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An interview with Dan Marom, co-author of The Crowdfunding Revolution

An interview with Dan Marom, co-author of The Crowdfunding Revolution

A few weeks ago, we had the pleasure to have a chat with Dan Marom, co-author of The Crowdfunding Revolution. He will be skyping in during our event at Social Media Week Glasgow taking place on the 28th of September at 5pm. The event will be live streamed too.

 

Hi Dan, thanks for taking the time to do this interview, really appreciated. You’re probably a person as well known and well published in the crowdfunding area as anybody, so we really appreciate your time. Tell us a bit about your view of crowdfunding.

Thank you for the kind words. One of the first things to note about crowdfunding is the nature of it is purely social. Kevin Lawton and I recently finalized the second edition of our book, “The Crowdfunding Revolution”, where we wrote a chapter dedicated to the idea that crowdfunding is the new “Like”.  I am of the opinion (albeit a provocative one), that companies who are looking to be “liked” on Facebook are doing yesterdays work. Why? Because “liking” a company is a passive way to engage, whereas crowdfunding is active engagement. Individuals can pick and choose the brands, initiatives, and entrepreneurs they care about, and invest in them. It is a more sophisticated and active form of engagement, engagement, and the social effects are what count.

We would echo those feelings entirely. It’s quite a profound connection that you make when you invest and you offer a level of binding to the brand and organisation or to a project in a way that is much stronger than buying a ticket.

Yes, absolutely. I find it extremely fascinating, and it is my honour to participate to Social Media Week (Glasgow), and to crowdfuture (Rome) in October to talk about this.

It will be our pleasure to have you there. When is the book actually due to come out?

The 2nd edition is forthcoming soon (this December) by McGraw-Hill.

Looking forward to that. Where did you meet Kevin Lawton, the co-author, and what prompted you to write the book in the first place?

It’s actually a funny story–despite writing a book together, Kevin and I have not yet met in person. In the book’s introduction, we discuss the global effects of crowdfunding and the manner in which the age of the internet has changed the way we interact, and we are a living, breathing example! Kevin and I are live 15,000 miles from each other, we have never met, and yet we are writing the second edition of our book! Our story is a testament to virtual cooperation.

Three years ago, while I was looking for an exciting issue to write a Phd thesis about, I wrote several pages and started to interview academic researchers. At the same time, I thought that I should write a popular science book, so I started approaching and interviewing different thought leaders in the field.  At that time, many of the current platforms were in their infancy, but I had the opportunity to interact with the different parties involved. Then I happened upon a blog post Kevin authored about trends, was intrigued by his material, and then one thing led to another and we decided to write the book together. Kevin is a fantastic guy, very smart, and is a true thought leader in this field.

That’s amazing and it’s a great testament to what’s possible now with these technical platform that are available to us (and giving that SMW’s main global theme is empowering change through collaboration there is a wonderful example of it, it’s fantastic).

Going back to the book, when writing the second edition, you must have seen quite a few changes in the 2 years since you did the first edition. Have you updated it at all and what would be the key things that are different now from when you first published? 

That is a great question. We wrote the book in mid 2010, so the landscape has changed in the past two years. The second edition has several updates. First, integrated the latest milestones of the crowdfunding scene. Second, we added several chapters that are focused on the funding campaign, with best practices, suggestions and pointers to make the book more practical.
When we started to interview the major players at the beginning of 2010, the overall crowdfunding market was very small. We have gone a long way since then and the book illustrates the metamorphosis both companies experienced.
All in all, I think that most of our predictions were actualized and we illustrated some of the future trends that we are seeing now.

The thing that I think will make huge difference is that whilst equity crowdfunding has been possible in the UK for some time with Crowdcube leading the way, and Brewdog, a Scottish craft brewery, that raised 3.5 million in equity share sales through crowdfunding, in the States this wasn’t legal. But now if the JOBS act becomes permissible then clearly there will be a massive burgeoning of the take up and popularity of equity based crowdfunding platforms.

