Tag Archives: crowdfunding


Where traditional spy agencies like the CIA, MI6 and Interpol fail to identify and answer global criminal cases, a new independent investigative journalism platform has been created that utilizes crowd-sourcing in order to solve these cases. Sounds almost superhero-like, doesn’t it? Well, Bellingcat might just be the ‘crime-solver’ the world was actually looking for.

The business model

Bellingcat identifies itself as “the home of online investigation”, as it uses open source initiatives and social media in order to investigate criminal activities and conflicts around the world. By bringing together professionals and volunteers, Bellingcat provides a platform where these injustices can be tackled collectively. (Bellingcat, n.a.) The collective approach to problem-solving can be traced back within the name. “Belling the cat” stems from a tale about a group of mice deciding that the best way to protect themselves from a cat is to place a bell around the cat’s neck, but are then unable to find a volunteer to attach the bell. “Therefore, we are the mice”, according to founder and CEO Elliot Higgins. (Doward, 2018)

The concept started out as a hobby by British journalist Eliot Higgins, once a college drop-out from his study Media Technology at Southampton University. Initially, he started writing blogs on conflicts, such as in Libya, under the pseudonym of Brown Moses. He realized that social media content on these conflicts were being largely ignored within investigations. Therefore, he began collecting this content and combining them to make compelling cases. (Doward, 2018) Eventually in 2014, the Bellingcat platform was launched with crowdfunding help from their Kickstarter campaign. As of now, they consist of 11 full-time employees, with their head office located in Leicester. To keep the business running, paid workshops and seminars on online investigative techniques are given to create revenue and motivate individuals to contribute. Increased interest from NGO’s such as the Google Digital News Initiative and charities such as the Dutch Postcodeloterij have also provided Bellingcat with grants in order for them to expand their operations. (Matthews, 2018)

Methods, techniques and contributions

Known as OSINT (open-source intelligence), Bellingcat’s method of journalism collects data from publicly available sources to piece together, debunk or verify a story. The investigative technique involves strolling the internet and then cross-referencing social media posts, tweets, news photographs, databases, Google Street View and maps into a detailed mosaic of apparently undisputable data. (Matthews, 2018) This is done by professionals who work full-time at Bellingcat, leading these investigations and are supported by a larger group of “amateur investigators” who, from the comfort of their own homes, voluntarily perform these methods. They meet and talk in Facebook groups, subreddits and threads of direct messages on Twitter, discussing new tools and techniques and working with any changes to social networks that might help or hinder their work. “A lot of people who are involved with Bellingcat are from those communities, and have a kind of nerdy desire or obsession with problem-solving when it relates to big stories”, says Press Association social media journalist, Alastair Reid. (Chakelian, 2018)

Figure 1: OSINT Landscape by Bellingcat

Due to the large pool of volunteering contributors, the ‘Wisdom of the Crowds’ phenomenon arises, where input from a larger group results in more trustworthy answers. Bellingcat’s information has been judged watertight enough to be used by the official commission investigating the downing of MH-17 and has been cited in the United Nations as proof of Syrian war crimes (Matthews, 2018). Bellingcat contributors found photos on the internet of fourteen Russian officers posing with the alleged BUK-rocket which shot Malaysian Airline flight MH17 from Amsterdam to Kuala Lumpur out of the air near Donetsk, Ukraine (Doward, 2018). Next to that, contributors were able to pinpoint the blame for chemical weapon attacks by the Syrian regime. The latest investigation that caught the global news headlines and is still ongoing is about the poisoning of Sergei Skripal and his daughter Yulia in Salisbury, England. Together with Russian website The Insider, Bellingcat contributors were able to identify one of the wanted men by downloading passport data of millions of Russian citizens. The suspect was found to be Anatoliy Chepiga, who is an officer from the GRU, the Russian military intelligence, being active behind the alias Ruslan Boshirov. (Doward, 2018)

Allegations, refutations and potential

Although much praise is being given to Bellingcat, also allegations and critic has been given from mainly the Russian government. Allegations vary from being accused as a CIA information warfare department to spreading fake news and illegally retrieving their information (Matthews, 2018). As mentioned, most of these allegations come from the Russian government. This is not that surprising, as many of the investigations led by Bellingcat see Russia playing a large role within the injustices (e.g. MH17, Skripal).

“When Russia started attacking our work I’d already spent two years building up a reputation. All they’ve managed to do since is to prove that whenever they end up attacking our work it’s because we end up being right about something. The more noise they make, the more truthful something appears, basically”, according to Bellingcat director Elliot Higgins (Doward, 2018). Moreover, in many of the investigations, Bellingcat is ahead of Western intelligence agencies when it comes to finding evidence due to Bellingcat’s willingness to buy information on the black market or retrieve it from pirate sites, making them better than governments at gathering information from open sources. (Matthews, 2018) Therefore, they are proving to be a highly efficient independent agency, simply leveraging the power of active member participation of a large and diverse group of contributors.

It is safe to say that Bellingcat’s potential is huge. They are still a relatively young platform, growing every day. As more volunteers join, more information will be found which will also prove to be more trustworthy. This will result in more support from NGO’s, charities and eventually official government systems. Recently, the Dutch Postcodeloterij funded them half a million euros in order to set up a new office in The Hague, the city home to the International Court of Justice (Walker, 2019). Will it just be a matter of time for Bellingcat, an open crowd-sourced investigative platform, to become the global leader in solving worldwide crime and an official authority within the constitutional state? Time will tell, but it is certain that exciting times are ahead.


Bellingcat, (n.a.).About”. Bellingcat.com.Retrieved from <https://www.bellingcat.com/about/&gt;.

Doward J., (2018).“How a college dropout became a champion of investigative journalism”. The Guardian. Retrieved from <https://www.theguardian.com/media/2018/sep/30/bellingcat-eliot-higgins-exposed-novichok-russian-spy-anatoliy-chepiga&gt;.

Matthews, O., (2018). “How Bellingcat outfoxes the world’s spy agencies”. The Spectator. Retrieved from <https://www.spectator.co.uk/2018/10/how-bellingcat-outfoxes-the-worlds-spy-agencies/&gt;.

Chakelian A., (2018). “What is Bellingcat? Behind the tactics revealing the Skripal suspect and Cameroon killers”. NewStatesman. Retrieved from <https://www.newstatesman.com/politics/media/2018/09/what-bellingcat-behind-tactics-revealing-skripal-suspect-and-cameroon-killers&gt;.

Walker J., (2019). “Bellingcat to establish new office in The Hague after €500,000 funding win through Dutch postcode lottery”. PressGazette. Retrieved from <https://www.pressgazette.co.uk/bellingcat-to-establish-new-office-in-the-hague-after-e500000-funding-win-through-dutch-postcode-lottery/&gt;.

