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Crowdfunding Services for Cooperatives

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Graham Public Seen by 78

Platform 6 has always been about creating a focal point for cooperative development, bringing together services, resources and support for people setting up and running co-operative businesses, especially in a digital context. For a while we've been looking at options around crowdfunding, community share issues and the like. Lots of cooperative organisations use crowdfunding approaches to good effect to raise funds - it's clearly a valuable and important part of the cooperative development landscape. And yet there aren't any cooperatively organised crowdfunding platforms out there that we are aware of.

Keen to gather ideas and input on the issues around crowdfunding for co--ops - what's needed, what works, what doesn't, and how it might work better if we're grow the co-operative economy.

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Graham Sat 15 Aug

One thing that a few of us have looked at is using Open Collective as a crowdfunding tool. In essence Open Collective is designed to let groups raise and spend money transparently without needing a bank account. Platform 6 is already set up as a fiscal host on OC, enabling the collectives that we host to use our bank account. But we've not used it yet for crowdfunding per se, where we might think of crowdfunding as tasing a given target mount in a month, for example. Would OC work in that context? How would it compare cost-wise?

R(U

Rory (as User) Sat 15 Aug

What about http://crowd.one/platforms/Microgenius - the site organised by Co-ops UK?

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Graham Sun 16 Aug

defunct

JM

John Merritt Sun 16 Aug

We created a product fo Credit Unions - a Cooperative Loan Fund Guarantee - but only had one Credit Union use it so far. The basic idea is that interested members use some of their savings as a guarantee against a Credit Union loan for the Coop or social enterprises business finance. It would be of more local interest but it may be something Platform 6 could add to a web page of Cooperative Development Finance options and try to get Credit Unions to register with Platform 6 and encourage them to recognise that they are a Coop with a potential role in coop development?

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Graham Sun 16 Aug

This seems to be about debt finance @John Merritt ? My focus here is elsewhere. I'm also unclear as to what the business model here is? Feels like a steep uphill climb with little hope of a return on that investment? Maybe I've misunderstood?

JM

John Merritt Sun 16 Aug

The loan is debt finance to the Coop or social enterprise that borrows. However, the crowd are the local savers who put up some of their savings as a guarantee against the loan, making it safer for the Credit Union, giving interested in supporting a business a means of supporting it, without just donating. The crowd could be workers in the business, family and friends or supporters (which is the the three Crowd Fund targets). If all goes as it should, the guarantee will just sit in the Credit Union account and get interest as the business pays back the loan.

It isnt grant money, which I know is one Platform 6 objective, but in the video we created to promote this, Chris Funnell spontaineouly described it as Cooperative Crowd Funding. It maybe donated money or crowd investments could match this, I am suggesting the Guarantee Fund as a additional, rather than central model for Platform 6. Another in that related spacvwe is the Mutual Credit Network, which similarly, has potential but needs working through much more.

I can see I havent really engaged with the relationship between technical creation of a Crowd Fund and the conceptual practicalities of what works and what doesnt and I do have thoughts and experience having used Crowd Funder and some community funded projects.

Thhe big issue I find is getting the crowd.

I did work with someone who wanted to set up a coop or social enterprise who described one of his organisations as a Crowd Sourcing organisation it did make me think about this process. I think the personalities, the project, the rewards and the social media activity are all important. Community Shares, Loan Stock and ethical reward based investment are similar, but not necessarily for the same crowd. Indeed, you might get different crowds with the same investment vehicle.

LS

Leo Sammallahti Tue 18 Aug

Would love to hear more, would you like to be interviewed for a blog post about this? I have been trying to think of rank-and-file membership organising ideas on how big and old coops can support small and new ones, and looking for examples. This is exactly the sort of real life examples that I have had difficulty finding.

JM

John Merritt Tue 1 Sep

Hi Leo, I would be happy to talk it through if you want to. John@assist.coop

OS

Oli SB Tue 18 Aug

I'm in touch with the people behind https://www.coenergy.app/ which is a platform built to assist crowdfunding, stakeholder coms and governance for co-ops... it's design for energy co-ops but could easily be repurposed / used for other types of co-ops

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Graham Tue 18 Aug

Aah yes, I had a good chat with someone there a while back. A potentially important project with lots of good ideas. As I recall it's built on a commercial closed source platform so I'm not sure how sustainable that might be?

