Equity-based crowdfunding whereby the many invest a little, each in return for a stake in a business or a special offer; or fundraising when backers support a campaign is growing and replacing traditional models of investment such as angel investment.
Crowdfunding can be used in the sporting world to launch a new business, or for a product launch and it can also be used to raise funds for teams in sport. Fundraising site Just Giving points out that ‘government funding for sports programmes have seen massive cuts, leaving many teams and individuals without the money they need to pay for facilities, equipment or travel expenses.’ Successful campaigns include The No More Page 3 team who raised £9,912.84 to sponsor Cheltenham Ladies FC, meaning the team could say ‘No More Page 3’ every time that they played as they had the logo emblazoned on their kit. West Yorkshire football club, Ripon FC raised £2,200 for the club’s redevelopment.
On a larger scale companies such as Tifosy, an equity crowdfunding group, allow ordinary individuals to invest in sports clubs they’re passionate about. The company set up in 2015 by ex-Chelsea striker Gianluca Vialli, and Fautso Zanetton, a former investment banker, has raised around £1 million for clubs, including English teams such as Fulham and Coventry City. They launched the first ever football ‘mini-bond’ reported the Financial Times earlier this year.
Mini-bonds are retail bonds that cannot be resold and are offered in small amounts direct to consumers. This model of connecting fans to their teams by giving them a real chance to invest in something they are passionate about could be replicated by other sports.
In crowdfunding it helps if you can tug on emotions and existing loyalties when asking for support.
When it comes to launching a new business, or product, a crowdfunding platform can be a focal point for your marketing efforts. Kickstarter is one such platform. The first step is to set a funding goal and deadline. If people like the project, they can pledge money to make it happen. If the project succeeds in reaching its funding goal, all backers’ credit cards are charged when the time expires. If the project falls short, no one is charged. Funding on websites such as Kickstarter is all-or-nothing.
A recent successful product launch using Kickstarter was run by accessories and bags specialist KitBrix, who launched into the triathlon market in 2014. They used the platform to launch a second version of their bag aimed at urbanite athletes, the CityBrix v2 (1) , a bag that contains two key storage compartments ‘work and play’ for kit – plus space for accessories, laptop, tablet, phone, passport and keys.
At the time of writing they have successfully reached their £10K goal (eight days out they have doubled their target and are at £20K) selling a variety of versions of the bag, with great offers of up to 35 per cent off by buying at the pre-launch ‘kickstarter’ price.
Acting in the same market, IAMRUNBOX, a bag for running and cycling commuters, used this approach to launch their company in November 2016. All the money was raised and the Kickstarter campaign was the focal point of all of the brand’s PR activity for the last quarter of 2016, resulting in national press coverage, sales and distribution in leading retailers, helping them to successfully launch, kick-starting sales and having a hook for great PR.
Live and breathe your brand’s ethos
Start-ups in niche markets are even more reliant on the passion of their supporters. Hoping to launch a high spec product into the cycling market is Body Rocket (bodyrocket.cc/). “Crowdfunding has opened up new opportunities for product entrepreneurs,“says company co-founder Eric DeGolier. “We’re creating a new market segment, with a device that requires significant development costs. We are re-inventing athlete aerodynamics. By shrinking the sensors used in wind tunnels, and putting them into the bike’s stem and seatpost, it’s now possible to measure and improve aerodynamics in real-time.
“But what we’re doing doesn’t fit traditional investment models. Fortunately, we have a very passionate community that shares our vision. With equity crowdfunding we can get the capital we need while giving our future customers a chance to participate, and share in our success,” explains DeGolier, who is well-placed in this market as a former elite cyclist with a Masters in Engineering Design.
With an innovative product, it makes sense to be innovative in their approach to raising the cash. The company have started with a small crowdfunding venture on Pateron (https://www.patreon.com/ BodyRocketCC). “Using Patreon is definitely an experiment. Normally it’s used for artists to share content but it’s also successfully supported open source projects, where backers get nothing extra for their support, besides the satisfaction of knowing it couldn’t happen without them. We think enough cyclists and triathletes are excited about shaving minutes off their PBs that we can extend that model to a physical product like ours. We’re starting here so people can get more involved. We hope to learn from this early engagement so we’re better prepared for our equity crowdfunding early next year,” he adds.
As part of their marketing strategy, Eric says he’ll be blogging about his experience on LinkedIn and hopes that will help attract traditional angel investors, and get them known.
Making crowdfunding work
It makes sense to be strategic and ensure your crowdfunding fits with your bigger marketing strategy. According to Sally Outlaw, author of Cash from the Crowd, although crowdfunding has the potential to be an amazing boon to entrepreneurs, only 40 per cent of projects succeed in reaching their funding goal.
She reminds anyone hoping to raise funds that crowdfunding cannot be a ‘post it and forget it’ proposition. Just like any sales campaign to be successful on a crowdfunding site, you will need an excellent marketing and PR strategy which will include a large email list and social media following and get you known (very important in the world of digital influence) (2).
Remember your tone of voice, your brand identity needs to shine through. Sport England remind anyone thinking of setting up a crowdfunding campaign has to get the balance right when it comes to presenting themselves. ‘Too slick and too professional makes people think that you’ve got money to burn and don’t need theirs, while too homespun and error-ridden can lead people to think you’re wellmeaning amateurs who they don’t trust to spend the money properly.”
Investment with a conscience
In the digital landscape and with millennials as consumers of many of the newest products coming to market, and the most likely to contribute to crowdfunding efforts, brands do well if they tap into a passion and a purpose. In an article for the Huffington Post, Jorge P Newbery, founder of American Homeowner Preservation, points to a study from 2015 study by Goldman Sachs, which says “millennials are more likely to accept a lower return or a higher risk related to an investment if it’s in a company that has a positive impact on society and the environment, while less likely to invest in a company that has a negative impact on society and the environment despite potentially large monetary returns.’
He also cites a survey from US Trust Bank of America Private Wealth Management which showed that 85 per cent of millennials believe that social and environmental impacts are important factors when deciding amongst investment opportunities.