Being “Controversial” Can Be Good for Crowdfunding Projects

A Brief Talk about Crowdfunding

Crowdfunding has become more and more of a common way for business founders to get their projects funded directly by wide population. The emergence of big crowdfunding platforms like Kickstarter and Indiegogo enabled project founders to “engage directly” with their potential customers. At the same time, people were finally able to invest in projects that they actually like. Through crowdfunding platforms, they can find projects from 3D printers to a block of soap that smells exactly like meat (yes, they made it from animal fat. I myself remembered backing a project called “Exploding Kittens” years ago simply for fun (I loved the name) and it ended up becoming one of my favorite games of all time.

Fun memories aside, the existence of crowdfunding platforms is a breakthrough for companies, big and small alike. There are several advantages and disadvantages of utilizing crowdfunding platform for businesses:


  • It can be an easy and fast way to raise finance
  • It is a fast method to see potential customers’ reactions, and positive reactions usually result in free marketing (through social media, for example)


  • It can be costly if not done right: donation incentives and marketing initiatives often need sound strategy
  • It is difficult to alter the business offerings, since public already has expectations of what the project will be (less flexibility)

Into the “Gray” Side of Crowdfunding

With the market development of this while crowdfunding concept, the “freedom” that crowdfunding platforms provide to individuals as a potential project founder might not always result in what our society’s “social norms” deem as ideal. There are many cases already in which people use the donations from crowdfunding platforms to do illegal activities. The most common form of this is scams: “founders” promise a great project and “run away” after reaching donation target of thousands of dollars. This is commonplace, and there are legal remedies already; but a more interesting case is when a founder raises money for a controversial project rather than an illegal one.

Controversial crowdfunding projects in most cases don’t actually break the law and are not outright illegal. Sometimes, they are just “teasing the boundary line” or not in accordance with acknowledged social values.

Sugarbook: When “Controversial” Meets “Attractive”

A simple example to illustrate a controversial project is to look at the newly established social networking platform Sugarbook. The startup built an app and website on the premise that a decent percentage of online dating puts importance of “having money” before considering moving on to more serious commitment in a relationship. Put simply, the app serves as the bridge to enable “sugar daddies” to meet young women.

The controversial nature of the business’ premise alone was able to attract attention from many places, wanted and unwanted. On one side, there is social unrest: many public officials stated that this app will be “watched” as many fear that this kind of apps tend to attract elements related to keywords like “prostitution”, “exploitation” and “women safety”. But, on the other hand, the attention this business got gained it lucrative funding and customers. The Sugarbook app states that it already has around 10,000 members already in New Zealand. Many other similar sugar dating apps also reflect the popularity of controversial businesses that somehow found their market.

The Business Perspective of Controversial Projects

The example of Sugarbook might provide us some business perspectives on a question that at the moment is perhaps boggling our mind: how does that even work? The first question that might appear is perhaps: “Is the business model any different?”. The answer is yes and no. For projects that gain their funding through crowdfunding platforms, the business model is still the same and separate. Crowdfunding platforms approve projects and get fee from project founders, then “display” the projects for people to see and invest. In our example case earlier, Sugarbook in itself doesn’t have much different business model to other dating and social networking app like Tinder: individuals can join to access networks of other like-minded individuals, and there is usually a premium service version that get the company more fees.

There are several explanations on why controversial-concept businesses work well knowing there are social or even legal consequences that can hinder the business from profitability, or even, sustainability. The first reason would be the attractiveness of being “controversial”. The word “controversial” is often associated with being “different”. And recent social movements encourage the notion that being different is attractive. This association thought-train is what enables controversial anything, including business projects, to gain more attention and traction in shorter time than “normal and boring” ones. Another reason that is still related to the first reason is the prevalence of social media in the spread of information on internet. Facebook, for example, has been reported by many sources that it is prone to spread of fake and controversial contents. With similar reasons that say “controversial” can mean “different” and “attractive”, social media plays a strong role in getting these types of businesses public attention.

Lesson Learned for Future Crowdfunding Project Founders

What we can learn from this is that while crowdfunding might seem to be an easy way out for our project’s financial needs, it isn’t always the case. The competition is already crowded; project founders still need to execute strategies to differentiate from others. Controversial businesses like Sugarbook teaches us that even with a controversial business premise that is seemingly harmful for business sustainability still manages to find its market (and investment to keep it going) and come out the winner of the situation (at least for now). Taking all these seemingly-trivial factors, like in this case, having a different and attractive marketing initiatives, into considerations is important to thrive, when everything is out in the open especially with crowdfunding platform system.

Who knows, maybe even you can be the next sensational founder of the $55,000 Potato Salad project in Kickstarter.

Written by: Theo Cavin Yudianto (495880)







SamenInGeld, a crowdfunding platform for mortgages.

SamenInGeld is a Dutch platform built specifically with the goal to crowdfund buildings and homes using actual mortgages. As with most crowdfunding platforms, the focal group of projects are those that cannot find funding at the traditional places like banks and other traditional mortgage lending businesses. Among the projects funded on this SamenInGeld are entrepreneurs that cannot get a mortgage through a bank due to inconsistent income and small time project owners that want to buy and renovate a building so they can use the building as a source of income through rent payments.

The advantage of this platform is that they managed to secure a AFM license which is legally required to officially offer mortgages in The Netherlands.

Business Model

SamenInGeld charges 0.5% of the total investment when the projects start and 0.25% every year the project is active to the money borrower. This is their primary source of income to support the platform. This means that for an investment of €100.000, they will receive €500 + €250 for 14 years = €4000.

The platform charges no fees to investors over their received interest, except for a small fee of €0.25 for every withdrawal from their account. This won’t make the platform owners rich though, since money lent cannot be withdrawn for 5-15 years.


To manage the risk of their investors, SamenInGeld allow loan seekers to split up the investment in different layers of risk and return. Some investors seeking higher profits might choose to take a higher potential reward by investing in a phase that will be paid later in the event of payment failure by the loan takers.


Legal requirements

Your author for this blog post is not in the slightest an expert on AFM regulation regarding private investment in mortgages, but I will do my best to use the sources available to assess the legal requirements of the platform and whether they conform to regulations.

Among the requirements to be met is the investor test. Companies operating under an AFM license that want to receive investments from private crowdfunders for investments higher than €500 need to test their potential investors on some their knowledge on the “risks of the project, crowdfunding in general and the specific platform” (https://www.afm.nl/nl-nl/professionals/doelgroepen/crowdfundingplatformen/toezicht/vereisten)

SamenInGeld matches this requirement. The funny thing is that the AFM makes the platform responsible for the review of the test and keep the requirements of passing rather vague. There are other requirements listed by the AFM like an €80.000 cap of total investment and a warning for investors to spread their risk. SamenInGeld meets those and other requirements by listing them clearly.


The running costs for the platform are quite low, and the business model allows for a steady flow of income for a long period of time (5-15 years). SamenInGeld smartly does not charge the investors a lot for investing in the platform, making the investment interesting for potential investors. The platform adequately counters legal repercussions by following the AFM guidelines.