JD

Josef Davies-Coates Tue 25 Aug

Looks like it was built using this proprietary low-code platform https://www.outsystems.com/

AW

A Waterhouse Thu 20 Aug

Why not work on developing the solidarity fund concept further in partnership with P6, this generates debt free working capital in a steady flow, for priming funds, to initiate democratic enterprise of various types fit for the given task. In addition work with investment coop like Rootstock, Community Capital ICOF, or a P6 variant if resources allow, these can vet applicant enterprise plans. Perhaps consider a micro pension, to generate patient capital. All this would need an incubatory process to have investment ready proposed enterprises. Co budgeting/investment processes can be incorporated . OK ideas are easy doing a challenge.

JD

Josef Davies-Coates Wed 26 Aug

Yeah, it's a shame Emily who started Microgenius sold/ gave it to CUK instead of to me! :P

But it was only ever an expensive white label of the crowdcube platform anyway.

And yes, it's a bit bonkers really that there is no co-operatively owned crowdfunding platform. Most people seem to just use Crowdfunder.co.uk these days (or Ethex).

In Spain they have http://en.goteo.org/ for funding open projects. It's open source, so could conceivably be forked into a crowdfunding site for co-ops.

Also in Spain they have https://coopfunding.net/ (a project of the Catalan Integral Co-op, I think) which is just a WordPress site with a (now defunct) plugin and theme.

NBC

I was explaining to a community shares client the other day why so many share offers have used Ethex or Crowdfunder. These are the benefits users would seek and a co-op version should seek to offer. An additional benefit a co-operatively owned crowdfunder could provide would be either cheaper fees or perhaps similar fees but an annual profit share dividend and/or say in where profits are spent - or even invested! Member users then have a natural incentive to "sell" the platform to other similar projects. I'm convinced crowdfunder's success is partly based on cheerleaders within the movement who earn fees as "coaches".

  • a public face which will be seen by other users of their platform not just people you promote your offer to

  • a progress indicator which shows how much you have raised so far - can be useful for encouraging others to invest as the "herding" factor is well established contributor to successful offers.  You can update this on your own website of course

  • ability for investors to easily share "I've invested in...." on social media

  • management and processing of application data: who has applied for shares - effectively your member/share register

  • Escrow - they only release the funds if the offer is successful i.e. reaches its minimum

  • You don't have to set everything up for a one-off share offer

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Graham Thu 17 Sep

Thanks Nathan. Really useful list of must-haves.

MSC

Cheers @nathan I think that an embed code widget for client sites would be good for the progress against target indicator. I'm not sure what you mean in the last bullet point.

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Graham Thu 17 Sep

Widgets-are-us. In the last point I think Nathan is talking about the benefit of using a pre-existing platform/service and not having to build it yourself on your own co-op's website.

NBC

Yes, @Graham that is exactly what it means. Hosting on your own site also means you miss out on the first bullet point, accessing a wider audience. As @Alex Lawrie has pointed out on numerous times, the advantage of going to Ethex or Crowdfunder is that they have a massive mailing list of existing sympathetic investors.

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Graham Fri 18 Sep

I'd love to see some data about this crowd of sympathetic investors.

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Oli SB Fri 18 Sep

me too - I always here this argument: "use a crowd funding platform because they have thousands of members just waiting to back your project" .... but in reality, I'm not sure that's true, or whether most crowdfunding platforms make any effort to support more than a TINY percentage of projects... so I'm with Graham here - I will struggle to believe it until I see some data

AL

Alex Lawrie Fri 18 Sep

Genuinely true. When we list on Ethex (I've been involved in Somerset CCLT and ELC offers, and recently observed Co-Cars raising £600k) it is very evident that after Ethex mailshot their 11,000 subscribers there is a surge in new investment. The number of local people we successfully signpost to Ethex is not nothing, but it is small beer by comparison.
Our own list - Co-op Angels - works in a similar way, but it is only 6,000 people and mostly snailmail. Of course the response rate for physical mailshots is much better, so you might actually prefer those; but we do want to convert to email where possible.

LS

Leo Sammallahti Sat 19 Sep

How can I join and get involved with the Co-op Angels?

JR

Jeff Regino Sun 20 Sep

@Alex Lawrie same question as Leo: can people join Co-op Angels and is it open to those outside Europe? Thanks!

SWS

In regard to worker (and possibly worker-led community) coops, I would see Solidfund as a potential base for simple donation crowdfunding/distributions, but that will take an expansion of Solidfund and improvements in its technical architecture. I'm probably going to propose an in-depth Solidfund symposium over a day or two preceding the next Worker Coop Weekend in May, possibly at Selgars Mill.

MSC

P6 has been involved in interesting conversations with Development Co-op and others around this over the last few days - will update at the CD Forum tomorrow.