You know all the crowdfunding sites that have helped businesses get started, families pay for medical expenses, college tuitions being paid, medical research funded, etcâ€¦ well, we all have Ruth Hedges to thank for that.
Ruth is responsible for getting a bill passed through congress in 2012 which allowed people like you and me to be able to invest in others, something that was only an option for banks before that because they were the only â€œcredible investorsâ€.
Most people donâ€™t even know what an impact Ruth has made on the millions of people who have received support through crowdfunding, so if youâ€™ve ever been able to raise money or you supported a cause that you care about through a crowdfunding site, Iâ€™d love for you to click here to send her a tweet and say thank you 🙂
[Ruth Hedges- How to run a Successful Crowdfunding Campaign Video Transcript]
Danielle Ford: Welcome! This is another episode of Leading Las Vegas. I am Danielle Ford of DanielleFord.com where visibility makes a difference. Â My lovely lovely guest today is Ruth Hedges. She is a pioneer in the Crowdfunding Industry and she actually was responsible for helping to get a bill passed in Congress, is that correct?
Ruth Hedges: Yes it is.
Danielle Ford: That is amazing. Thank you so much for being on the show.
Ruth Hedges: Thank you so much for having me. Iâ€™m very excited about being here.
Danielle Ford: Can you give our audience a little bit of backstory specifically around that bill that you got passed? Itâ€™s so impressive and interesting.
Ruth Hedges: Thank you. Yes, it was actually during the hiring recession, there was no access to capital. VCâ€™s, Angels, and the banks stopped lending and stopped investing. A group of us got together and we realized we would need to remove an 80-year old securities law which prevented all of us from investing in each other because we werenâ€™t considered accredited investors.
Danielle Ford: Wow.
Ruth Hedges: Yeah and most people didnâ€™t know that.
Danielle Ford: I donâ€™t think most people donâ€™t know that still.
Ruth Hedges: Yeah and I think that itâ€™s just basically protections that were put in in the 1920â€™s when a guy could drive up to a farm try and sell fake stock certificates from the back of a pickup truck. But of course, with the internet now thatâ€™s not an issue.
So we did we actually wrote a bill called â€œStartup Exemptionâ€ and we went to Congress, we walked the halls, we got signatures. eventually people like Steve Case of the US Chamber of Commerce and a whole bunch of other people joined our cause and April 5th 2012, President Obama signed it into law, it was called the Jobs Act itâ€™s the crowdfunding bill Title 34A6.
Danielle Ford: Wow so this is really been since 2012 that itâ€™s taken on?
Ruth Hedges: Â Yes.
Danielle Ford: Iâ€™ve noticed that too. It almost like it came up from nowhere? People were just crowdfunding for everything. Itâ€™s almost like there was a demand for it and people were pigeonholed on how to get money. And you guys saw an opportunity to help everybody and go in and allow it to happen.
Ruth Hedges: Yes. Well what we do is look at the reward and donation model which is where most viewers would be familiar which is like a Kickstarter which is reward-based crowdfunding. Or Indiegogo where you have a prototype but you donâ€™t have the money for the inventory. So you go online and you ask the public.
Basically say, â€˜you help me in the front end, Iâ€™ll give you a copy of this product for much less that what you pay once itâ€™s in the marketplace.â€™ Â Thatâ€™s reward based crowdfunding and the other one is GoFundMe which everybodyâ€™s now familiar with, which is cause-based or donation-based kind of funding.
And so we took the functionality of that and we added the stock so itâ€™s all the same, essentially. itâ€™s just the process is the same but the end result is different.
Danielle Ford: Thatâ€™s amazing. A lot of my audience are people that care a great deal about causes and are not necessarily; some people donâ€™t feel comfortable doing crowdfunding? Have you noticed that?
Ruth Hedges: Yeah a lot of people think that youâ€™re begging, you know sort of like this kind of pathetic thing to have to do. Â And really, I believe that itâ€™s the best of our humanity when we can actually go out in the world and talk to complete strangers and make a case for something. Â And you have to ask them to join us.
People shouldn't feel ashamed about #crowdfunding. -@startupsmap Click To Tweet
Whether itâ€™s a cause, whether itâ€™s an innovative idea that we as a society need in the world. To be able to just go out to the world on social media and have that conversation is absolutely amazing. And just to put in perspective when I started in this Industry in 2012 the entire crowdfunding industry was 1.7 billion dollars, today itâ€™s over 60 billion dollars.
Danielle Ford: Oh my gosh.