Crowfunding in Real Estate

Investing into real estate
Investing into real estate has traditionally required large amounts of funds to even get started. While returns on real estate can in the long run be more attractive than investing in for example stocks, exposure to the market is lower for the general public because the barriers to entry are so high. The real estate market is currently on the rise again, and this trend can be seen in many countries. As an example, according to the CBS the price of existing houses in Amsterdam rose by 14.7% during Q2 of 2016. Moreover, the rise of crowdfunding is stimulating some interesting developments in the real estate market, especially with respect to investing possibilities for smaller investors.


Can real estate be crowdfunded as a form of investment?
Launched in 2012, Fundrise is a real estate crowdfunding platform that allows the “average” person to have to opportunity to invest into real estate projects. These projects range from pooled small investments such as a single family homes, to large corporate buildings. The platform has set a minimum investment price of $1,000 and allows its investors to start accruing interest on their investment as soon as a project is funded. The benefits from investing directly into real estate assets is that there are generally less fluctuations in returns (granted that the project goes according plans) and more transparency. In fact, in 2015 the average annual return for all the investments on the website was 13.1% (Forbes, 2015).


Efficiency Criteria
The platform is two-sided. On one side of the platform there are real estate investment trusts (REIT), which create portfolios by participating in the development of a variety of real estate assets such as hotels, shopping centers, houses and office buildings. On the other side of the platform, users (investors) can then invest into the real estate portfolios by essentially buying shares in these funds. Through this, the development projects are funded, built and eventually rented out or sold. Users can then earn gains or make losses depending on the success of the project pools in which they have invested. Users can however, not lose more than the initial investment that they put in.

As such, the platform creates a network effect in which the more users invest, the larger the pool of real estate assets can grow, and therefore the less risk to the users that they will lose their investment. The risks of real estate pools are defined clearly and are dependent on factors such as location, asset type, and structure. Users moreover have the chance to participate in redemption plans, in which they are able to sell back a certain amount of the bought shares to the respective REITs at the end of each quarter.

The business model behind the platform is relatively well protected against legal regulations. This is because it essentially deals in shares of the REITs to fund projects, rather than by providing a loan type structure. Moreover, users get a transparent view of the assets, structures, and locations that they are investing into. The one major downside of the platform is that your investment funds are essentially managed by an external management team, and are therefore dependent on their knowledge and execution. In this aspect, the user does not have the ability to exert direct control over the way in which their money is invested, which might not always be favorable.



The Effect of Perceived Impact on Crowd-Funding Contributions

By Madeleine van Spaendonck (365543ms)

When deciding to fund a project on a crowd-funding platform, does it matter to you how close it is to its target? This is what researchers Kuppuswamy and Bayus (2017) investigated in their study “Does my contribution to your crowdfunding project matter?”. Prior scholarly work in this field has focused mostly on the significance of early contributions, and their ability to signal quality and lessen project uncertainty (Colombo et al., 2015). They found that people financially support projects when they believe their contribution will have an impact. Using a panel-data approach, the study examined 10,000 randomly-selected funded and unfunded Kickstarter projects (posted between 2012-2014), with the following variables.

Screen Shot 2017-03-05 at 21.08.58.png

The results reveal the following phenomena, forming the basis of the proposed “impact theory”:

  1. Additional backer support for a project will be higher as its cumulative funding approaches its target goal.
  2. Additional backer support for a project will drop sharply after the target is reached. After this point, people are likely to prefer other projects that do not have sufficient funding and where their financial help is thus perceived to have more impact. Results 1 and 2 combined form the ‘goal gradient’ effect.
  3. Moderating factors: this effect is strongest when backer support is likely to have the highest impact; this is when the project is close to its funding deadline, has a small funding goal, or has limited early support [figures 1, 2 and 3].

Screen Shot 2017-03-05 at 10.29.49.pngScreen Shot 2017-03-05 at 10.33.39.pngScreen Shot 2017-03-05 at 10.34.34.png

The figures illustrate U-shaped patterns for funding contributions over time. From a customer-centric perspective, backers are thus motivated by the target goal of the project and its proximity. For both pro-social reasons and the opportunity to receive the promised rewards, backers want the project to succeed (Gerber & Hui, 2013).

Strengths, Weaknesses and Future Research Directions

The paper offers new insights into crowd-funding behaviours by empirically studying its dynamics over time. For example, the ‘impact theory’ can explain the “Kickstarter effect”, which is the observation that more than 90% of projects that achieve at least 30% of their goal will eventually reach their target. People want to make an impactful contribution, which means that projects that are near – but not past – their target are most likely to receive support. Other crowd-funding phenomena, such as herding, cannot account for this by themselves. A weakness of the study is that the outcome measure is only focused on whether or not a contribution was made. To determine whether people voluntarily contribute more when they believe it will make an impact, a future research direction would be to measure contribution amounts.

Managerial Implications

The study highlights several practical implications for entrepreneurs. Setting the appropriate goal has a high impact on potential funding. A too-high goal makes it challenging to get close enough to the target for the goal gradient effect to arise. However, a too-low goal may prematurely halt contributions, because support declines after the target is reached. Furthermore, communicating the target goal and the goal process in the form of updates/reminders can increase contributions, as this also triggers the goal gradient effect.


Colombo, M., Franzoni, C., & Rossi-Lamastra, C., (2015). Internal social capital and the attraction of early contributions in crowdfunding projects. Entrep. Theory Pract. 39(1), 75–100.

Gerber, E., Hui, J., (2013). Crowdfunding: motivations and deterrents for participation. ACM Trans. Comput. Hum. Interact. 20 (6), 1–32.

Kuppuswamy, V., & Bayus L, B. (2017). Does my contribution to your crowdfunding project matter?. Journal of Business Venturing, 32(1), 72-89.

Cover photo:

Gil C. via Shutterstock.com for VentureBeat, (2017), Kickstarter Headline [ONLINE]. Available at: http://venturebeat.com/2017/02/01/kickstarter-acquires-video-streaming-community-platform-huzza-opens-first-office-outside-the-u-s/ [Accessed 3 March 2017].

Crowdfunding: Why People Are Motivated to Post and Fund Projects on Crowdfunding Platforms

The concept of crowdfunding is rapidly becoming more popular, and people are increasingly turning to crowdfunding platforms such as Kickstarter or IndieGoGo. As such, there has been a growing amount of research focusing on how to increase the chance of running a successful crowdfunding campaign. The focus is on how to optimize elements such as the design of crowdfunding page content or reward building to get the best possible results. However, what is it that motivates people (both creators and funders) to actually use crowdfunding platforms? Gerber, Hui and Kuo (2012) conduct research to determine the motivating factors that draw people to crowdfunding platforms, and moreover explore how these platforms impact the successes of projects in general. Through various interviews with creators, funders and representatives from Kickstarter, IndieGoGo, and Rockethub, the authors gain insights into the motivating factors that stimulate people to use crowdfunding platforms.

