Safety in Numbers? Crowdfunding and Competitive Intelligence
Jinfo Blog

By Tim Reynolds

Abstract

In the years since crowdfunding started generating millions in funding, writers have covered crowdfunding projects either as success stories like Amanda Palmer's $1.25 million project, or they give marketing advice. This article shows how crowdfunding platforms (CFPs) such as Kickstarter and Crowdcube, reward or equity-based, could be a source of competitive intelligence.

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Introduction

In 2006, crowdsourcing met microfinance, creating crowdfunding. According to a 2012 Crowdfunding Industry Report by Crowdsourcing LCC, there were around 536 crowdfunding platforms (CFPs) by the end of 2012 with estimated funding through CFPs up to $2.8 billion. The most common CFPs are reward-based whilst the fastest growing are equity-based platforms. These different platforms provide varying degrees of intelligence information as well as complications. The rest of the article introduces two of the common platforms and how to data mine them.

The US-based Kickstarter is a reward-based crowdfunding platform which claims to be the "world's largest funding platform for creative projects" and through its games, design, and technology categories, is becoming a site where innovative creative products are introduced. Kickstarter provides a page to place a video and background information. Next, funders set funding goals, with up to 60 days to meet them, and a funding matrix which sets rewards for donations. This format creates an assortment of open source data like pricing, demographic, demand, cost and revenue information for mining. It claims to have created over $500 million in pledges since its launch in 2009.

According to DailyCrowdSource.com, one of the equity platforms aka "business crowdfunding" sites to watch is UK-based Crowdcube. Currently only offering itself as a platform for UK businesses, the layout is similar to Kickstarter with two major differences. First, only qualified investors can see beyond the basic information. Second, instead of rewards, a person receives equity in the company with the amount set by regulations. It claims to have successfully funded projects to the tune of over £8 million to date and is aimed at "investors who are sufficiently sophisticated to understand [the risks of illiquidity, lack of dividends, loss of investment and dilution]".

Developing Trends Through Crowdfunding Sites

One example is the Pebble Kickstarter project. According to the Kickstarter site, Pebble is a simple watch base design whose interface can be customised and which runs on both Apple and Android platforms. It uses Bluetooth to push information from a smartphone to the watch's display. First, we can gather market size. In this case it was worth $10.25 million. The site claims around 69,000 backers but a closer look shows that 86,000 Pebbles were sold in under a month. Next, we have a controversial price point. Producers claim it will retail at $150. Yet, with over 50,000 people funding at $115-$125 levels it seems this is a better price. A less obvious bit of data is demographic information gathered from funder list. The more information funders give in their profiles, the more successful this information gathering will be.

Crowdfunding can be a new source of intelligence. According to the Crowdfunding Industry Report, there were over a million projects around the world in 2011, making this a complex proposal. To succeed, an analyst needs to design a monitoring system that identifies trends such as demographics and pricing information early enough to aid decision makers.

For more information on crowdfunding, FreePint Subscribers can log in to view Tim's article "Gleaning Competitive Intelligence from Crowdfunding".

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