Crowdfunding Spurs Nimble Brands Devoted to Social Good
Tuesday, 22nd March 2016 at 8:45 am
Crowdfunding means that entrepreneurship is no longer just the domain of those who are financially well-connected, writes business expert Lisa Claes, from ING DIRECT.
In September 2014, social entrepreneur Lauren Shuttleworth set out to secure enough seed capital ($15,000), through the financial backing of complete strangers, to turn her budding idea for social change into reality – all in the space of four weeks.
On paper it seemed like a formidable task – and yet she did it.
With the help of digital crowdfunding platform Start Some Good and the ING DIRECT Dreamstarter program, Shuttleworth was able to mobilise enough online support ($18,589) to launch Words With Heart and put her eco-friendly stationery range, which directs a portion of profits to women’s education, into production.
While this is indeed a remarkable feat, it’s by no means an isolated success story.
Many aspiring social entrepreneurs are realising the merits of crowd funding over traditional sources of finance, such as personal loans, to get their business idea across the line – and they are relying on the interest, engagement, and financial pledges of their peers and networks in order to make it happen.
Hundreds of projects that would never have got off the ground 10 years ago are now not only getting started through the crowd-funding model, but making a sustainable impact in our community – thanks to the amplification afforded to us by digital technology.
Digital – an agent for change
In this era of digitalisation, the “physical” barriers to communication and interaction have been all but erased, and previously difficult tasks have been the focus of much innovation.
We can gain instant feedback by asking a question on social media, shop online 24/7 with retailers who are “always open”, and work remotely from a cafe just as well as we would in the office.
Digital technology has rapidly become a change agent in many aspects of our lives, and the social enterprise space is no exception.
Individual fundraising used to be largely restricted to bake sales and raffle tickets. Nowadays, financing an individual project on a bigger scale – something which would previously have been nigh on impossible without corporate backing – is in reach of almost anyone with the skills and digital know-how to mobilise it.
Adding value with digital
Digital technology, including social media and instant messaging, is sometimes criticised for encouraging a somewhat impersonal approach to communication, but it’s all relative.
In comparison to simply making a donation, digital crowdfunding enables a closer connection to develop between entrepreneurs and their supporters than would otherwise have been possible through traditional offline channels.
Certainly, from an entrepreneur’s point of view, digital offers huge potential for amplifying engagement throughout the crowdfunding campaign, and beyond: sharing blog content and status updates online, tagging donors on social media to thank them for their pledge (and at the same time increase the post’s virtual reach), and building up a following on social media to engage with and market to in the future.
From a supporter’s perspective, too, the crowdfunding model makes it easy to get involved with a cause that resonates. People can follow them on social media, or pledge in an instant – anytime, anywhere, using any digital device. They also get an immediate return on investment in terms of seeing in real time the impact their donation has in helping the entrepreneur get closer to their overall financial target.
Typically donors also receive some sort of incentive or reward in return for their pledge. It could mean they receive the product that is being crowdfunded once enough money has been raised for it to go into production, or it could be an invitation to a launch party.
But increasingly people are motivated to pledge simply because they have an affinity of purpose with the social enterprise they choose to support, and want to help it succeed in the community.
Affinity of purpose
And there is certainly no shortage of support out there. Almost one and a half years after the Words With Heart crowdfunding campaign ended, Shuttleworth has amassed over 8,000 supporters on social media, is selling her products via a retail network as well as through her online store, has helped fund 35,000 education days for women and girls, and has expanded Words With Heart to incorporate a printery in addition to her original range of notebooks.
The success of digital crowdfunding campaigns through the ING DIRECT Dreamstarter program, which so far have helped raise $617,000 for 44 social enterprises, is proof that the financial barriers to social innovation are slowly dissolving. Good ideas and hard work aside, crowdfunding means that entrepreneurship is no longer just the domain of those who are financially well-connected, rather it is becoming the domain of those who are digitally well-connected.
If you have a bold idea for social change and want to make it happen, the opportunity is there for the taking.
About the author: Lisa Claes is the Executive Director, Customer Delivery at ING DIRECT. Beginning in 2003, Claes has held executive positions as Senior Counsel, Executive Director of Savings, Direct Business and Mortgages respectively before overseeing the bank’s Customer Delivery division with executive responsibility for the sales and servicing of retail clients through its online, digital, mobile, phone, broker, wholesale and financial adviser channels.