Why do creators use crowdfunding platforms?
The findings of the study show that while creators are primarily motivated to raise funds, there are also social aspects that contribute to why they decide to use crowdfunding platforms. Firstly, the community aspect of crowdfunding provides creators with validation regarding their projects. The community can provide feedback in the early stages of the project, which can take away a lot of the uncertainties about how the project is seen by consumers. Moreover, the community validation aspect is shown to actually increase the creator’s perception of his/her own ability, which in turn stimulates increased motivation as well as increased performance in the project.

Secondly, crowdfunding platforms provide creators with the opportunity to connect with their funders and engage in direct collaboration. This shifts the emphasis from a mere financial transaction to engaging in long term two-way interactions with funders, essentially dissolving the line between producers and consumers through active participation.

Thirdly, the results show that creators are actively encouraged to participate in crowdfunding by being able to see successful past projects and the idea that it is possible to replicate those campaigns. In this sense, successful campaigns do not only draw more attention to the project itself, but they also provide social proof and an example to the public on how to become a creator.

Lastly, creators are motivated to use crowdfunding platforms because it provides exposure to their projects through social media channels. Since these platforms are becoming so widely used, they essentially provide a means to showcase a concept to the world without the creator having to spend significant amounts of money on advertising.

Why do funders use crowdfunding platforms?
Similar trends can be seen among funders that use crowdfunding platforms. It is found in the study that while funders primarily seek rewards, there are also social factors that contribute to the appeal of using crowdfunding platforms. Firstly, funders often become intrinsically motivated to engage and contribute to a creative community with similar interests. The idea of being part of a community and collaborating across different projects, strengthens the connections of people within the social network and provides intrinsic motivation.

Secondly, funders often become personally interested in the projects that they follow or fund, and as such become motivated to support the creator in realizing the campaign goal. Personal involvement allows funders to take pride in the achievements and developments of the project, which in turn makes the participation in crowdfunding more rewarding. The implications of perceived involvement in the project could also make funders more loyal towards both the creator and project. This could therefore lead to a greater motivation to create awareness for the project through word of mouth, and a greater motivation to fund future projects by the same creator.

What does this mean for crowdfunding platforms?
The research has practical implications for crowdfunding platforms. By stimulating the features necessary to form interactive communities, crowdfunding platforms can satisfy the aforementioned motivational factors that stimulate people to want to participate. By emphasizing and building on these elements – such as the communication channels between creators and funders, and enhancing transparency in the workings of past successful projects, crowdfunding platforms can increase participation on both the creator and funder sides.

Gerber, E. M., Hui, J. S., & Kuo, P. Y. (2012). Crowdfunding: Why people are motivated to post and fund projects on crowdfunding platforms. In Proceedings of the International Workshop on Design, Influence, and Social Technologies: Techniques, Impacts and Ethics (Vol. 2, p. 11).

Crowdfunding for charity on chuffed.org

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There are many crowdfunding platforms available on which companies and individuals can attempt to raise money for their cause. I would like to share my thoughts on chuffed.org, an Australian based platform that is one of only a handful of platforms available (one other example is youcaring) that charge no fees to the organisation running the campaign. I personally think their story is inspiring and hope they will be able to survive despite of their current business model. We will look at the way the platform operates from the supplier and customer sides before assessing the business model.

Supplier-side operation

For suppliers of projects, chuffed is a relatively easy to use platform to start hosting funding campaigns. Chuffed has listed a five-step plan to help charities and individuals get underway in starting their first campaign, including best-practices about perks and promoting the campaign on social media. Obviously, chuffed benefits from well-run campaigns so making this as easy to understand as possible is in their favour, and they seem to understand this very well. The biggest reason for causes to use chuffed is probably that they charge no fees on the donations made through the platform. End users must pay the credit card fees on top of the donation amount but this is paid to their PSP: stripe.

Customer-side operation

Chuffed is accessible on a responsive website. End users can browse through the different projects with relative ease. I can understand the choice to save money by not building native apps, but it is still a shame that the site is not very mobile-friendly, especially on lower internet speeds.

On a more positive note, the site attracts consumers from all over the globe. In an interesting blog post containing statistics from 2016, chuffed notes “We’ve only run campaigns in 20 countries, yet donors have come from 152.”.

Business model

Chuffed.org is a social enterprise, so survival is their prime concern. They ask end users for a small donation to sustain chuffed on top of the donation to the specific campaign.


This intuitively seems like a good option to sustain the platform, but chuffed does not disclose numbers on how many donations they receive through this channel so it is hard to assess whether they do a good job of sustaining themselves.

Another interesting survival strategy is discussed in a blog post posted by the CEO. Chuffed received their second round of funding in March 2016 through Blackbird, a venture capitalist. The CEO notes that even though they were rejected for 86 times by various VC’s and other investment parties he persisted in this strategy and that it eventually paid off.


I greatly admire the persistence of chuffed to charge no fees on the supplier side of the business and it appears like they have found a couple of ways to sustain their own platform.

In order to attract more funding from customers, my opinion is that they should invest more in the mobile-friendliness of the platform through native apps.







Seed & Spark – Crowdfunding for Independent Filmmaker

Creating and writing up an excellent script is already hard enough, however raising funding to make the screenplay to reality and brining the film to the cinema in front of audience represent another big challenge to the filmmaker. In recent years, heat waves of crowdfunding shed a light on film industry as well. The emergence of film crowdfunding has made some breakthrough in assisting film projects especially for independent filmmakers to raise funding.

Continue reading Seed & Spark – Crowdfunding for Independent Filmmaker

Neighborly: the crowdfundingplatform for public bonds

Over the last few years, municipal finance has become increasingly complex. It is not surprising that most people do not understand how public finance works. Required information is scattered over different places, multiple diverse projects are bundled as a single mega bond and the process is slow and bureaucratic. These characteristics make public bonds not public at all.
Neighborly, the crowdfundingplatform for public projects in the US, brings municipal bonds back to its roots by making it understandable and accessible for the public again.

Continue reading Neighborly: the crowdfundingplatform for public bonds

E.ON: Home of the Future

Together with co-creation specialist 100% Open, the energy company E.ON has issued a challenge for the best idea to a home energy makeover. Such contests are not new, but the approach they used is very interesting. In 2012, the companies started a crowdsourcing project for a five-part documentary called Home of the Future. In this documentary  the Perera family from Sheffield is filmed while experts install new gadgets or other projects to safe energy. The documentary focuses on the need for future energy efficiency, environmental-responsibility and saving time and money. Examples include domestic power stations and waterless washing machines. Next to this, future technologies are assessed in how useful and cost effective they are in a real world situation.

Continue reading E.ON: Home of the Future

Patreon: Will you be my Patron?

