The Story Behind NZ’s Only Crowd-Funding Platform — PledgeMe
Crowd-funding is the new buzzword in the investment world. With the recent signing of the JOBS Act in United States of America, a new era has started and opened up a new source of funding for small companies and startups. The belief — and hope — is that this type of funding will open up more opportunities for capital to flow into startups. That, in turn, will help grow new companies and create new jobs.
Pledgeme – New Zealand’s crowd-funding platform – launched in Feb 2012. I caught up with Anna Guenther — COO, PledgeMe — to discuss:
- The PledgeMe story.
- Why does NZ need an exclusive crowd-funding platform?
- Is Crowd-funding here to stay?
- Exclusive tips on how to get your project crowd-funded?
- Anna talks about her 3 favorite and weirdest rewards from PledgeMe projects — including an offer to start a religion of in her name and get worshipped.
Listen to it yourself and enjoy the inaugural TranscribeMe Podcast.
Anna: Thanks. Good to be here.
Chirag: Awesome. Anna would you like to quickly do an intro about, just about a brief background about where you started from. Not about PledgeMe, but before that, what’s your history and how you got interested in entrepreneurship and things like that.
Anna: I guess my background really is inventing and project management. I’ve had a few different careers along the way, working in the States, New Zealand, China, Hamburg, London.
Chirag: Oh, that’s pretty exciting.
Anna: Yeah, but I came back and I’ve been working on my Masters of Entrepreneurship for about 2.5 years now, and as you know one of the things we had to do was write a thesis, so my thesis was based on crowd funding, so I co-founded a crowd-funding website for New Zealand called PledgeMe.
Chirag: That’s awesome. It’s amazing to see industry trends like crowd funding, crowd sourcing gaining traction with NZ startups like PledgeMe. So what about the team, like how did this all come about. Where did this idea started from and why did you see the need for PledgeMe because there are a lot of other companies doing something similar globally, so, yeah, so let’s talk about the team first and then dig deep into it.
Anna: So there are two of us on it on it, at the moment, Camilo and myself, we’re the co-founders on the tech and, sort of, business development sides. We’ve also got a group of brand ambassadors that we have around the country working on building the profile and talking about what we’re doing and also connecting with the creatives, because it’s not just, really, you know, us and the back end, it’s really that talking about how it’s going to help people out and making people aware of the opportunities that crowd-funding can provide. Yeah.
Chirag: Do you want to quickly explain, because a lot of people, although I believe a lot of people probably know what crowd-funding is
Anna: If they listen to your podcast.
Chirag: We’re in the space of most of people knowing, crowd-sourcing being the trending topics these days, but yeah, like, what is crowd-funding and how does it different from the current models and why, you know, why should we do crowd-funding?
Anna: Crowd-funding started in 2008. the main front runners are Sellaband and Kick Starter. The idea really is instead of going to one person to fund a project you go out to a crowd and say, hey, all I need is a little, if you give me $10, $20 or whatever you can really make my project happen so for us at the moment, products are really in the creative and technical space but the applications are a lot wider than that and it really is you set a trend. There are over 300 crowd-funding platforms now. 300. 170 started last year. We were one of them, but the really thing behind starting a crowd-funding platform in New Zealand was there wasn’t one and it was really a noted absence. Yes, there are these global big hitters like Indiegogo. But my thought was crowd-funding really isn’t about being global which probably is like dirty word to say, but you don’t crowd-funding is about community, it’s about your crowd, it’s about connecting it to people you know and it’s easier at a local level than global level, you know, you want to make those connections both online, but build it sort of offline as well. you want that community. And we find, sort of the New Zealand angle’s working well for that.
Chirag: That’s really interesting because when you think about it from a TranscribeMe perspective, you know, we can’t go speech to text and use crowd-source transcribers, so when we think about crowd-source it’s global. It’s like, it’s the opposite because we want to take people from all over the world and we have different accents to cater to and that works really well for us and from your perspective it’s interesting to see that you’re completely around the model.
Anna: I think the thing is that crowd-sourcing and crowd-funding are, it does have global application and I think that you know, when I say that we’re focusing local it doesn’t mean that we’re focusing, our people just crowd-fund locally. They are going to their networks here but some of them do have networks overseas. They are, I think we’re finding at the moment that between 10 and 20% of our pledges are coming from overseas.
Chirag: Really? That’s amazing. What about the projects are the projects coming from overseas as well?
