AlumniFunder launched in beta this week with a simple mission: Help create a deeper relationship between current students and alumni, while supporting collegiate entrepreneurship and creativity. To do that, AlumniFunder wants to give alumni a platform by which they can invest in innovative projects created by students at their alma mater. Whether it be for a new science lab, natural language processing research or a documentary film, the startup also wants to help give students access to the capital they need to get their ideas off the ground.
Riding the crowdfunding wave, the startup is essentially putting a spin on (or splitting the difference between) Kickstarter and education-focused, P2P funding platforms like SoFi and CommonBond. Not unlike these platforms, AlumniFunder has no affiliation with a specific college, instead providing a marketplace for those with ideas that need funding to connect with those looking to open their wallets to a worthy cause.
In other words, the platform works like this: Those registering for AlumniFunder are split into “Doers” (those looking to create a project) and “Alumni” (those looking to browse and fund projects). Doers are required to register with a “.edu” email address to set them up as part of a particular collegiate and alumni network, and then, like Kickstarter, their projects are posted to that network for a specified duration — usually between 30 and 60 days.
If the team or student hits their funding target, the money is then transferred via Stripe to the team; if not, no credit cards are charged. AlumniFunder provides a layer of oversight during the process to make sure the projects meet a minimum level of decency and appropriateness, while providing students with tools from Prezi and Vimeo, for example, to help them build and share their presentations with alumni.
The core value behind AlumniFunder, co-founder S. Ryan Meyer tells us, is to create a more direct and transparent channel for alumni to connect with students, in turn supporting alumni engagement in on-campus programs and entrepreneurial initiatives. Rather than crowdfunding being the focus of the platform, Meyer sees it as a technological tool for pooling resources — not a panacea for every capital-raising scenario and every hobby project out there.
Meyer started AlumniFunder last July as an “elaborate work-around,” he says after experiencing problems raising money for “the technology spinoff” of his brick-and-mortar, children’s brain-training company, Minds-in-Motion. Looking into crowdfunding as an alternative and, after considering using Crowdtilt’s white-label product, Meyer and team decided to create their own solution.
Meyer has raised $125,000 thus far, mostly from friends in his alumni network, he says, “crowdfunding it the old-fashioned way” through phone calls and in-person meetings. Crazy, I know. The team has since grown to five, including CTO and co-founder Brandon Goldman, who was the 13th employee at Box and is building the site in Node.js.
As for pricing, at launch, the site is free to all users, save for the requisite credit card processing fees. Going forward, AlumniFunder plans to launch an equity investing platform (set to launch at some point this summer), which will also be free-to-use. The team is currently raising a fund (at an undisclosed amount) that it will likely use to co-invest one-third with the accredited investor crowd in equity-based campaigns, “using crowd-vetting as a way to deploy capital to early-stage investments,” Meyer says.
Although much of the crowdfunding regulation is still in limbo, Meyer says that the team has been working to build its equity model in such a way as to both be efficient while operating within the present regulatory environment. “Hence the summer launch,” he concludes.
For its beta launch, AlumniFunder started by holding contests at Georgetown and Princeton for the most disruptive crowdfunding campaign, with Greylock COO Tom Frangione and Elevation Partners MD Adam Hopkins judging for Princeton and Ellie Wheeler from Greycroft judging for Georgetown. So far, the co-founder says, 22 campaigns are live, which are collectively seeking over $400,000 in capital. The first two contests ran for three weeks and offered $1,000 cash prizes to the best campaign submitted by March 20th.
Rather than working directly with either university, AlumniFunder approached a variety of both undergraduate and graduate “entrepreneurship clubs” to get the word out. Today, the startup announced the winners, and you can find Georgetown’s winner, HoyaChallenge, here and Princeton’s winner, Orchive, here.
Next up, AlumniFunder will look to continue pushing its contests onto more campuses to help spread the word, beginning on April 9th at U.C. Berkeley, Stanford on April 18th and USC at the end of April, with more schools to be added in the near future.
“We aim to be a marketplace for ideas, using crowdfunding as a tool to change the dynamics of university education and alumni relationships, creating untold opportunities for experiential learning,” Meyer tells us. “And we want to fund some kick-ass startups, too.”
Crowdfunding is the process of raising capital by offering rewards to ‘backers’ by pre-selling your product or offering equity in exchange.
