Exploring Crowdfunding: Concepts, Models, and Opportunities with Prof. Rotam Shanour (Full Transcript)

Speaker 1: Today we have Professor Rotam Shanour with us from University of Agder, and today we are going to learn about crowdfunding. Share the concepts, models, opportunities, and some of the guidelines. So here the floor is with Professor Rotam Shanour.

Speaker 2: Thank you Muneeb. We're going to discuss some of the interesting developments in recent years, otherwise known as crowdfunding. Crowdfunding basically means collecting small sums from many people in order to raise funds to fund the project. This is nothing new. It's been existing in history for quite a long time, but thanks to internet, we are able to do this to a greater scale, scope, and speed than ever before. So what's the benefits with doing it this way? Well, first of all, more people can get funded. More entrepreneurs, more artists, more social activists, sports people, whoever you want who might need the funding but struggle to get it elsewhere can reach out to the crowd to raise funding. At the same time, more people can participate in the funding. So it doesn't depend only on traditional sources, but everyone in the crowd can contribute a small sum for somebody's project. As money is raised, it's not only about the money. It's also about validating the idea, especially if you're an entrepreneur, that there is demand for it, that people think it's a good idea. And it goes beyond just liking an idea on Facebook, but actually putting a little money behind it. In addition, because this is going through social media, entrepreneurs and artists are able to fine tune their concept. They get feedback, they get ideas, they get questions that can help them revise, improve, and further develop their products or services. At the same time, the same people can also recruit their first customers. Anybody who has worked in sales knows that this is quite difficult, especially if you're an unknown brand or unknown company. But thanks to crowdfunding, you are able to recruit these first customers simply because they either want to try out and experience new products, or because they want to support that person. They want to support the development of that specific product. In the longer term, it means that more people can get more project and people can get funded. More people can participate in funding. And as we will see later, because most of these volumes are associated with investment, there is also a possibility of certain reduction of inequalities in society, where more people get better access to finance, investment opportunities, and business creation. At the core of this is basically a win-win game between three players, a platform, a campaign creator, and a backer or supporter. The platform is basically the website or the application on which the interaction between campaign creators, fundraisers, and backers takes place. And they serve as trust facilitator. They provide the technology, the payment processing. They do the filtering of the different campaigns, and they aggregate the community of potential supporters. The creators are basically the fundraisers, those who need the funding for their project. So they advertise their campaign, its purpose, objectives, what do they want to achieve? How much money do they need? Who is behind the project? And try to convince people to contribute funding to their campaign. The backers or supporters are those, anybody in the crowd who might want to support, provide the funding to that project. It could be in the form of donation, consumption or purchase of product, or it could be as an investor in a project. But the bottom line is that everybody gains from this interaction. The creator get the money that they need. They get followers. They get customers. They get the funding without investment in a platform of their own, without investment in technology, with payment processing. Everything is sort of provided by the platform. From the customer perspective, they have a greater say in their future consumption. They influence product development. They have a sense of patronage, as well as they are provided with opportunity to give feedbacks on how they want to see products developed into the future. The platform, of course, depends on this for its commercial viability. They earn money from these transactions through commission fees or on successful campaigns or through various additional services they might be offering. Basically, everybody gains. ♪♪