

The most important thing is to be focused. You should have a strong, almost bullet-point presentation of the strongest parts of your pitch, and you should be able to deliver this calmly and confidently within the first 30-seconds.  You can then punctuate your video with a change in pace/music/imagery as you move into expanding on the strengths you summarised at the beginning.

Start by introducing yourself, your place in the company and something about yourself that’s relevant to the business you are pitching.  If you have built and sold several companies in the past, use this to impress the viewer right at the beginning.  If the company has an impressive pace of growth, “beyond expectations”, say so!  Seeing your personal passion and belief in the business is encouraging, just beware of getting bogged down in expressing emotional attachments that could be read as personal delusion.

When you move into expanding upon the finer points of the investment opportunity, keep people interested, both through the script and visually.  Nicely shot footage of your products and/or company locations are ideal.  Animation is a popular choice for visually reiterating key points and can work alongside live footage.  Relying entirely on animation can be risky, though, as the good-quality motion is time consuming to produce, with the cheaper animation making many pitch videos look the same.

The sum-up

Here is your opportunity for a strong finish.  The sum-up is another chance to punctuate your video, along with a change in pace/feel, and should again reprise the key strengths of your opportunity for your potential investors. Reiterate the points from your introduction, alongside any less-obvious positive side effects that achieving your investment target will have on your business.  Include something personal that reflects your enthusiasm in your business’ future – and end with a smile!

 Find out more about BrioBolt (winner of CrowdCube’s Best Video of the Year) online right here.

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If you’re ready to invest in a crowdfunding project then do take a look at DropKicker, which reminds you that you should always investigate technical claims made by crowdfunding campaigns.

Crowdfund crisis

DropKicker is run by two engineers/product designers who are spending some of their spare time reverse engineering claims made by some of the projects attracting attention in the crowdfunding space.

Their intention isn’t to undermine the projects, but to examine what is being claimed in order to figure out if a claim is technically possible and if the team behind the scheme’s up to scratch.

Not a bad idea when some projects attract millions of dollars in support.

Just because the reward-based project team promises to make an effort to deliver a product to you doesn’t mean you’ll get your money back if they fail to achieve this. It’s a risk. So it makes sense to be critical, or, in DropKicker’s case, “provide a healthy dose of pessimism”.

Project records

DropKicker has looked at a couple of projects recently, including the Scribble colour-changing pen and the iFind Bluetooth beacon (it has also examined other projects). In both cases the site raised doubts about the campaign claims:

The Scribble pen’s response was to close its Kickstarter campaign and move to a different service. This is interesting because while Kickstarter doesn’t transfer funds until the project is complete Scribble’s new chosen platform transfers funds immediately.

Following DropKicker’s debunking of the iFind project Kickstarter closed the project down because it broke some platform rules: the team was backing its own project, posing as a third party supporting project, and providing inaccurate user information.

So what are we saying? Put simply it’s this: There’s a lot of money being fired at crowdfunding projects. That’s great and the democratization of funding it brings will enable many new startups and product designs.

What to do

On the other hand, not every project team knows what they are talking about, some are inexperienced, others lack technical proficiency and some may simply want to part you from your cash.

What’s tragic is that in both cases mentioned here the project teams had invested in PR representatives who had managed to place reviews across trusted media outlets, such as Cnet. This is bad as it suggests those outlets will carry reports about projects without checking their technical feasibility.

Our advice?

• Always check the project thoroughly.
• Seek advice on the technical claims, from a friend or even from DropKicker (you can get them on Twitter).
• Take media reports about new project products with a pinch of salt.
• If it sounds too good to be true, it probably is – but it might not be, the thrill of crowdfunding is that sometimes you come across a great idea.

Happy crowdfunding!

The post Crowdfunding? Don’t forget due diligence appeared first on Crowdfund Champion.

You’ve been looking for a smart investment and you’ve been thinking about putting some of your available capital into a crowdfunding pitch. You’ve explored our directory of crowdfunding services and found a few interesting pitches, but what should you look for when you make an investment?

That’s what we hope to explain a little in this post, but in light of FCA rules (and common sense) we should warn you that: “The materials on this site do not constitute financial or other professional advice. We make no representations as to the accuracy, completeness, suitability or validity of any information and will not be liable for any damages arising from its use.”

What we can do is share a few insights we hope might help you make good investment decisions of your own.

Know the market

You should know the market you’re getting into and once you choose to make an investment using a crowdfunding service you are already in the crowdfunding market.

If you are making an investment you’ll want to place your bets on people who know what they are doing — and that includes them knowing about crowdfunding, if they’re pitching via a service. So what should you look for?

Check the pitch

Video is pervasive, and most crowdfunding services offer people pitching the chance to publish one. Video creation isn’t for everyone, of course, and while there are people around who’ll make a video for your crowdfunding pitch, as an investor you’re probably not looking for production values as much as you seek passion, intelligence, and honesty.