Absolutely. Over the past three years, Kevin and I have been involved in several groups working on the regulatory aspects. We are optimistic the JOBS act will transform crowdfunding from a trend to the industry standard. While it will take time, and there will certainly be challenges, I think it will happen. I am also interested in the regulations aspect of crowdfunding. Kevin took a leading part at the work on the JOBS act, and we anticipate the SEC regulations will be impactful on the future of crowdfunding in a positive way.

I think you’re right. (A law firm here in Glasgow just launched their own equity based crowdfunding platform, it’s really starting to take off over here too.) The thing that I find fascinating is that much of this equity based crowdfunding will be first round, so the traditional capital market will get involved at the second and third round funding. I’ll be really interested to see if and how these traditional capital market players will come get to grips with the fact that they’re second-round investing in a company that has already sold 10 per cent of their equities to people that are out of their traditional environment.

Great point. I believe hybrid mechanisms are the future. The crowd itself will find it hard to succeed with a start-up company or any other initiative alone without some institutional money, and the classical financing intermediators are currently resisting to any change. There is  tension between these mechanisms, and I think we will see a lot of change in the next five years. There are no alternatives to these hybrid mechanisms. It is also a major business opportunity, and has serious potential to be a gold mine. The bridging between financial institutions to crowdfunding platforms and players could be a significant area of growth in the near future.

Thank you very much, Dan. 

Glasgow is going social again

Glasgow is going social again

As you may have heard, Social Media Week is coming back to Glasgow 24th – 28th September. Looks like Glasgow did a nice job last year, give yourselves a round of applause. And we at twintangibles are happy to be part of it again this year for another week of creativity, collaboration, innovation, connectivity and sharing with a global audience.

Last year many of you didn’t know us and what we it is that we do. ‘Event organisers’ was probably the most popular guess. By now we hope you have a clearer idea, not only of what twintangibles is, but especially of the connection we have with this global event.

But in case you don’t know here is a quick review. We first got involved with Social Media Week because we liked its vision and objectives – a worldwide event to explore the social, cultural and economic impact of social media. At twintangibles we have always focused our work on assisting organisations to understand, identify and create value from the opportunities presented by Social Media and the mindset that underpins it.

For us it’s always been important to help people understand how social technologies have revolutionised the way we interact with the world and how we relate to it, both individually and collectively. We need to constantly remind both ourselves and others that new generations will have never known the world without the “social“ and their attitudes and mental processes are shaped by and through these new technologies. This presents us with challenges and tremendous opportunity to re-think our approaches to almost every aspect of our daily lives. Understanding the diversity of application of these technologies is crucial. Day after day we encounter interesting initiatives in all sectors, students doing the most innovative research, and we hear of innovative projects we could have never thought of, empowered by the use of social technologies. Everything is connected by one only common denominator: social media influence and empowerment.

Social Media Week is the perfect “event” to showcase the diverse application of Social Media not least because it is crowdsourced, emergent and created by you, individually and all together. And it’s an event that not only demonstrates diversity and innovation around the globe, but also inspires us to be even more creative, to think differently, and to connect all the points of a global social world. It also encourages us to think big: anything is possible. We can reinvent ourselves and be whoever we want, connect and participate as never before through the power of digital technologies to liberated voices, talents, distribution, capital. Social Media Week is an amazing window on to all this, and we are delighted and honoured to be part of it again along with all of you.

As curators, we will do our best to ensure that Glasgow adds something of great value to the global conversation that will be going on in that week around the theme ‘empowering change through collaboration‘. This is the 2012 theme devised by non other than the Global Curator of Social Media Week Don Tapscott who we had the honour of having as our closing keynote speaker last year.

Another reason why we decided to put Glasgow forward again this year is because we know we can count even more on your support, collaboration and help. On Tuesday after the first ‘soft’ announcement was made that Glasgow will be one of the participating cities, we quickly noticed a good “buzz” on twitter. It’s all very exciting already and we are really looking forward to the 2nd of May when the full line up of cities will be announced and we can begin the process of building a fantastic week with you. If you want to get involved or to know more about this global event as it emerges, go to SMW Glasgow website or email us here.