Anna: They’re local, so that’s where the focusing is really building the creating community in New Zealand. Yeah, it’s coming from all over. It’s crazy because what is it, Kea’s last stat, 700,000 Kiwis are living overseas. So it’s a lot of those but it’s also just New Zealanders. They’ve been everywhere, so they have those bases overseas and there’s people pledging from all walks.
Chirag: So is it always Kiwis pledging or is it like other nationalities as well.
Anna: I think it’s mixed.
Chirag: That’s really interesting because apart from the crowd-funding its also raising New Zealand brand image, because New Zealand usually is like a small place and nobody really knows what’s happening there. So that’s pretty incredible. I’ve heard a lot about PledgeMe, but we’ve never had time to sit down and talk about it, so I think this is a great time. So could you please explain, like, the simple step by step process and how exactly it works so that you know there already artists or musicians listening to this show they can understand the process and how it is different from other ways of funding the projects.
Anna: From filling out a grant application. Well yeah, so basically the idea is that you’re creative or you’re something with a project that you just need a set amount of money to get started and you have a deadline for when you want to get started and you come to us and you just post it and this is my project description and this is how much I want to raise, and this is what I want to do with it. And we go through that process of approving it and once it’s approved you go in and you say, so here’s my project, here’s a video of me pitching my project. We find videos are really important because it really helps you engage with your crowd.
Anna: You set up a tiered reward system, saying where for $10 you get a copy of the CD in making, for $20 you get a ticket to my concert and you just say, yes, so I need $2000 to make this happen and I want to try and raise it in 30 days. And so that’s it, then you’ve go to your crowd and say, make it happen.
Chirag: You think it’s really hard for them to get the traction they need because there’s so many websites asking for money, and different people pitching for the project so it’s quite crowded I believe at the moment so how do you differentiate yourself?
Anna: It’s not crowded in that way, so once they’ve come to us and they’re using our platform it’s really them going out and talking to their crowd. It’s them selling it to their family, their friends and their fans, to sort of validate and recognize what they’re doing, so they’re really the people that are going to fund, you know, the first funder is probably going to be your mother, your father, and then you know it’s going to be your friends and it’s going to be your fans, I think the hardest thing for crowd-funders is really taking that first step and getting themselves out there and saying this is what I’m going to do it and this is how I want to do it and now I’m going to talk to my friends about it. We do see sometimes people are just a little bit too scared to sell themselves and that’s when you, sort of, see it not working.
Chirag: I think it’s one of those inherent Kiwi things. We’re not so good at selling ourselves or pitching ourselves, compared to Americans who are louder.
Anna: I think it’s it partially that but I think it is also, often the creatives, well not often, but sometimes the creatives are making this pieces of work and making this art and they’re making this, but often they’re behind the scenes on it, so they’re not selling themselves.
Chirag: They’re not marketers, they’re creatives.
Anna: Right, which is often different from bands, or things like that that are often on stage, but like film makers and artists, it’s not really their normal skill set. But I think that’s a mostly good thing as well because it’s really engaging, you’re seeing the person that’s making these things and
Chirag: It’s more honest, it’s more authentic.
Anna: Yeah, it’s more authentic. Yeah, but it’s funny though because one of the hardest things it to get people to make a video to pitch what they’re doing. Getting a filmmaker to get on video is really hard, when you think they have the toolset to do that, but they really don’t want to. But one of the kick starts to that I’ve read recently, it’s 114% more likely to get funded if you have a video.
Chirag: Really? That’s a pretty amazing statistic.
Anna: Yeah, we’re seeing that as well, like you know, having a video makes it more likely and really making it about you as much as about the project, which is sort of similar to business, you know, it’s as much about you and the team as what you’re doing.
Chirag: I think videos just take your engagement to the next level. No matter how good a copy editor you are. The big deal is the next level I think. So just with regards to some of the projects you’ve gone through recently. I’ve read a lot about PledgeMe, you guys have raised about $270,000.
Anna: We’ve just hit the $300,000 pledge mark.
Chirag: Wow. Awesome. Well I’m sure that must be an expensive one.
Anna: Of course.
Chirag: That’s $300,000 and what the time period, is it 6 months, one year?
Anna: So we re-launched in Feb and most of the money pledged has been 2012.
Chirag: 2012. Woah.
Anna: So we re-launched in February. We had some Beta testing website up and we were putting some projects through 2011, but so the re-launched and the redesign was in February. I think we’ve just hit our 56th pledge project, successful project, yeah, so it’s interesting to see the sort of our stats are really in line with what we’re seeing globally, so 30% is in the music industry, 25% in the film, sort of, breakdown.