Ruth Hedges: So weâ€™ve clearly are doing something right that people should feel okay with you know itâ€™s not like, you know. Â
Danielle Ford: Yeah itâ€™s almost. . . Iâ€™ve feel like that too. I mean Iâ€™ve dabbled in crowdfunding a little bit and I have gotten like really positive responses that people that want to support and then Iâ€™ve even gotten people that are like, â€œOh but why are you asking for money?â€ and to me just like you said, itâ€™s like getting people an opportunity to be part of something amazing which wouldâ€™ve just gone to a bank who gave a loan or whatever.
Nowadays with the internet people can make a difference by just donating $5 or buying a product, thatâ€™s great. Â
So if somebody was interested in getting started with crowdfunding and they didnâ€™t know what platform to use or what to do but they knew that they needed to raise a certain amount of money, is there maybe like a step by step process or simple step process or some tips that you would have to get started?
Ruth Hedges: Sure we actually built something called crowdfundingcrm.com and itâ€™s a planning tool that walks you through the entire process. Everything from how to showcase that youâ€™re a thought leader in whatever it is youâ€™re trying to raise money in, building a crowd, writing a press release, getting a lot of fans and followers and friends, building a list to email.
More than 40% of the money thatâ€™s raised in crowdfunding is done by email marketing so you really want to start to build a list with like a lead gen page where you can capture someoneâ€™s name and email address. And then even the video, you have 100% failure rate without a video so donâ€™t even bother crowdfunding if you donâ€™t have a video.
Danielle Ford: Really?
Ruth Hedges: Thatâ€™s how important the video is.
Danielle Ford: I would assume itâ€™d be more important but thatâ€™s really shocking 100% failure rate. Wow.
Ruth Hedges: And there are other things like, you have to get some commitment ahead of time so you donâ€™t want to start… this is one of the biggest things that people do, because I get thousands of social media, tweets, â€˜Will share my campaign?â€™ â€˜Will you help promote me?â€™ And I look at them and I see first thing they do is itâ€™s zero. So the campaign started a week ago and itâ€™s still at zero.
Now Iâ€™m a complete stranger and so are the rest of the people showing up, but the person putting on the campaign must have somebody who love and cares about them enough to give them 20 bucks like a parent, a sister, a brother, somebody.
If they canâ€™t find somebody who they really know, why should the public who shows up as a stranger look at that campaign and think â€˜Well Iâ€™ll be the first one to give you the 20 bucks.â€™ Makes no sense.
Danielle Ford: Do you think it would be smart for them even just to do it themselves? Almost like putting a little few dollars in a tip jar?
Ruth Hedges: Exactly. So what we recommend in our product, the Â Crowdfunding CRM, is that we say get like 25-30% committed by people who are really your tribe
Danielle Ford: Support group?
Ruth Hedges: Yeah but just I mean it could be something like you could have some scientific thing and you have the cure for something and you have already been networking with business people in that area.
They want to see you produce these products so they would be inclined to help support your thing on the front end and then that way the strangers ho show up and now see this groundswell of money flowing in the first couple of days. They see 50, 100 backers which is listed on the campaign page – thatâ€™s going to compell people.
Let me tell you another trick. You are better getting 300 dollars, a dollar from 300 people than 300 dollars from one person. So all of these platforms like Indiegogo and Kickstarter, and the other 2,000 platforms around the world in every language you can think of today.
They want your customerâ€™s name and email address. So if you could bring 300 people in like the first 24 hours to give you a dollar or 5 dollars, thatâ€™s worth a lot of money to the platform.
So what theyâ€™re going to do is theyâ€™re going to take your campaign and theyâ€™re gonna uploud it up maybe to their homepage.
Danielle Ford: Thatâ€™s so smart.
Ruth Hedges: Or they going to put in the next newsletter. Because theyâ€™re gonna think, â€˜Wow this is a great look at all the traffic.â€™
Danielle Ford: Theyâ€™re going to tweet about it, spotlight it, exactly. And make it a case study, â€˜this person is raising so much money within 24 hoursâ€™. Wow! I do marketing and I think about those things and I hadnâ€™t even considered that as a way, thatâ€™s really really smart.
Ruth Hedges: I just wanted to address on something you brought up before; people shouldnâ€™t feel ashamed of using crowdfunding. Iâ€™m going to give you some examples. LeVar Burton Crowdfunded reading rainbow he raised 5 million dollars.
Now you would think LeVar Burton could pick up the phone and call anybody on the planet and find money he needed but itâ€™s just not that easy for anybody to raise money.
Kristin Bell raised over 5 million dollars for Veronica Mars and she took the TV show and she made a movie out of it. Thereâ€™s all kinds of people.