Daniela & Tim

It’s Social Media Week again!

It’s Social Media Week again!

Feels like yesterday that Glasgow was buzzing, tweeting and talking all about Social Media Week 2011.
Now it’s time for another SMW! From this morning to Friday, another 12 cities, including Tokyo, Singapore, Hamburg, Paris, and NYC are going to live the wonderful experience that Glasgow lived six months ago. The UK hub this time will be London, and we wish all the best to the amazing team at Chinwag who are coordinating things in an excellent way!

After the great time we had last year, we thought we couldn’t really miss SMW this time. Even if good part of it will be livestreamed, we wanted to be part of it again as close as we could, that’s why we’re going to London this week, with some of Social Media Glasgow partners.

We will be at the Hub Westminster this Thursday, the 16th of February, from 6pm for  Socially Scotland, a collaborative event with twintangibles, Inner Ear & KILTR to celebrate the impact of Social Media Week in Glasgow and Scotland’s growing digital community, highlighting some of the creative output from schemes initiated during Social Media Week Glasgow, and reviewing the growing opportunities developing in Scotland.

We will share some of the highlights of the week and present the projects and initiatives born as spinoffs from SMWGla. We will also unveil some interesting figures and stats regarding Social Media Week Glasgow: who attended, what sectors were most represented, what the hot topics were, and so on. Here’s a taste of it, some voxpops from the SMWGla review night we organised last November (thanks to the great Inner Ear team):

Creative content communications company Inner Ear will talk about some of the projects they showcased during Social Media Week, including the company’s long running alternative, underground music internet radio station, Radio Magnetic and new streetwise audio walking tours producers Walking Heads. They’ll also present the results of a collaborative spinoff from SMW Glasgow: Spokenherd, a crowdsourced audiobook.

Kiltr, the rising niche network for anyone with an interest in Scotland, will take the opportunity to meet its members and discuss the latest developments of the network including the forthcoming launch of version one.

Scottish craft beer, generously offered by WEST brewery and Ayr Brewing Company, and ‘Scotland’s flavourite’ tea cakes and biscuits offered by Tunnock’s, will be available throughout the event.

Socially Scotland will be a networking opportunity for all Scots in London and for anyone interested in Scotland to get a flavour of what is happening North of the border.

The official hashtag for the event is #smwldngla – Please use it to connect and network!

Join us, be part of it again!

Crowdfunding- A Concept Whose Time Has Come?

Crowdfunding- A Concept Whose Time Has Come?

[This article was originally published on Social Media Week Global blog]

On Tuesday 20th September, at Social Media Week Glasgow, an entire day was spent dealing with the subject of Crowdfunding. The founders of the Crowdfunding platform SoLoCo– which launched that same week – had gathered together an impressive group of representatives from some of the major crowdfunding platforms in the UK for a workshop-based happening, highlighting the opportunity and the collaborative spirit of those engaged in this increasingly talked about activity. It was right and proper that this happened during Social Media Week as the links between crowdfunding and the reach, empowerment and engagement of social networking are strong ones.

Of course the idea of raising money through collection from donors or investors is neither new nor novel. But crowdfunding goes beyond that. Fundamentally it is rooted in the idea of microfinance, the notion that small sums, when aggregated, make a difference. It is that idea of a groundswell of small actions that, when gathered together, have a significant impact that is at the heart of so much of the attraction of social media and social networks as a method to effect action and change. It is in this link we can begin to explore the affinity between crowdfunding in particular and social media in general.

If we refer to Charlene Li and Josh Bernoff’s book Groundswell they make a point of illustrating that much of the empowerment and impact of social networks is often found in communities and consumers of whom a brand or organisation may be completely unaware. And so it is with crowdfunding. Your intention in a crowdfunding campaign should be to reach beyond your immediate tribe and tap into individuals and groups that you may not be aware of and perhaps, before your campaign began, were unaware of you. This process is possible through the viral referral and reach of social networks where you seek to make first touch contacts into advocates and ambassadors to use their connections to jump the six degrees of separation to a global investor community. This means we must embrace diversity and accommodate emergent views, and accept that motivations to get involved are many and varied and not necessarily the ones we immediately imagine. In a highly networked and diverse world we need to broaden our notion of expectation of return in keeping with the sort of groundbreaking insight developed by people like Yochai Benkler in his work Coase’s Penguin.