People making pitches really should make videos when they do. Campaigns that do make videos achieve a significantly higher success rate than those who don’t, and they raise up to 122 percent more money, too. If the pitch you are pondering doesn’t offer a video when they are trying to raise money, does it make sense to take a position in them at all?

On the other hand, if there is a video are they doing it right?

There’s plenty of advice websites out there who recommend people making videos for this purpose keep the film short, to the point, say who they are, show themselves and manage to get the point across while still trying to have a little fun. As an investor your first test of potential business acumen starts right there — are your potential investees thinking about the importance of this video to what they are trying to do?

Are they working to create an emotional bond with you inside the first minute?

The same logic should extend across your analysis of the pitch. Find out what the current advice is for people seeking funding through crowdfunding and compare this with what you’re seeing — there’s a very good chance the people you are looking at have read the same advice too. Unless you are seeing something incredibly genuine and charmingly individualized, then you should expect your potential investments to at least try to heed that advice.

Crowdfunding means crowd

Campaigns that gain 30 percent or more of their funding goal in the first week are the most likely to succeed. Knowing this you usually find people making pitches have already mobilized their friends and relatives to help raise them to that point in funding. This means that when you’re thinking on taking investment in a pitch, one thing you can look for is how long the pitch has been available and what percentage of funding it has achieved.

Existing networks are never enough. If they were, people making pitches wouldn’t need to pitch at all. In most cases the project you’re considering will have exhausted its personal connections to get to the funding level it has already achieved. A smart investor will take a look at what the people behind the business are doing to fill the gap. The most usual strategies pitching people make is to be digitally active, so an investor may want to check if the team:

• Is active online?
• Has a website?
• Which services are they active on?
• Can you find guest posts or blogs on other websites written by the protagonists?

Checks like these can help investors determine just how much the people who want your money are doing to find additional investment. It’s not foolproof — some pitches and business ideas are extraordinarily niche, so you can’t really expect exactly the same behaviour, but on a case-by-case basis it makes sense to vet pitch-related digital marketing efforts.

While making these checks you may find further evidence to suggest how active the people behind your potential investment are online. It makes sense for them to be — it’s about reaching the crowd to bring in the finance; so if they aren’t especially active at this stage of their business, how active do you expect them to be with your money once the business goes live?

Traditional checks

You should also you follow the age-old principles of due diligence, for example:

• If your potential investment claims to be a trading company you should certainly check its details on Companies House (or your local equivalent).
• You should then assess any available data regarding the directors of the company.
• You may want to run credit checks against the company and its people.
• Contact your potential investment and ask to see their company information and business plan.

Ask difficult questions:

“Who are your competitors?”, “Where do you want to be in 20-years time?”, “What kind of company are you?”, “How reliant are you on foreign manufacturers and do you have an existing relationship?”, “Where are you with distribution?” You don’t have to run at any of the answers you receive, but you have to be certain the target of your investment has at least some knowledge of what they are doing. It is possible that you may already be able to fill in any gaps in the knowledge/reach of your investment target or its team.

Finally you’ll need to call in the lawyers, agree a suitable contract and (presumably) run a Criminal Records Check.

All these tests of due diligence are traditional, but each one is essential. Merely because the business you are investing in sources its funding online doesn’t mean your money should be less well protected.

Stay hungry, stay foolish

I’ll end these few snippets of advice for potential investors with one warning: The difficulty of judging business ideas by how well their protagonists do their crowdfunding marketing is that in some cases you can miss a great idea simply because such marketing isn’t what they do well. As Apple’s Steve Jobs’ once said, “Stay hungry, stay foolish,” and keep your eyes open for that maverick pitch that could become worth it’s weight in gold.

Also read: The ABC of crowdfunding

The post What to look for in a crowdfunding pitch appeared first on Crowdfund Champion.

These days if you’re a start-up business you don’t go to the bank, you go to a crowdfunding service and hope for the best. That’s great, as it makes big ideas happen, and is even better if you are looking to take a stake in an exciting new business venture — but what should investors expect as they explore crowdfunding? In a sense the song remains the same: just as business investors always have we continue to seek strong business ideas, commitment and strong leadership before we dive in, but in the democratic new crowdfunding age you should be aware of some big differences in what to expect from your potential investments:

DIY entrepreneurs

Many of the firms you’re looking at may be run by individuals full of good ideas who lack previous business experience. Given the nature of the crowdfund drive for innovation, you shouldn’t be too put off — look instead for creative, flexible thinking and the capacity to change or tweak the original business idea in response to feedback, perhaps gathered during the crowdfunding campaign itself.

Networking

People seeking funding will leverage their existing network. Part of this may involve people running projects you’re considering taking an investment in putting together pitches and supporting materials of a more personal nature than you’re usually exposed too. Don’t be put off: it’s a good thing. You see, such personal appeals suggest those behind the project are working hard to mobilize and extend their own network with such personal connection. Given so much of the cash raised through crowdfunding comes from friends and family, projects that make such personal appeals may be worth a closer look: they may be doing the right thing (assuming the business has legs, of course).