In the last few years a lot of crowdfunding platforms have appeared or gained popularity after Kickstarter had its big success story. People like to invest in ideas they find interesting or that suit to their unmet needs. Kickstarter and IndieGogo are two examples of crowdfunding platforms for entrepreneurs who want to start a business or develop a product. However in recent years these several crowdfunding platforms have taken on different roles in providing funding (Floship, 2015).

Continue reading Patreon: Will you be my Patron?

Fan Funding – Let’s retake charge!

Through crowdsourcing of many kinds, people can support causes they are passionate about and, in the case of equity crowdfunding, even buy shares with voting shares, such that they gain a say in the operations of the organization or project they support. However, can people really fund and take charge of the things they are most passionate about?
“Amongst all unimportant subjects, football is by far the most important.”  – Pope John Paul II
The amount to which a large share of habitants of European countries, and many more worldwide, care about their favorite football club can hardly be overestimated. Though how often do we read about mismanaged clubs in severe financial problems? Opportunistic behavior of the top management of clubs unfortunately is rather rule than exception in the industry of football, often resulting in a short term focus, immense amount of debts and, in turn, the decay or even the liquidation of a club. Whereas the often very rich board members and owners are simply replaced after such disasters and move on with their comfortable lives, the fans are left in grief over the loss of their great pride and passion.
There is hope. In the last years, some highly interesting and promising initiatives have taken place to redistribute a part of the control of a club to its fans. Due to financial mismanagement, from the 2009/2010 season onwards, the former British Premier League side Portsmouth Football Club was relegated three times in a row and the club found itself on the brink of extinction. But, in 2013, the fans injected 2.5 million pounds in their club, through a community share issue with partial ownership rights for each shareholder. The fans, essentially a club’s customers as they buy tickets and merchandise, saved Portsmouth and made ‘Pompey’ the largest fan-owned football club in the UK. The investing fans are united in the Portsmouth Supporter Trust (PST), which has to approve any major decision of the club’s board, such as the issuing of loan capital or venturing in acquisitions. While this yet is a beautiful example of what consumer involvement can do, last year a crowdfunding campaign backed by Portsmouth fans went a step further even. On Tifosy.com, a newly established platform with the aim to stimulate active supporter backings and decision rights, raised 270,000 pounds for Portsmouth to construct its first-ever club-owned academy, right in the heart of the city of Portsmouth.
The video below tells the great story of the Portsmouth fans’ actions.
Two fans of 3rd Bundesliga side FC Fortuna Köln had an even greater ambition. The plan they launched last year proposed that any Fortuna supporter could fund its beloved club and, in turn, gained a vote on a wide array of possible decisions, including whether or not to buy a particular player, realize an investment to the clubs premises or even to sack the first squad’s manager. Every pound invested represents one vote, and the fan opinions alltogether would decide which actions the club had to take. Unfortunately, this highly democratic, wisdom-of-the-crowd enabling, crowdfunding campaign did not reach its funding goal, but the idea might very well turn out an industry changing one in the long run.
The organization Supporters Direct promotes and researches the cause of the so-called Supporters Share Ownership. In their extensive 2013 report on this topic, the authors identify a rapidly increasing interest of both fans and politicians, whereas club owners and board members, the incumbent agents in this industry, display a fierce reluctance to venture in this kind of acquiring funds. To overcome this deadlock, the authors recommend policy makers to establish a Community Football Fund which would be created as a social investment intermediary capable of securing various forms of social investment to assist supporter ownership. Supporters Direct is paving the way for widespread supported ownership of football clubs, giving hopes to all those fans opposing the modern reality of football, where clubs are subject to the dangers of the few elite owners spending billions, those of the short term oriented, opportunistic board members and the investors who view players and clubs as mere investment vehicles.
Sooner than expected, we might witness crowdfunding radically transform yet another industry; the highly conservative, but yet so deeply cherished industry of football. Let’s make it happen!
– Niek A. van der Horst
Crawley Town v Portsmouth - npower Football League One



Buy this team, April 2012, The Economist, accessible at: http://www.economist.com/node/21553493

Crowdfunding: Football’s 12th Man!, April 3rd 2014, FC Business, accessible at: http://fcbusiness.co.uk/news/article/newsitem=3057/title=crowdfunding%3A+football%26%23039%3Bs+12th+man!

Is fan ownership the answer to struggling football clubs?, November 27th 2013, The Guardian, accessible at: http://www.theguardian.com/social-enterprise-network/2013/nov/27/fan-ownership-football-premier-league

Portsmouth FC Academy campaign successfully raised £270,000, August 16th, Tifosy, accessible at: https://www.tifosy.com/en/campaigns/pompey-academy

Start-up-Netzwerk für Fortuna Köln, April 8th 2014, Kölner Stadt Anseiger, accessible at: www.ksta.de/koeln/crowdfunding-start-up-netzwerk-fuer-fortuna-koeln,15187530,28071496.html

Supporter Share Ownership, 2013, Supporters Direct, accessible at: http://www.supporters-direct.org/wp-content/uploads/2013/11/Supporter_Share_Ownership.pdf

Coolest Cooler: 21st Century Cooler that’s Actually Cooler!

Consumer co-creation and crowdfunding go hand in hand. Consumers co-create value by funding the entrepreneur’s project on crowdfunding platforms. These platforms have brought forth awesome products: the Pebble Time watch, the OUYA videogame console, MaKey MaKey and many more! In this blog I would like to go into more depth about another awesome product brought to life through crowdfunding: the Coolest Cooler!

Afbeelding 3 Blogpost 3

The Coolest Cooler, sometimes called the most successful campaign on Kickstarter ever, raised 13,285,266 dollar from 62,642 funders during its 52-day campaign. That equals to more than 265 times the projected goal. Pretty impressive!

What is this Coolest Cooler? Yes, it is a cooler, but not your average one. This cooler is ready for the 21st century! “The Coolest Cooler is 60 quarts of AWESOME packed with so much fun you’ll look for excuses to get outside more often.” Its founder Ryan Grepper calls the Coolest Cooler a “portable party”. It contains a lot of practical functions a traditional cooler lacks. With the Coolest Cooler comes a built-in ice crushing blender for those margaritas or smoothies on the beach, a removable waterproof Bluetooth speaker, an USB charger for when your electronics are running low on battery, a cooler divider which can also function as a cutting board, a bottle opener, integrated storage for plates and knives, extra wide easy rolling tires (which makes it easier to use it on sandy beaches), gear tie-downs and built-in LED lights to light up the contents for when it is dark outside.

Given those impressive statistics about the funding this project received, you would think it was an instant success. However, what if I told you that before raising more than 13 million dollar in August 2014, it failed to raise 125,000 dollar in December 2013?