While the latter is not yet legal in the United States, the JOBS Act, which was signed into law in April 2012, mandates that the SEC makes it legal by January 1st of 2013. There will inevitably be delays as the SEC works to implement a new framework to support this legislation, but it would be wise for entrepreneurs to start comparing equity crowdfunding with their alternative options now.
Let’s take a look at what equity crowdfunding looks like when compared to the traditional capital raising process. What I think you’ll find is that it is a great solution for the majority of entrepreneurs, especially those who have limited access to investment capital due to not being in the right industry, location or networks.
Just like the traditional capital raising process, entrepreneurs often still need to invest in their business before they bring it to the crowd. The crowdfunding campaigns that are most successful have had time and money invested into the business by the founders first, which usually comes from credit cards or personal savings.
This money helps them to incorporate, file the necessary paperwork and put together compelling collateral to merchandise their business opportunity.
Once an entrepreneur starts a crowdfunding campaign, either with rewards or equity, they spend the next 30-90 days pitching their product to everyone they can think of. They market it on their social networks, to their friends and family, and through press outreach.
The great thing about this process is that you are forced to get out in front of potential investors or backers much quicker, at which point you get feedback more quickly. This is the best thing for an early stage company and can save an entrepreneur years of their lives and tons of money.
Whether a campaign is successful or a failure, it can greatly serve a company with important market feedback that is all to easy to ignore in the traditional capital-raising process.
The traditional capital raising process is conducted in a bubble, with limited exposure to the media, customers and investors.
Crowdfunding creates a marketing event that entrepreneurs can rally support around which tends to garner more exposure to customers and potential investors who would have had no way of knowing you were raising capital before, unless you had a pre-existing relationship.
According to the Center for Venture Research, angel investors and venture capitalists collectively invest approximately $40 billion per year into companies, with a primary focus in the tech sector. On top of that, friends and family contribute another $60 billion per year. Coupled with personal savings, bank loans, and credit cards, traditional small business funding taps out at about $600 billion per year.
To put that in perspective, Americans are estimated to bet $550 billion at casinos, online, and through bookies per year. And if Americans were to shift just 1 percent of their long term investments per year into small businesses, it would equate to $3 trillion in funding — nearly five times the amount currently available.
While equity crowdfunding is not yet legal, entrepreneurs can currently take advantage of reward-based crowdfunding in which they can derive many of the same benefits. If you are an entrepreneur, want to start your own business or are interested in funding small businesses, keep following the progress of the legislation — it could help revive the American economy as we know it.
Image Credit: Oli Scarff/Getty Images
CES is in full force and TechCrunch is in the middle of it all. Literally. Our massive broadcast booth — it looks like a greenhouse — is in front of the Las Vegas Convention Center. And coming up at 1:00PM PST is the second episode of TechCrunch’s Gadget Live webcast.
After a quick recap of the morning’s live streaming video coverage, Lytro is going to take the stage to discuss the latest developments regarding its breakthrough camera. Oh and they’re giving one away live on air.
Folllowing Lytro is an interview with Indiegogo, the crowdfunding marketplace that is fueling much of the innovation we are seeing here at CES 2013.
See the rest here: TechCrunch Gadgets Live Is Happening Today At 1PM PST/4PM EST
Editor’s note: Tadhg Kelly is a game designer with 20 years experience. He is the creator of leading game design blog What Games Are, and consults for many companies on game design and development. You can follow him on Twitter here.
There were many significant games-related stories in 2012. On the one hand there were negative tales, from the breakdown of the social game model to the (not entirely surprising) revelation that the bulk of gamification doesn’t really work. These stories were essentially about novelty wearing off, twinned with the growing general awareness of the playing audience of Skinner-box designs that aren’t much fun.
Other negatives included the generally weak anticipation for new consoles and the mass overcrowding of iOS and Android (and no doubt the Windows Store soon enough). Discoverability became the watchword on game makers’ tongues, as many struggled to gain enough momentum to really see any success. For many, the industry felt as though it was going through a crunch, to the point that big publishers like THQ are officially circling the drain.
However in tandem with those problems came the return of tools intended to solve them. In the last few months, companies like Tapjoy have resurfaced with new versions of their old Facebook product, this time for mobile. Cross-promotion is back in style, with many a provider offering the opportunity to lower your customer acquisition cost. So too are monetisation platforms that offer developers the ability to manage their virtual stores dynamically, profile their customers and tailor their offers. Finally there are social tools like Everyplay, which can magically share your gameplay sessions on video sites.