Our next step down this path will take us into the notion of The Long Tail as popularised by people like Chris Anderson. This is a concept that lies close to the heart of crowdfunding and many of the innovative economic models being enabled though social networks. To tap into the long tail the cost or barriers of each “transaction” needs to be sufficiently low to make it “economic” to work there. Once there, the traditional models are no longer the only game in town. In a crowdfunding scenario, the transactions barriers are lowered by making the contributions small enough to extend the number of people who are both able and willing to participate. The turnkey crowdfunding platforms that provide a transactional solution for a crowdfunding campaign reduce the friction and costs further and make the process increasingly viable.

The transformational power of these tools is another feature that crowdfunding shares with the ethic and spirit of social networks. They allow us to reimagine ourselves in different guises, to become things that were once gated from us or perhaps we considered fanciful. In the same way that we can become film critics and political commentators, citizen journalists and inventors, the barriers and gatekeepers of investment fall away so that the rarefied world of finance becomes imaginable and possible for all of us. We can at last reimagine ourselves as engaged in what was once a closed world.

Crowdfunding has a strong relation to other behaviours that we would recognise as prime aspects of social media in the idea of validation and trust based on distributed cognition- or the slightly more vulgar wisdom of crowds. In crowdfunding we have a network of individual judgement and validation that can asses a business plan, market test a product, and police behaviours based on trust models. These all have value for those seeking both insight and investment in their plans and products, and is born out in the security of many crowdfunded lending models that enjoy repayment rates that high street banks could only dream of, based on transparency and trust tags.

Over the next few weeks we will post a few blogs that investigate and prompt debate around the idea of crowdfunding, its provenance and application, and its growing popularity as a mechanism for raising and sharing funds in a capital constrained but increasingly networked world. We hope you find them though provoking and informative and look forward to hearing your ideas as we step into what is an increasingly common activity in a campaigning world of engaged investors, funders, lenders and entrepreneurs.

If you want to learn more about crowdfunding and how to put together a crowdfunding campaign, then you might want to attend our workshop in Glasgow on the 14th of December

The Rise of Crowdfunding

The Rise of Crowdfunding

When a word gets shortlisted for the OED you can be reasonably confident that it is seeing a bit of use. This year the word crowdfunding was shortlisted for the US version of that august publication. Frankly we at twintangibles are not surprised as it is a subject we get asked about more and more.

The proposed definition is Crowdfunding: The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. At its most basic, that definition gets to the core of it, but what that definition doesn’t get into is a more detailed analysis dealing with the role of social media or concepts like the The Long Tail, and how these are key components in successful crowdfunding. But it does at least capture the aspect that is causing the word to become increasingly popular, and that is that it is about raising money.

At a time when the traditional mechanisms of raising funding to – say – launch a business, start a project, or even make a film, are increasingly tough, then people start looking for alternatives, and crowdfunding is one of them.

Seemingly everyday we hear of new projects (even the Krankies are involved in one!) and new platforms to raise finance via crowdfunding. In the US, it is apparent that the Obama administration have come to recognise that it has merit to potentially drive entrepreneurship and job creation and so plans are progressing to adjust SEC rules to make limited equity-based crowdfunding permissible. Closer to home, Brewdog have announced that their recent second crowdfunding campaign has been almost 100% taken up.

So, with all this in mind we are pleased to be able to announce that we have been asked to curate a series of articles and debates on the subject of crowdfunding for the Social Media Week global blog. Over the next few months we will be covering many aspects of this emerging trend and look forward to some interesting interviews, debates and comments. We will keep you posted as to when the series starts.

In the meantime, if you want to learn more about crowdfunding and how to put together a crowdfunding campaign, then you might want to attend our workshop in Glasgow on the 14th of December.

[Images used with this blog are supplied by www.pachd.com]
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