Afbeelding Blogpost 3

What turned this failure into a major success? According to the question “What did you do differently this time around?” in the FAQ section on the campaign page it was a combination of multiple factors. First of all, seasonality played a role. People are much more interested in coolers in the summer than in the winter. Naturally, when it is freezing outside, the last thing you will do is spending a day with your friends at the beach or at the park. Secondly, crowding in effects were present. They had a group of passionate supporters from their first campaign, who were willing to actively promote the project. And finally, of course, they learned from the feedback about the first concept and turned it into an improved product. Also, they lowered the bar to 50,000 dollar.

Nowadays, you can sign up for a waiting list to buy the Coolest Cooler when it is for sale to the public.

What do you think about the Coolest Cooler? Do you know any other awesome products created through crowdfunding?



https://www.kickstarter.com/projects/ryangrepper/coolest-cooler-21st-century-cooler-thats-actually (all three images retrieved from this page)


Crowdfunding getting personal.

This week the multinational Philips announced to stop sponsoring the shirts of football club PSV after being there main sponsor for 34 years. PSV and Philips had the longest sponsor relationship in world history. Philips will only step down from their title as main sponsor and  will continue to sponsor the club on other fronts and the PSV stadion will still be called the Philips Stadion. However, for a lot of fans this news came as a shock. Philips has always been the main sponsor of the club and has caused for a lot of brand awareness as well. A great amount of fans were extremely disappointed but also concerned that no one at this point will provide the club with decent shirts.

As a response a group of PSV-supporters decided to try to become head sponsor of the club, simply through crowdfunding. The group of fans tries to include as many other fans as possible. They are currently verifying if the demand for the idea is sufficient. If it is they will further work out there plans.

For the football industry this might actually be a radical innovative idea. If the crowdfunding idea works out it creates opportunities within other football clubs world-wide.

Currently, the group of fans would need about 600.000 fans to spend 10 euros each in order to collect a sufficient amount for the head sponsorship.

Crowdfunding is becoming more and more of a solution nowadays. Another great example of this is the crowdfunding campaign: Scusa Roma.  A woman from the Netherlands that lives in Toscane decided to set up a crowdfunding campaign to raise money for the damage that was done in Rome by football hooligans. As a response other people started campaigns for the same cause.

The following graph shows the development of crowdfunding volume on crowdfunding platforms since 2009. We see an extreme growth since then as people become increasingly interested in alternative forms of investment capital.


(Statista, 2015)

The examples in the football field are merely two out of a huge amount of examples for what people use crowdfunding nowadays. The most commonly known example is startups that need funding for development of their products. However, as in the Scusa Roma example, there are loads of people that also use crowdfunding platforms for a good cause. Another example is the Hakiki – Fight poverty through social enterprises – project. A group of students want to help villages in Tanzania with developing  and decided to run a lot of events as for instance dinners, parties or benefit nights. However, to double the amount they have already raised they decided to start a campaign on Indiegogo.

These examples show that crowdfunding is not only for actual companies or start-ups anymore and not solely focused on investment. In contrast, they are getting closer and closer to our personal lives.










To The Stars and Beyond – A Bright Future For Co-creation


As I recently wrote about Local Motors, an online co-creation initiative to launch the first 3D printed car, I would like to point you to yet another fascinating example of co-creation: Project Dragonfly.

The Dragonfly project aims to explore interstellar flight (a space mission that goes beyond our solar system!) through leveraging not only technologies such as complex computing and the miniaturisation of space flight components, but phenomena such as co-creation, design competitions and crowdfunding as well.

Now, although the technologies involved to get a satellite to travel to other stars is fascinating stuff (the mission enhances a laser-propelled spacecraft that ‘sails’ through space, more information here) I would like to point you to the way the project leverages co-creation, quite the way as local Motors does: through design-based competitions. The difference between Local Motors and Project Dragonfly however is that Local Motors pays royalties on each car sale to successful designers, whereas Project Dragonfly awards fixed sums of money to successful contestants in the form of a prize.

Design competitions are more and more used by new initiatives, but how do they work? First, the initiators define their goals and set up proper design requirements in order to identify so-called ‘performance drivers’ and ‘showstoppers’. Within the limits of these requirements, students, scientist, innovators and entrepreneurs are then invited to come up with innovations. Deliverables of teams participating in such a competition consists of a final design report, which covers all areas that are relevant to makt a mission a success and to return scientific data. With DragonFly for example, a team could report new findings on instruments, communication technology or new usage of power supply. Also, teams have to research economic and technological feasibility. Instead of granting one prize, competitions (as is the case with Dragonfly) offer cash prizes for multiple areas of technological development, allowing multiple teams of people to innovate and succeed in a particular area. Hence, design competitions speed up technological advancement in multiple areas at a given point in time. Finally, design entries are evaluated by industry experts and winners are chosen. The results then could form as a basis for future technology development of a mission. Participants are invited to continue working on their project or could be offered a contract to join the initiative. The design competition itself is financed through a crowdfunding campaign. Funds raised allow the organisation to market, raise awareness about and support the design competition.

It is great to see more and more initiatives leveraging co-creation to make steps in technological advancements. One wonders what potential co-creation beholds for the future. Will it one day enable us to travel beyond the stars?

For more information read the original article from the blog Centauri Dreams.

Crowdfunding: Where people trust random strangers with their money, and smile doing it.

It is hard to not have noticed the immense increase in popularity for crowdfunding. The concept of allowing you, as a customer, to directly influence the creation of a product you always wanted or a company you really like, is very appealing. It gives consumers power. And if anything, people are always interested in power. However, as with every exciting new development there is also a dark side to crowdfunding. Over the few years that crowdfunding has existed, there have been a couple of instances where successful crowdfunding campaigns turned out te be a fraud. A famous example is the Kobe Red campaign on Kickstarter, which promised their funders the world’s first beef jerkey from Kobe Red meat. In the end it turned out the company didn’t even exist. However, apparently enough people were convinced that the campaign was legit, as they managed to raise $120.000.

Now this provides an interesting perspective to crowdfunding. What makes a campaign appear legitimate enough for potential investors to proceed and donate money? This is what Frydrych and his colleagues (2014) have attempted to uncover in their research. They looked at some aspects of crowdfunding campaigns and in what manner it influenced the legitimacy of the campaign. Their main findings:

Funding Target and Final Funding

A moderate funding goal sends the signal that the entrepreneur is cautious and realistic. This is therefore a good sign of legitimacy for funders. Also, when a campaign has already accumulated some funding, this is a big sign of legitimacy towards other funders, who are much more likely to invest then. A report from Seedr, one of the larger equity crowdfunding platforms, mentions that once a campaign hits 30% of its funding goal, the chance to reach the entire goal jumps to 90%.