Chirag: And do you find that there are some characteristics of the projects that get listed and become successful or are there some, sort of, trends, if you did this stuff you’re more likely to get funded, or are there any tips for people who are going to create projects for them to follow.
Anna: I think the main thing is coming in with a pre-existing crowd, so you know you have the family and the friends, the fans supporting you. And then making sure you make it engaging, it’s not just about the project, it’s about you having a video, having some quirky rewards. Yeah, I think my favorite one, someone pledged $1000 to have a religion created around them.
Chirag: A religion. Are you kidding me?
Anna: And the band and this was a crazy band promised to worship in the house of whoever created the, whoever pledged $1000.
Chirag: I would have loved that.
Anna: Yeah, that was awesome.
Chirag: So did that actually happen?
Anna: I haven’t had an update from the band. I heard that they’ve just launched their EP last week, so I should get in touch with them and see. If they have any photos of that that would be awesome.
Chirag: Yeah, and how did they start a religion. I’d love to see interview those guys. That would be a really good learning for me. But that’s pretty incredible, you know, awards like that, I can see why they would go viral and probably get a lot of traction because people would probably think this is nonsense and what is this. I so think that’s a pretty big learning that your projects cannot go viral by themselves. You have to do a lot of work, you have to create this crowd. It’s hard work, it’s not easy but it’s doable.
Anna: It’s totally doable. It’s not easy but I was re-reading some of the interviews that we’ve done successful project creators last night and some of the feedback is really that it’s humbling, the support that they get, and people come out of the woodwork and say, yeah I’ll give you $100. it gives you pre-existing stakeholders and you get that sort of validation. I think is really important, it’s more than just the money, it’s the support and that sort of saying we believe in you.
Chirag: I think it’s emotional when people say I want to give you money for making my project successful. That’s a lot more than just saying give me the money. And I think that’s probably a bit part of what drives you as an entrepreneur I guess.
Anna: Yeah, definitely. We definitely see what we’re doing. It’s not just adding financial value, it’s social value. There’s balance there too.
Chirag: I think it’s pretty important with the problems which we face as a society these days. We’ve got to solve the rare problems rather than just, hey this is my product xxx how much make the money out of it. Can you give us some examples of, you know, what projects, the more successful pledge projects to date? Yeah, I’m sure it’s a pretty hard job to pick just one. I’ll put you on the spot.
Anna: Just one?
Chirag: Maybe three.
Anna: Okay, so the biggest one funded, to date, was $21,000 for a documentary on curling. Curling in New Zealand, you know the sport curling? So they made a documentary out at May’s Beach, just down. $21,000 yeah so they already made the film, so they could go over to Edinburgh and do other film festivals overseas, so they raised $21,000, which is our largest project to date. Another one, my favorite, was this little one, this girl she just wanted to go to an illustration course, I think she must be a university student, she had no money, so she just wanted $250 to go on this course.
Chirag: That’s it? $250?
Anna: $250. So she said I’ve only got 4 days to raise it. She went online, she raised the money in 12 hours and it was just, yeah.
Chirag: So guys if you’re online and you’re at university or school you know where to go.
Anna: It was just a short course. It was just cute though, she was saying for $10 she was saying I’ll do an A6 illustration for you.
Chirag: That’s an incredible story.
Anna: It was just a little thing but it was really sweet. And yeah, my third one would be
Chirag: What about the religion guys, no?
Anna: I like those guys, they’re good sorts. I think one of the other ones, the fastest large project we had was a community project we had to build out website somewhere with a New Zealand focus, so petition signing and they wanted to raise $10,000 in 5 days. They managed to.
Chirag: That’s pretty amazing. 5 days.
Anna: Yeah, so $11,000 in 5 days.
Chirag: They must have done a big push.
Anna: Oh my gosh. Watching the load on the website, the final hour was pretty scary.
Chirag: Take it easy guys.
Anna: They managed to raise 60% of their funding in final 4 hours, or 5 hours.
Chirag: How does it look watching your bank account going up like in 4 hours to , do you see the bank account. How does that process work?
Anna: So we don’t get, we don’t charge credit cards until the deadline goal is met, so it’s only if a project meets it goal that people are charged, but no I do have an automatic feed to my phone watching the pledges coming through and it was fully watched. Stand up, stand up. It was quite cool, especially seeing the crowd that’s coming with these projects as well, like we’ve had quite a few famous people pledging on projects. We’ve had a lot of creatives themselves who are probably have little bit more money now are giving back. Which is quite cool to see.
Chirag: Have you got any like new Zealand famous personalities, maybe backing, not backing but do a project at PledgeMe.
