Lessons from a crowdfunding platform to crowdfunders
Even though investments in innovation and research is perceived as highly risky, they can project major financial and social returns. A Dutch crowdfunding (CF) platform, Oneplanetcrowd, which aims to finance sustainable organisations and initiatives in order to positively impact people and planet, realised this.
81,5% of projects launched on the platform are for R&I. Oneplanetcrowd, founded in 2012, raised over € 7,000,000 and it is now considered one of Europe’s leading CF platforms endorsing sustainable projects. But it does not operate only in the Netherlands. It is currently active abroad, in Germany and Belgium, and planning to expand to the UK.
Where does this success come from?
As many other players in the field, Oneplanetcrowd acknowledges the fundamental role fine networks play for successful CF projects. As a matter of fact, the platform itself is already a network, as it represents a collaboration between organisations where each one brings its partners on board. The network, combined with a good marketing campaign, ensures visibility of all projects.
Another strength that Oneplanetcrowd pointed out are different funding models on offer. The platform offers four different CF models to investors: reward, donation, loans and subordinate convertible loans. In this way different investor needs are recognised.
Furthermore the partnership agreement signed with Rabobank boosted the platform development. The agreement means that the bank will refer to Oneplanetcrowd their customers, who have outstanding projects which are not funded.
The platform manages risk well
Even though the platform is an intermediary between an investor and an entrepreneur and it does not constitute a part of the agreement, Oneplanetcrowd tries to identify main risks affecting investors and fundraisers in order to help them minimise them.
Risk management for investors
Risk depends on the type of enterprise (startup or growing) and the CF model (loan, convertible loan, rewards or donation). However, investors should be aware that a high level of risk is always present. This is the reason why Oneplanetcrowd suggests not to invest more than 10% of assets in CF projects and to spread risks by dividing the total investment among multiple projects.
Risk management for fundraisers
The main risk faced by fundraisers lays in the All or Nothing funding model. Fundraisers should be aware that if the project does not reach its target then they will not receive any money that was pledged. Oneplanetcrowd assess entrepreneurs and their projects before publishing them online.
Oneplanetcrowd’s suggestions for a successful crowdfunding campaign
First of all, it is important to acknowledge the threats. According to the platform, a CF campaign usually comes across two main challenges:
- How to explain to potential funders risks and opportunities of CF
- How to effectively interact with investors and crowd, both before launching the project and during the CF campaign
Some of the identified solutions are:
- The project leader should be an entrepreneur with strong communication skills
- The project needs to be understandable as people must be able to appreciate its potential
- The project’s team must have carried out some market research and market analysis
What are the take away lessons?
First of all, Oneplanetcrowd provides an important evidence of the potential of crowdfunding for R&I. Moreover the experience of Oneplanetcrowd confirms the fundamental role of a well developed network for running successful crowdfunding campaigns. Last but not least, we need to keep in mind that a CF campaign should always be supported by good communication. Great ideas need to be shared to become reality.
Download the entire case study here: http://bit.ly/OnePlanetCrowd4Inno
What do you think, how important is the network? Can you apply all these learnings for your own CF campaign?
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