Reward Structure

An interesting aspect of reward-campaigns are the perks they offer their funders. The perk is often the main motivator for funders to donate. As such, the type of perks might also influence the campaign legitimacy. Frydrych et al. did not find conclusive results for this, however I feel there should be a more in depth look for this topic. For instance, some campaigns offer a perk to meet the team. This might signal legitimacy, as it proves that the team exists. Also, many campaigns offer a pre-order of their product as a perk. Legitimacy might be less important for these type of perks since people simply want the product. Campaigns that focus more on the company, such as musicians raising money for their album, might need more legitimacy for funders to donate.

Team Composition

Finally, it appears that a team of entrepreneurs is considered more legitimate than just a single entrepreneur. This makes sense, as there is usually more expertise present in a team which increases the chances of success for the company. Investors are more likely to invest in companies with high success chance.

Overall the article gives some interesting perspectives, however it did not include all the possible aspects that could affect legitimacy. Mollick (2014) mentions quality signals such as spelling errors, preparedness of the entrepreneurs and social presence of the team, these could all affect legitimacy as well. It would be interesting to see if legitimacy could be used as an overall explanation of funding behavior.

BrewDog Beer’s £25m crowdfunding appeal- Brand Community building at its finest

Earlier this week, Scottish craft beer brewery BrewDog announced that it would be returning with a new equity crowdfunding campaign to raise a stunning £25 million- shunning traditional financing methods and banks in the process. Dubbed “Equity for Punks”, BrewDog said it would be offering shares at £47.50 each with a minimum investment of £95, entitling investors to an lifetime discount on BrewDog beers and bars as well as the opportunity to attend the annual AGM (Annual General Meeting). Earlier in 2013, the company successfully raised £4 million from a similar crowdfunding bid from customers. BrewDog co-founder James Watt said that “Equity for Punks puts the people who really care about our beer in control and keeps the passion and integrity in people’s beer glasses.”

BrewDog’s latest bid is a brilliant move from a customer relations perspective. Although the primary aim is to raise the necessary cash to fund new projects and growth, the campaign is essentially bringing like-minded people together to create a dedicated brand community and allowing them to invest and be a part of the company’s future. The group of existing and potential investors embody what a brand community is: ‘a specialized, non-geographically bound community, based on a structured set of social relations among admirers of a brand’ (Muniz and Guinn, 2001). The already 14,500 strong community of shareholders share the company’s vision and associate themselves with the brand’s anti-establishment identity and culture.

The new equity crowdfunding campaign will allow the company to realise their ambitious future plans such as building a new brewery as well as a craft beer-themed hotel. However, the value from the dedicated group of investors who have an equity stake in the company will be just as great as the funds looking to be raised who can provide important suggestions and feedback for the brand’s future strategy. The ‘brand community’ of investors will also act as passionate brand advocates and it is in their interest to promote BrewDog and its values as their return on investment is dependent on the success of the brand.

From a consumer’s perspective, a close look at the numbers show that they must be realistic about their goals of their investment, as BrewDog has no near future plans to go public, and that it is hard to determine the true value of the brand. However, for many dedicated fans the lifetime discount and their legendary punk AGM that features some high-profile rock bands may be enough to entice them. As one BrewDog lover noted to the Financial Times, it is “more of a beer club than an investment… The AGM lasts about 30 minutes, followed by a six-hour beer festival.”

BrewDog’s latest equity crowdfunding bid by appealing to their most dedicated customers to bring together a passionate community of BrewDog beer lovers is a brilliant strategy to build a closer relationship with its customers and among them as well- a move that, if successful, is likely to be imitated by other brands.


Thompson, B. (2015) ‘BrewDog launches record £25m crowdfunding appeal’, April 22, Financial Times

Muniz, A. and Guinn, T. (2001) ‘Brand Community’, Journal of Consumer Research, Vol 27, No. 4, pp. 412-432

Raising capital – But which crowd to tap?

Imagine you are an entrepreneur and you want to raise money in order to set up a project or small business by means of crowdfunding: the practice of raising small amounts of money – funding – from a large number of people – the crowd – to finance a project, which happens most commonly via the internet (Schwienbacher & Larralde, 2010). There are many different forms of crowdfunding, and it is a maze for you to choose the right structure and funding focus. How to make the right decision of the path you are going to follow that is suitable for your business? Paul Belleflamme, Thomas Lambert, and Armin Schwienbacher (2014), have written an article that gives a valuable advice in making those kind of decisions, whereby they compare two types of crowdfunding.


Crowdfunding can take place in four different forms (or a hybrid of those): donation-based, reward-based, lending-based, and equity-based (Mollick, 2014). In this article, the authors focus on equity-based crowdfunding, and a pre-ordering structure (which is a form of reward-based crowdfunding), since those are the two dominant structures in the crowdfunding scene. With equity-based crowdfunding, funders financially support the entrepreneur in exchange for a share of future profits. With the pre-ordering method, the entrepreneur invites funders to pre-order the product, usually for a premium price, whereby the entrepreneur is able to collect the necessary capital for launching the production. In this case, the entrepreneur is able to price discriminate between two groups: first stage crowd funders, and second stage consumers. In order to make a decision between those two structures, the authors considered the economic factors that determine an entrepreneur’s choice of a particular form of crowdfunding and came up with a unified theoretical model that suggests the following:


An entrepreneur should choose for a pre-ordering structure in cases when the initial capital required is relatively small compared with the market size, whereas entrepreneurs should choose for a profit sharing structure otherwise.

Adding to this main implication, when  exercising a pre-ordering structure, the amount to optimally implement price discrimination between first stage and second stage supporters, may be constrained by the amount of funding that the entrepreneur needs to raise in order to cover the fixed costs. When this amount surpasses a threshold, the profitability of the project is reduced. For higher funding goals, equity crowdfunding becomes more meaningful for entrepreneurs when community/social benefits are associated with financing the project, since larger amounts of individuals will support the project, whereas the fraction of profits the entrepreneur needs to give up remains equal.


To apply those findings on real-world examples, I would like to highlight two cases.

Yoni – Last week I interviewed the founders of Yoni, a start-up company that produces organic cotton tampons and pads. The founders raised their starting capital on oneplanetcrowd.com under a pre-ordering structure. By means of perks, crowd funders could pre-0rder products for a premium price and in addition to the product itself they received a special thank-message or a t-shirt. Currently, the products are available for a lower price. Here, we see the typical path of first having initial, first stage supporters (the crowd funders) and later in the process second stage supporters (regular customers). When I asked about their choice for this pre-ordering structure, they said that this was the quickest and most convenient way to start producing their products, which is an operating decision. Besides that, their products are able to reach a large base of customers, which is in accordance with the article.



Donner – Another example, exercised in Rotterdam, is the crowdfunding campaign of the bookstore Donner. When the traditional bookstore was on the edge of its bankruptcy, former employees of the bookstore started an equity based crowdfunding campaign on symbid.com to raise financing, that led Donner to a go-around. Since a lot of capital was needed for this turn-around strategy, equity crowdfunding was most suitable. The community benefit of this campaign was high, since a lot of customers wanted to prevent the bookstore from closing its doors.



