Loomio
Sat 15 Aug 2020

Crowdfunding Services for Cooperatives

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Graham Public Seen by 87

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 2020

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?

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Rory (as User) Sat 15 Aug 2020

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

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Graham Sun 16 Aug 2020

defunct

JM

John Merritt Sun 16 Aug 2020

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 2020

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 2020

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.

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Leo Sammallahti Tue 18 Aug 2020

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 2020

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

OS

Oli SB Tue 18 Aug 2020

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 2020

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 2020

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

AW

A Waterhouse Thu 20 Aug 2020

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 2020

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

Nathan Brown (Co-op Culture) Tue 8 Sep 2020

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 2020

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 2020

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

Nathan Brown (Co-op Culture) Fri 18 Sep 2020

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 2020

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

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Oli SB Fri 18 Sep 2020

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 2020

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 2020

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

JR

Jeff Regino Sun 20 Sep 2020

@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.

DF

Dave Fuller Mon 23 Nov 2020

Hi all, I'm new to the group so apologies if I do a little bit of digital blundering around. I work for Repowering London, the Community Energy organisation that CoEnergy (https://www.coenergy.app/) was developed in mind of. We really love CoEnergy but unfortunately the platform as it currently exists is going to be retired next year for a few different reasons.

Rather than losing the amazing work that Andre has put in creating the platform we're planning to develop CoShares, based on Andre's research and code. The aims are to create a platform that:

  1. Is simple to use for the end user

  2. Reduces and removes administration tasks for co-ops

  3. Is an affordable option for small co-ops

  4. Can become financially sustainable

Repowering isn't interested in owning a platform, so I was excited to learn about this group as it seems like we may have similar aims.

We've got a tight timeline, we dont' want to be without our share register so hope to have a new platform in place by summer 2021.

I'd be really interested in the thoughts of this group. I don't want to recreate the wheel, so if anyone's already doing something like this I'd love to get involved (yes, I know about Crowdfunder and Ethex, and while both platforms have lots of positives they don't do what we want, happy to have that discussion off-list). Alternatively, I've got to make something happen so would anyone like to get invovled?

cheers

Dave

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Graham Mon 23 Nov 2020

Hi @Dave Fuller and thanks for joining in. I had a call with Andre a year ro more ago now, and I agree the work that he has done on the Coenergy app is impressive. My concern with it is that from what I understand it is built on and is dependent on a low-code proprietary platform. That will most likely mean cost and potential risk issues for the future, though you may have these issues well in hand. I think it's fair to say that my preference is for open source, and ideally free/libre open source, as it provides transparency and tends to better quality. That said, we are also very keen to collaborate rather than compete.

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Dave Fuller Mon 23 Nov 2020

Hey @Graham, this is one of the reasons we're looking at redeveloping what's been done. Happy to discuss doing something that's open source, tbh I don't know what the pros/cons are in terms of cost but from our point of view we're less interested in IP than we are something that's great and works for as many people as possible

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Norman Tue 24 Nov 2020

Sorry I'm late to this discussion but this approach is one I am trying to promote for small-scale housing co-ops in Ireland. as far as I can see it does not involve any special mechanism if it is within the same Credit Union. Am I correct? Credit Unions in Ireland are sitting on millions which thay are unable to lend, while there is a housing crisis.

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Graham Sun 29 Nov 2020

Hi Norman. Not sure what you mean when you say "if it is within the same Credit Union"?

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Norman Sun 29 Nov 2020

Hi Graham, I meant that if all the savers, guarantors and the co-op itself are members of the same Credit Union it is easily arranged. Between different Credit Unions may be harder?