Difference between revisions of "Reward-Based Crowdfunding"
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= Overview<br/> = | = Overview<br/> = | ||
| − | + | The idea of result-based crowdfunding is to raise money using online platforms where interested funders can make a financial contribution. In return, the funders might get a small nonmonenatary reward such as mentioning their names on the company website, company products such as Tshirts and the funded technology itself eg. solar lights. The funders are usually motivated by altruism<ref name="The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies</ref><ref>Energy4Impact (2020): https://www.energy4impact.org/file/1996/download?token=xiKti84u</ref>. Crowdfunding began as a wider phenomena in USA and Europe since 2008 in reponse to the economic crisis<ref>Candelise, C. (2015). Crowdfunding and the Energy Sector. https://www.researchgate.net/publication/285397036_Crowdfunding_and_the_energy_sector</ref> and is now a popular funding mechanism. The commonly used crowdfunding platform include: Indigogo and Kickstarter. | |
| − | < | + | Results-based crowdfunding is mostly used by companies who are in their pre-seed to seed stage and where there are limited grant commercial and grant capital<ref>Energy4Impact (2020): https://www.energy4impact.org/file/1996/download?token=xiKti84u</ref><ref name="The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies</ref>. It is used to generate fund for a particular projects such as R&D, developing new prototypes and manufacturing new products<ref>Energy4Impact (2020): https://www.energy4impact.org/file/1996/download?token=xiKti84u</ref>. |
| − | + | E.g, off-grid companies can organize crowdfunding for buying the technologies. Off-grid solar companies that have done crowdfunding include: Okra Solar, Pollinate energy and solaris off-grid <ref name="The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies</ref>.<br/> | |
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= Benefits = | = Benefits = | ||
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== Gravitylight - Kenya == | == Gravitylight - Kenya == | ||
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== Okra Solar - Cambodia == | == Okra Solar - Cambodia == | ||
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| − | ''Okra Solar is an Australian company piloting a "''plug-and-play smart controller”. In December 2016, the company raised USD 45,0000 via the Austaralian crowdfunding platform Pozible. They used this money for seed funding and to build a prototype. Their fund raising campaign also received more than USD 10,000 match funding from DFID'''' ''<ref name="The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies</ref>.'' | + | ''Okra Solar is an Australian company piloting a "''plug-and-play smart controller”. In December 2016, the company raised USD 45,0000 via the Austaralian crowdfunding platform Pozible. They used this money for seed funding and to build a prototype. Their fund raising campaign also received more than USD 10,000 match funding from DFID''''''<ref name="The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies</ref>.''''' |
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Revision as of 09:26, 28 May 2020
Overview
The idea of result-based crowdfunding is to raise money using online platforms where interested funders can make a financial contribution. In return, the funders might get a small nonmonenatary reward such as mentioning their names on the company website, company products such as Tshirts and the funded technology itself eg. solar lights. The funders are usually motivated by altruism[1][2]. Crowdfunding began as a wider phenomena in USA and Europe since 2008 in reponse to the economic crisis[3] and is now a popular funding mechanism. The commonly used crowdfunding platform include: Indigogo and Kickstarter.
Results-based crowdfunding is mostly used by companies who are in their pre-seed to seed stage and where there are limited grant commercial and grant capital[4][1]. It is used to generate fund for a particular projects such as R&D, developing new prototypes and manufacturing new products[5].
E.g, off-grid companies can organize crowdfunding for buying the technologies. Off-grid solar companies that have done crowdfunding include: Okra Solar, Pollinate energy and solaris off-grid [1].
Benefits
- Allows for pre-seed and seed funding for companies
- Faster than applying for other grants.
- Opportunity to engage and build network of supporters which can later be tapped for building product awareness and getting new talents [1].
Challenges
- Mostly suitable for early-stage companies or a specific project/outcomes.
- Must leverage existing network and have innovate solutions. Entrepreneurs without existing network and an innovative idea that appeal to the funders might be at disadvantage.
- Cost of reward needs to be considered when they are offered to the funders.
- Difficulty to find the right platform - international companies might not be familiar with the local platforms and the international platform may have limited payment options (e.g only credit card) which might not be feasible for all the contributors [1].
Case studies
Gravitylight - Kenya
| Gravitylight | |
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GravityLight is a low cost light (15 lumen LED) and is powered by kinectic energy i.e you hang the light with a bag and then fill the bag with heavy objects, as the pulley does down it creates light. In 2013, they raised USD 400,000 in 40 daysvia reward based crowdfunding and the reward ranged from a "thank you" on their website to gifting the light (depending on the contribution). In 2015, the company started another crowdfunding on Indiegogo. The campaign funding was matched with funding from Ben & Jerry. They raised USD 400,000 to lauch commercial pilot in Kenya. In 2018, they raised again USD 115,000 on Indiegogo. [1]. | |
Okra Solar - Cambodia
| Okra Solar | |
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Okra Solar is an Australian company piloting a "plug-and-play smart controller”. In December 2016, the company raised USD 45,0000 via the Austaralian crowdfunding platform Pozible. They used this money for seed funding and to build a prototype. Their fund raising campaign also received more than USD 10,000 match funding from DFID'[1]. | |
Further Information
- Financing and funding portal on energypedia
- Role of Crowdfunding in Raising Finance for Energy Access Businesses and Projects
Reference
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies
- ↑ Energy4Impact (2020): https://www.energy4impact.org/file/1996/download?token=xiKti84u
- ↑ Candelise, C. (2015). Crowdfunding and the Energy Sector. https://www.researchgate.net/publication/285397036_Crowdfunding_and_the_energy_sector
- ↑ Energy4Impact (2020): https://www.energy4impact.org/file/1996/download?token=xiKti84u
- ↑ Energy4Impact (2020): https://www.energy4impact.org/file/1996/download?token=xiKti84u