More than a few people have made the analogy that these companies are doing the smart thing, selling shovels to prospectors rather than getting in on the digging themselves. If you were in their shoes, you likely would too.
The odds are increasingly stacked against any developer who’s unable to pull a Peter Molyneux and attract a whole lot of press attention to a zany idea. Their problem is that most often their games look and act very similar to others’ games, have the same look, gameplay and overall dynamic as competitors’ games. That is the kind of market that favours aggregators (like cross-promoters) over creators because in it the creator is just cranking out a commodity.
On the supermarket shelf, commodities are all much the same and the user doesn’t really have to care which choice he makes, so he tends to go with the one he sees first or second. That’s why Apple has all the power on the App Store, why Google is sort-of getting there with the Play store, and why Zynga has all the power within the sub-ecosystem it has developed on Facebook. In commodity markets, visibility is everything.
However at some point aggregation is also not enough. Perhaps for a while there is room to manoeuvre with your quirky take on the standard farming game, or if you’re skilful enough at playing the arbitrage game you’ll get your social casino to rise up the charts. But those ideas are kind of cheap, and you’ll quickly find many competitors doing the same thing. The aggregator tools that you’re using also start to become overly full of competitors who had the same idea as you, and they start to shut down because of a lack of return-on-investment.
This leaves only a very few in the market competing over hundreds of millions of players with hundreds of thousands of games, which is basically just another version of the low-rent gaming portal business of 2000-2005. For the individual developer the game then has to become about either impressing platform holders and users, or doing something else.
Most choose to try to be impressive. This year the tablet space in particular has had a marked increase of graphical polish, and that trend shows every sign of continuing. In some respects it’s like watching the console and PC games industry play its story out all over again, but with good reason: Graphics, in particular a stylish look, can really push a game forward into the market in ways that innovation rarely does.
However this does not give much solace for the developer who cannot afford to spend a fortune. He finds himself needing an edge, and that edge is the marketing story.
Amid all the gloom, the most interesting story of the year was crowdfunding. At first it seemed like a small thing, such as in 2011 when Six to Start raised $72,627. However a gear shifted in early 2012 when Double Fine got in on it, raising millions. At first dismissed as a blip, or a one-time event, crowdfunding then proved to have legs, funding dozens of projects from games to add-ons, and one whole brand-new console. And it continues to do so.
Its secret is deceptively simple: The projects that represent causes in which the market already believes get funded. These cause-projects are commonly tied to a particular game maker, such as Chris Roberts or David Braben, but often not. Nobody ever heard of Palmer Luckey before he raised $2.4m for the Oculus Rift, nor Adam Poots who’s very close to raising a million dollars for a co-operative board game named Kingdom Death. They are all examples of marketing-story driven success.
A marketing story is a cause that a market believes itself to be a part of, and which goes out of its way to try and recruit more members into the market. It’s often fuelled by a sense of injustice at some past misdeed, or some anticipated future, and through purchasing players feel that they are participating in telling that story. That whole Apple fandom thing is an example of a marketing story operating at full steam, as is the (slightly more dented) Nintendo fandom.
Marketing stories are everywhere in games, from the iOS game 10000000 to Minecraft. Some of them are small in scope, reflecting a passionate niche (like my recent report on eRepublik whales). Others are huge, like the legions who queue at midnight to get World of Warcraft releases.
Some marketing stories also extend beyond the boundaries of games. A recent example is the belief that games are dangerous or induce violence (here, the market is political rather than monetary). Another is (approaching defunct) San Francisco Revolution view that meaning, behaviours, community and education can all be melded into noble businesses through gaming. This story is what gave virtual worlds and alternate reality games their impetus five years ago, which is currently driving gamification and – when gamification finally falls away, as is inevitable – will likely propel augmented reality.
The important word here is belief. Marketing stories are not rational analyses based on studying metrics or performance; they are derived largely from a narrativised understanding of games and what they mean. They often have historical roots, an idealised origin story, and leader figures who propel them. This is why many Kickstarter-funded games tended to gather around game designers of yesteryear, but equally the story can be more consensual (such as for the Ouya).
All the most infectious marketing stories tend to be future-forward in their thinking. Cynics may roll their eyes, but phrases like “We need 21 billion hours of gaming to save the world” (a Jane McGonigalism) inspire imagination. One marketing story forming around a future-forward idea is that of 3D printing. For legions of war game fans, the idea that we will be able to download and print miniature armies in the future is positively erotic.