Anna: I’m not sure if you’ve heard of Lawrence of Arabia. Duncan Sarkese wrote Boy, not Boy sorry he wrote Scarves and they have Jemaine Clement in that project as well, so they were funding for a radio podcast.
Chirag: Funding for a radio podcast.
Anna: Yeah they wanted to do a podcast about Uncle Bernie’s Botanarium, just a random quirky story.
Chirag: How much money do you need for doing a podcast.
Anna: They raised, I’ve heard, $7000. These guys are putting a lot of different things into it, live music, original sound track and they’re trying to make that now, so raise $7,000.
Chirag: Okay, so that’s pretty exciting. The mainstream public taking crowd-funding to the next level because these people have big followings, and they do stuff like that I thin at the moment it grows bigger so that’s great to see. Just getting some industry stats from your, sort of, experience, where do you think this industry’s going in terms of the, you know the legal change and a lot of thing are happening with the Jobs acts.
Anna: Jobs Acts in the States.
Chirag: And there’s something happening in New Zealand as well I think.
Anna: Yeah, so the FMA are planning to get some legislation through hopefully this year which will change laws around crowd-funding venture capital so it’s an interesting place to watch. Last year, over 1.5 billion dollars was raised in crowd-funding. Kick starter was one of the main platforms and raised $100m. and the scary thing with that is they’ve already raised more than that this year so far. They’ve had I think four or five projects maybe more. More than a mill. Everything from tech startups to.
Chirag: Tech startups.
Anna: Tech startups raising over a mill. Tech Companies.
Chirag: Tech startups, like we are one of those so usually its about you get money and there’s a bit of equity exchange and things like that.
Anna: They’ve been pre-selling products that they want to make, and also, I think my favorite one was Amanda Palmer from the Dresden Dolls raised over $1 million for her project and she was saying this is the future of music which probably is. You know the way things are going. Yeah, so it’s massive and it’s a growing industry.
Chirag: I think it’s great to see you’re already in the bandwagon and leading your charge from New Zealand. It’s awesome. So do you think there’s any competition for you guys, the only NZ funded platform in New Zealand and I don’t see a need or even a opportunity for another one only for New Zealand, so do you think or is there any competition from PledgeMe’s point of view?
Anna: Well I guess one of the main competitors would really be Indiegogo which is a global platform but we’re differentiating ourselves by being New Zealand, the Arts Foundation are planning of starting a crowd-funding website in September.
Chirag: In New Zealand? Really?
Anna: Yeah, so we’ve been chatting to them and they’re different form us in that they’re not crowd-funding for rewards, they’re planning on just letting the people crowd-fund for a tax deduction.
Chirag: Tax deduction.
Anna: Yeah, so they’re setting themselves up as a charity or donor organization, sorry, so people can get a tax deduction from the pledges they make.
Chirag: So right now if I pledge something on PledgeMe I don’t get a tax reduction, but basically if
Anna: You get a reward though, so you get, you’re donating, but you’re getting.
Chirag: So on this one you get cash back.
Anna: Yeah, basically you’re saying I’ll give you $10.
Chirag: Interesting because I think you mentioned that a big part of PledgeMe as a business is the social aspect. The connection you make with the creative, but if you’re doing the cash back thing do you think that’s, isn’t that a big problem?
Anna: It’s a different model, and they’re basing it off I think it’s called Artist Share in the States, which does the same thing, there’s no rewards, it’s just for a tax deduction and supposedly they have a higher success rate, but I’m not sure if they just pre-vet people that come through harder as well, or what that means but yeah, I’m really interested to see how it goes and we’re chatting to them and trying to, you know, make a community around what we’re doing because at the end of the day anything that helps the arts is a good thing, but yeah, so that’s been main new competition.
Chirag: And what do you think about in terms of the big goals for PledgeMe moving forward, you know, the next 3 to 5 years, as you said, Kick Starter raised $100 million last year, massive achievement, they’ve already passed.
Anna: We’d like to do that too.
Chirag: But $100 million NZ might be a challenge.
Anna: When you look at the amount of money people are spending to go to shows and to support the arts it’s potentially doable. We just want to see ourselves supporting a good share of the people who essentially aren’t getting funding from the government. So at the moment cross-government grants across the arts are 21% are funded, so that leaves about 79% of the people who are applying for money aren’t getting it. So we really want to see us tapping into that and supporting those people.
Chirag: So that’s a completely different channel that you haven’t even started tapping yet.
