Two years back, I wanted to start my journey as a freelancer. I wanted to use my entrepreneurial flair for something I was really good at: social media and community management. I was still at university and wanted a space to work where I could escape the contagious exam anxiety that hung over university library. I decided to get a membership of a business club. I set up a page on my blog where I volunteered an hour of my time in return for as much or as little as people were happy to donate for me to raise £500. I did not use any crowdfunding platform because before I could set up a crowdfunding page, I hit my target of £500 in three weeks through Paypal donations. It sounds strange but I was busy with university and didn’t think much of the page on my blog until it helped me achieve my target.
Fast forward to today and crowdfunding is enjoying the spotlight.
”Crowdfunding platforms raised $2.7 billion and successfully funded more than 1 million campaigns in 2012. Massolution forecasts an 81% increase in global crowdfunding volumes in 2013, to $5.1 billion. ” (Mass Solution Industry Report, 2013)
Despite the growth of crowdfunding, social enterprises do not spring to mind. For me, the things that stick out to me are 3D printing doodlers or Zach Braff raising $2 million for his new film. I had the pleasure of coming across Buzzbnk at Oxford Jam and up til that point, it had never not occurred to be that social enterprises(I knew startups could!) had dedicated platforms to help them raise capital.
Michael Norton is the Co-founder and Chairman of Buzzbnk; a regular speaker at Oxford Jam and also sits as the Director of CIVA. He calls Buzzbnk ”co-venturing” rather than crowdfunding which is an interesting way to reframe the problem of raising capital for social enterprises. By offering benefit such as discount vouchers or gifts in return for goods/services, or a loan, social enterprises can circumvent the increasingly difficult landscape of applying for grants or investment. Buzzbnk launched last year and it has helped raise over £250,000 for 26 social impact projects.
Some of the success stories come in the shape of the well-loved Hackney Pirates raised over £7,500 for their new literacy centre and The Converging World who raised a whopping £111,000 for a new wind turbine on a 5 year loan.
The problem with most crowdfunding campaigns remains that most of them fail. Social enterprises are no different in this respect. There is a steep uphill battle for social enterprises who need support in outreach and framing their ask to increase the chances of success. Interestingly, the Mass Solution Industry Report also demonstrates that while crowdfunding is booming, equity crowdfunding is yet to reach the same level. Only 4% of all crowdfunding investment were equity-based. This makes the role organisations like Buzzbnk play more important as more social enterprises turn to crowdfunding to raise equity funding.
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Crowdfunding Soared to $2.7 Billion in 2012, But Equity Funding Is Still On Ice – TIME Magazine
It’s PeerFunding, not Crowdfunding – TOM DAWKINS, StartSomeGood.com
How I Raised $12,500 on KickStarter