Sector trends

At present most successful crowdfunding projects appear to be in the technology, fashion and video production sectors. That’s not to say they’re the only investment games in town — there’s lots of ideas out there and beyond the now-standard business start-ups you can find crowdfunding services specializing in social enterprise, alternative energy, and more standard business investment/loans for existing businesses. In other words, crowdfund finance covers all sectors. This will change, of course, as entrepreneurs from outside these early stage sectors begin to take advantage of the crowdfund opportunity.

Platforms matter

How did you make the money you hope to invest? Did you follow the crowd or did you pursue your own original ideas? If the latter then are you certain that investment via the bigger crowdfunding services is the right way to find the kind of business you seek to take position in? Research the existing crowdfunding platforms — and read this site, as that’s what we do. Connecting to the platform that’s most likely to be used by entrepreneurs you hope to find should make it easier to find the perfect investment.

Get familiar

Don’t just rush to invest — take your time and learn how the systems work. Learn from other campaigns: Take a look at the most successful campaigns: how were they written, what rewards were offered? How did they interact with backers? Speak to people: Speak to those who have run successful campaigns (and read the interviews with such people we publish here). What worked? What didn’t? How would they do things differently? Any tips? After all, understanding the mind of people seeking funding should help you identify the traits of the strongest entrepreneurs, before you invest. Tip: Campaigns that gain 30 percent of their funding goal in the first week are more likely to succeed. Crowdfund seekers know this, and that’s why they’ve usually got their supporters lined up before they begin their campaign. If you’re looking for strong ideas with strong supporting networks, look at how long a campaign has been running and how much of its goal it has achieved in that time. We wish you huge success as you make or attract investment using crowdfunding networks and we do hope you contact us to share your stories, successes, failures, tips and suggestions to help others find success through crowdfunding.

Photo credit: Caleb Roenigk / Flickr

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In a gesture that recognises the challenge of funding new ventures the UK government offers two generous tax incentives designed to accelerate investment in sectors it recognises as vital to future economic prosperity.

• The Enterprise Investment Scheme (EIS)
• The Seed Enterprise Investment Scheme (SEIS)

The two schemes are slightly different, but in very (very) general terms they enable taxpayers to claim a rebate on the value of 30 percent of any share investments they might make in an early stage project recognised as having EIS or SEIS status.

A little more information about these two tax breaks:

EIS

EIS investors enjoy an initial 30% income tax saving and exemption from capital gains tax when the EIS shares are disposed of if the shares are held for a qualifying period.

It’s not quite a free for all – you can only claim EIS tax relief on a maximum of £1 million investment in any tax year (however a married couple can invest a million each). You can’t claim tax relief on any loans drawn to purchase the shares.

The company offering the EIS is limited to raising up to £5 million from that and two other schemes, the corporate venturing scheme and the venture capital trust scheme. The key limitation is that the company must operate within a “qualifying trade” and must also have fewer than 250 full-time employees.

The company you invest in must have a permanent establishment in the UK and must not have in excess of $15 million in gross assets before the share issue takes place.

Investors are locked into the scheme for a minimum of three years – they can’t exit the investment until that period has passed.

One more thing: “If shares are disposed of at a loss, the investor can elect that the amount of the loss, less Income Tax relief given, can be set against income of the year in which they were disposed or, on income of the previous year instead of being set off against any capital gains,” says Crowdcube.

“The purpose of Enterprise Investment Schemes is to recognise that unquoted trading companies can often face considerable difficulties in realising relatively small amounts of share capital. The new scheme is intended to provide a well-targeted means for some of those problems to be overcome,” said Michael Portillo, Chief Secretary to the Treasury when the scheme was launched in 1993

You should read HMRC’s guidance notes on EIS here.

SEIS

Under the SEIS, investors can invest up to £100,000 across a number of companies in a single tax year and don’t have to pay any Capital Gains Tax for gains they make on SEIS shares. Companies can raise no more than £150,000 in total via an SEIS investment.

However, in exchange for the investment investors cannot gain control of the company they invest in and aren’t permitted to take more than a 30% stake in that firm.

The benefit is good: investors can receive up to 50% tax relief in the tax year in which the investment is made, regardless of their marginal rate. In other words under SEIS you can claw back half of any qualifying investment made in terms of tax relief. There’s additional benefits, too, particularly when you cash in your investment — there’s an excellent PDF describing this in more detail here.

There’s some additional caveats to SEIS: The company invested in must be a UK firm with a permanent base in the country; it must also have under 25 employees and be no more than two years old and have assets of under £200,000. Finally, the company you want to take position in has to trade in an approved sector.

Chancellor George Osborne intends making some form of SEIS a permanent part of tax law (so it will always be available) later this year.

You should read HMRC’s SEIS guidance notes here.

There’s a little more detail to both these schemes, and you can’t claim them retrospectively — the company you take an investment in must have been accepted as a body covered by one of these schemes before you invest.

It’s also important UK tax payers recognise that the way these investments impact your own tax status will depend on your individual circumstances and may be subject to future change, so please speak to your tax adviser before you invest.

Photo credit: HM  Treasury

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