Anna: Well, I mean, we’re already connecting to people who have tried for government funding and haven’t got it and have funded through us, so it’s just that idea of a market size is you know, people don’t choose to go through that route through, because a lot of people don’t even want to try for government funding. Some of it, like, creative New Zealand anecdotally 1/3 think they can get funding, but things like film it’s just such a busy space, there’s so many things going on. It’s hard to get notice from a crowd.
Chirag: I think there’s so much activity happening in the space it will be interesting to see how these different platforms, differentiate themselves with different niches, as you said, you’re focusing on art and creatives and stuff like that, other companies might have a different moral, as you said, the hard part is foundation, so there will be a lot of innovation in the business model going forward in this space.
Anna: I think we’re well placed though because we’re testing our engine and sort of other things that we could do as well.
Chirag: Is there a lot of technology at the back end at the moment. How complex would that be?
Anna: Last time I talked to my tech co-founder he told me that the back end engines valued at about $1 million. That’s a lot of hours into that. Yeah, it can do a lot. It’s quite a powerful engine.
Chirag: Does it differ from other crowd-funding platforms or is it like a standard thing where all platforms use something similar
Anna: Our platform was built especially for us.
Chirag: That’s awesome. So it’s good to see some technology get valued that are a lot more even before the actual value
Anna: Well this is his value, so
Chirag: Okay, well I’ll have to take that. It’s still great. Definitely.
Anna: A lot of work has gone into the technology as well. it’s interesting the synergy the business and community develop around the technology and making sure that you value both sides of it.
Chirag: Oh definitely, even here at TranscribeMe, there is so much effort. Technology is the backbone of everything we do, but at the same time there is a whole marketing and sales and though leadership strategy around how do we push the industry forward both as crowd-sourcing as well as transcription, so and you know that’s the community aspect you mentioned. Both are equally important. And I believe you pretty much manage the community and the marketing side of the business and business dev.
Anna: Yeah. Camilo and I both work on the business development side, but you know my main thing is getting it out there and getting our platform getting used, which is working.
Chirag: Which is working and that’s what you’re doing right now. So is it been just two people all throughout or has it been people came in and were quite busy with other things and stuff like that. That’s what happens with startups a lot of the time.
Anna: Yeah, we’re pretty much a core, we had one other person at the start as well who was sort of interesting but he had a lot of other things going on, so he ended up actually going to the States, but yeah, so it’s pretty much the two of us, but the thing is the networks of support we have, it’s amazing. I would say that we have at least 20 or 30 if not more people who regularly check up and see how we’re doing and soundboard ideas. We have a really good design and front end.
Chirag: Oh really. Are they a part of your team.
Anna: Yeah, I could them as part of our team. Yeah, the amount of phone call she gets. She loves it. No, it’s really is a team effort and I think the thing, people see the value because it’s not just us going finish the game, it’s the social side of things. We’ve got support from Grow Wellington, from MSI and we’ve gotten, just the support.
Chirag: Yeah, mentors and contacts have been so critical even in TranscribeMe, like New Zealand’s is such a small place, you know, if you know 3 or 4 really connected people they can connect you to pretty much anyone in the country, plus you’ve traveled a bit so you probably know people as well who have helped out. Just to get some big stats, just for the readers to pick up right at the end of the podcast. So what’s the big numbers, you’ve received $300,000.
Anna: yeah, so $300,000 pledged, over 50 projects funded.
Chirag: Success rate is about 50%.
Anna: Success rate is slightly over 50% so it’s just over industry standard, which is 44.
Chirag: How much would you like to achieve in 5 years, what’s like.
Anna: At least $100 million.
Chirag: 100 billion you said?
Anna: $100 million I think it’s doable.
Chirag: Okay, that’s incredible. Love to see that sort of money coming out of New Zealand. We see New Zealand as a small country but if you can raise that much money through one platform that’s incredible. Alright, that’s awesome. If you have any questions, please feel free to write below in the comments box, but if you want to get in touch with Anna . Where can they get in touch with you?
Anna: Just look us up on the website www.pledgeme.co.nz, just in the about section there’s some contact details.
Chirag: That’s awesome, well thanks Anna for coming down and taking us through the story about PledgeMe. Do you have any last message for listeners to maybe create a project to fund one of those I believe.
Anna: I say just go on and check it out and see what people are doing and remember crowd-funding is the way of the future.
Chirag: Okay, thanks Anna for that.
What are your thoughts about crowd-funding? Do you think it is here to stay? Would you give it a go with your next project? Tell us in the comments below!
Podcast done by Chirag Ahuja