For games, these passions have always existed. However Kickstarter (and to a lesser extent other services like Indiegogo and Steam Greenlight) have made them more directly expressible, and this is a capacity to which neither aggregators nor power plays generally have access. It’s somewhat pat to say, but the way that the network connects is fuelling both a fragmentation of the existing industry and a new generation of heroes. But it’s also creating a strong sense of disruption.
This newfound tribal funding and evangelism model has appeared at a time when the official industry finds itself in a deeply troubled state. Nobody’s really sure whether they even want a new console anymore, or a gaming PC, or whatever. Developers have no idea which market will be the hot ticket, or which might at least allow them to survive. The metrics simply do not track fast enough for anyone to have a firm grasp on what the hell is going on anymore.
To some, there is an element of the transitional yips about 2012. Fine, they might say. It’s all well and good for the moment for Kickstarter to be doing its thing, but just wait until there’s a crash, a scam or something else to take the shine off. Just wait until old-school game designers like Peter Molyneux come in and wreck it. Just wait until E3, when Xbox3 and PS4 roll in and the industry gets back to “normal” once again.
Personally I think the crowdfunding story has struck hard and deep because it’s as significant a shift as going from physical to digital shopping. As we know from reading all about long tails and the like, the digital landscape allows users to connect to the interests they care about rather than just the ones they are served, and this tends to cause all sorts of unexpected effects. The market becomes much more chaotic, more thousand-niche-like, and the paths to success all look like long-odd bets. In such situations, only a marketing story tends to survive.
Marketing stories don’t tend to fizzle out that quickly, even if the leader of the story makes missteps. The crowd proves willing to forgive as long as it feels kept in the loop. It wants to see the future that the story promises. They believe what they believe, no matter what. That fountain is always regenerating, always has new heroes to step in and push the story forward, and new enemies to fight.
And now that the true believers can participate directly, that is what they are going to continue to do.
View original post here: The Games Industry Is Driven By Marketing Stories
Startup Canada today debuted a $100,000 Indiegogo crowdfunding effort to try and raise money for building an online resource to help entrepreneurs across Canada gain access to crucial support and resources as they build their businesses. The platform, called Startup Canada Connect, will offer resources, access to mentors, and events and associations, as well as generally provide a centralized place where entrepreneurs can rate and compare local community startup services.
Startup Canada, a non-profit organization founded by Victoria Lennox and Cyprian Szalankiewicz, is itself a startup, having been funded in May 2012 around the idea that, while Canada’s startup community is vibrant and growing, it lacks a unified network, which leads to poorer access to resources for a startup in, say, Prince Edward Island versus in Toronto or Vancouver. Connect is meant to address some of those gaps via the development of a strong online community. It is being designed around lessons learned from a six-month cross-country tour, during which Startup Canada sought the opinions of around 20,000 Canadian entrepreneurs spread across 200 events.
Startup Canada is looking for a lot of funding to help with building this platform, but it is a volunteer-run organization and the goals it has set for itself are ambitious. There are also arguably other organizations out there that already strive to help the entrepreneur community in similar ways, including Toronto-based Sprouter and, to some degree, Clarity, the mobile mentor network I wrote about earlier today. But Startup Canada’s aims aren’t profit-based. Also, both Sprouter and Clarity target a more global entrepreneur community, while Startup Canada wants to focus more narrowly on the Canadian community.
“We definitely know that we wanted to provide a personalized dashboard for Canadian entrepreneurs to access the services available to them in their community and nationally,” co-founder and CEO Lennox explained in an interview. “But what we really wanted to do is to give the community an opportunity not just to rank support but to access the support, so they can actually comment on the level of services that were provided so that we can provide that feedback back to service providers.”
The goal is to build an effective feedback loop that helps local service providers better understand the needs of startup businesses, so that entrepreneurs get access to more services they actually need, rather than just the ones people think they need. That’s especially important for communities outside of the major Canadian city centers, Lennox said, where support infrastructure for startups and entrepreneurs doesn’t tend to be as mature.
Startup Canada’s $100,000 funding goal may seem lofty, but the organization is seeking to be self-sustaining, independent of government funding, through multiple crowdfunding efforts and select support from private business. Lennox says that while this is the first time her group is dipping its toes in the crowdfunding pool, and Indiegogo was a logical place to do so at the time, Startup Canada wants to eat its own dog food and will be working with some Canadian crowdfunding platforms currently in development in the new year to help finance further initiatives.