Considering those cases and the article, I think that both firms made the correct decision in tapping the right audience. Going back to the article, Belleflame et al (2014) address that when the project is driven by financing decisions, entrepreneurs should choose a profit-sharing approach, whereas when the project is driven by operating decisions, the entrepreneurs should choose for a pre-ordering approach. Reassuring this, both cases have chosen to the right structure, as it both led to success.



Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: Tapping the right crowd. Journal of Business Venturing29(5), 585-609.

Mollick, E. (2014). The Dynamics of Crowdfunding – An Exploratory Study. Journal of Business Venturing 29, 1-16.

Schwienbacher, A., & Larralde, B. (2010). Crowdfunding of Small Entrepreneurial Ventures. SSRN Electronic Journal.

Loan-based Crowdfunding : Money for Each Other.


Crowdfunding has become a popular topic for authors in both academia and journalism, as well as on this webpage. Commonly, crowdfunding platforms allows entrepreneurs to gain capital for their operations through either donations or by offering partial ownership of their companies, resembling venture capital. Over the last years, the number of participants in crowdfunding campaigns greatly increased. One of the explanation for the sudden popularity of this form of acquiring funds for one’s business venture is that commercial banks have become very reticent when it comes to providing loans for entrepreneurs and small businesses. While the bank has traditionally been the first party entrepreneurs-to-be turned to, the credit crisis and the subsequent stricter legislation installed by governments resulted in the situation that banks hardly provide any commercial loans below 500.000 euro.

While the rise of crowdfunding is thus partly explained as an answer to the changed world wherein banks are highly reticent to provide loans below half a million euro’s, the types of financing that are commonly collected through crowdfunding platforms, donation-based and venture capital-like financing, are rather different from the common financing type collected through a bank, the loan.

In response to this contrast, a young Dutch crowdfunding platform called Geldvoorelkaar (Dutch for ‘Money for each other’) introduced an alternative way of crowdfunding. Money is not collected by gifts or transferring parts of the ownership of the firm, but by requesting a loan. Loans can not only be requested by firms or people with a business plan, but also individuals who look to buy for example a car or new kitchen, but lack needed money needed for these purchases at the present moment.

Geldvoorelkaar operates differently than the well-known crowdfunding platforms. An individual or firm can file a request on the website of Geldvoorelkaar with the desired amount of the loan and the interest rate they are willing to pay on the loan. Geldvoorelkaar then checks the credit worthiness of the person or firm which filed the request. Apart from doing their own assessment on the risk of borrowing money the person or firm, Geldvoorelkaar assesses the creditworthiness of individuals and firms in cooperation with the Dutch credit assessor Graydon by a Probability of Default (PD) score and uses the Dutch Central Credit Information System to calculate a BKR-score, such that people considering providing a loan through Geldvoorelkaar can assess the creditworthiness and connected risk of the particular loan with three different, independent ratings. Geldvoorelkaar accept only the files with a PD score of B or higher. The maximum probability of default, as assessed by Graydon, allowed is 4.99%.

The way in investors can contribute is similar to the common crowdfunding platforms. Investors can choose the amount which they want to provide, and have full control of their privacy options. The default privacy option is an anonymous contribution. An important difference though is that when the requested loan amount is reached, it is not possible for people to contribute more anymore.

The loans made take the form of an annuity. When an individual or firm successfully collects its loan, every month it has to pay both the interest and a redemption sum, such that at the end of the term of the loan, the loan is fully paid back. This form greatly decreases the risk of default and provides investors with a steady income on their loaned money.

It is extremely interesting to see this new form of crowdfunding unfolding. People can invest in exactly those people and projects they believe in, with a clear indication of the risk through various ratings and their reward, through the interest rates. This puts the ordinary man back in charge of what goes on with its savings, as opposed to the opaque ways banks and trust funds use the savings of the consumer they control.

And on the other hand, I believe it is greatly promising to see that this new form of crowdfunding provides a solution to the problem that individuals and small firms are not able to get a loan at a bank. Overcoming this problem may very well turn out to be a great stimulus for entrepreneurship, innovation and, in the end, healthy economic growth figures. Earning money by providing some of your savings to an individual who wants to make an impact on your local society, how could one oppose such a beautiful thing!

Is crowdfunding changing the way we donate?

It is a recurring sight, collectors that ask for donations for one of the many charities in the streets or at your home. This traditional collecting technique has worked for many years and has proven itself as an effective strategy. However, small charities that are focussed on a niche have often trouble gathering sufficient funds. Their campaigns are also focussed on one of the many problems in the world, but don’t get the attention that they deserve.

The up rise of crowdfunding has created new possibilities for these charities, donating your money directly to a project off your choices has never been easier than with the many available crowdfunding platforms. Kickstarter and Indiegogo already had successful donation based crowdfunding campaigns such as “The Ocean CleanUp”, but more often than not, these platforms offer reward based campaigns that give you a varying reward for your pledge (1).

The success on these platforms created a whole new category of crowdfunding platforms that is solely based on the principle of donating your money to a project of your choice. One of these platforms is Razoo, which offers you the possibility to make a difference (2). The platform brings together charities or organizations that need funds for their projects (these projects can be focussed on Human Aid, Animals, Sport, Education, Etc.) and the donators.

Basically this means it is a two sided market, the difference however is that the donators are not motivated by money or rewards, they are often driven by philanthropic reasoning (3; 5). The CEO Lesley Mansford said that: “Razoo wanted to empower everyday philanthropists to show they care and provide tools to … help anybody who needs it, regardless of the cause – because not all needs are tied to a charitable organization.” The aim of these platforms is to provide peer-to peer benevolence for non-profit fundraising and become a significant category of giving in the future,” (4)

Since the beginning in 2007, the platform received a total of 870,000 donations which supported over 31.000 causes (4). This all leads to the fact that one crowdfunding platform was able to raise over $270 million for charity proves that they are becoming a significant player in donations (2). From this we can concluded that donation based crowdfunding is changing the way we donate, it has become easier to find projects or goals and support them compared to the tradition channels. However, from all the money that is donated a large amount stays within such a platform. For example: the website Razoo charges 4.9% of donations for non-profit causes and 7.9% of donations on personal fundraiser (6). This backs the question if using such a platform really favours the charity projects in the long-run or that these kind of platforms are a temporary trend for all involved.


1: http://www.theoceancleanup.com/

2: http://www.razoo.com/

3: Tsekouras, D. (2015) Consumer-Centric Digitial Commerce, “Why Funders do this”, slides session 4 (8-04-15)

4: http://venturebeat.com/2014/02/07/razoos-gamified-approach-to-fundraising-has-generated-200m-for-charity/

5: Eisenmann, T., Parker, G., & M. W. Van Alstyne (2006). Strategies for two-sided markets. Harvard Business School Publishing Corporation.

6: http://www.razoo.com/p/faqs_individuals