We had this company last year that came to my convention and they raised 8 million dollars for a card game called exploding kittens and they had 218,000 backers. Thatâ€™s twice as large as next closest campaign ever in the history and it was because this celebrity cartoonist had created. His name is Oatmeal. The design for these card game and he already had a following so he was able to just immediately get all this excitement around his new exploding kittens idea. They didnâ€™t even have a prototype just had some postcards with some little drawing on it and literally this thing took off and in 30 days they raised 8 million dollars .
Danielle Ford: So to piggyback of that you just gave me like a bunch of so many thoughts are coming to mind right now. But when you said that the thing that I first thought of is â€œHow are conventional retail products are and say, a game or a movie studio, how are they responding to this kind of crowd funding.â€ Do you think they feel intimidated by it?
Ruth Hedges: No. Last year 10% of the films at Sundance were crowdfunded.
Danielle Ford: Wow.
Ruth Hedges: Yah. And if you go into like the gaming industry is huge people have great ideas but they canâ€™t get past the prototype that can get the money to inventory so theyâ€™re stuck at the prototype stage.
And crowdfunding helps them and then you have this amazing proof of content so even like Sony has used it proof of products idea big corporations will use it. They donâ€™t need the money, they just want to see if there is interest in it before they invest in it. Last year we had Johnson & Johnson.
They have a platform called Caring Crowd. They want to do medical research.
So for example if there is a rare disease and thereâ€™s not enough, they donâ€™t believe thereâ€™s enough money in it for them to do the research, if a group of people who all have the disease or their families get together then they crowd fund the research and they can prove, you know they get through the research and its successful, they create the medicine and theyâ€™ll pay for the medicine side if the public pays the research.
Danielle Ford: Right. That makes so much sense one person trying to fund them.
Ruth Hedges: And they will also prove that a lot of people with that disease so it makes financial sense with them.
Danielle Ford: It makes financial sense with them, for the pharmaceutical companies to finally get on board and help.
Ruth Hedges: And then youâ€™ll have a whole world of research crowd funding, science crowd funding, crowd funding for college tuition. Lots of people are crowd funding today for obviously itâ€™s so expensive. You have real estate crowdfunding thatâ€™s a huge thing too so people you could own a piece of condo but not the whole condo you could only have a piece of the building. You can own a piece of hotel. You can own a piece of an office building that you would never be able to buy an office building but you can own a piece of one
Danielle Ford: What about these kind of like pop up social media crowd funding like Patreon? Would you consider that crowdfunding? Do you think thatâ€™s where crowdfunding is going?
Ruth Hedges: I think there is, I mean I think they have a wonderful platform thatâ€™s kind of look like a matching thing where there is federal funding thereâ€™s grant money for a park but the park costs a hundred thousand and the grant will only get 50,000. So on that platform they match the other 50 crowd come through with the 50 they get the other fifty.
Danielle Ford: Wow I just didnâ€™t even realized the opportunities that are in crowdfunding. I know that you have a yearly convention that you do can you tell us a little bit more of that? Â
Ruth Hedges: Sure, so every October for the last 6 years weâ€™ve been gathering the industry leaders from all over the world weâ€™ve had people from 22 countries and weâ€™ve had people from as far away as Singapore, Australia, Taiwan, Chile, and weâ€™ve had a great influence. In fact, when we got a phone call a few years ago from the Spanish embassy, they wanted to buy 12 tickets because they have a 40% unemployment rate in Spain. And they desperately needed some way to create jobs and startups are the job creators they create 60% of all the jobs in the world.
So we put on itâ€™s called the Global Crowd funding convention. Itâ€™s in October every year. This is our sixth convention and weâ€™re really excited this year we have Microsoft as our sponsor and weâ€™re working with their department of supply diversity which is the part of Microsoft that helps women minorities and veterans, and LGBT community get these contracts, as part of the supply diversity world, but a lot of them need access to capital because they donâ€™t have enough money to buy the inventory which is sort of the same problem so we have now introducing this thing itâ€™s theGCCworld.com, Thatâ€™s the address.
Danielle Ford: Very good to know. Wow thank you so much. If you guys are interested in crowd funding or have done it before but wanna ramp it up for the next time, check out that convention also. Where can they find you in general online?
Ruth Hedges: So I am on startupsmap is my personal Twitter handle, fundingroadmap, thegccworld I have 5 different Twitter. We have a Thegccworld has a Facebook page and you can just google me. Iâ€™m all over the place.
Danielle Ford: Weâ€™ll post those links below the video too so go ahead and check that out. Thank you so so much for being on here you are so inspiring and I know that Iâ€™m sure people are taking down notes and running now to know more about you.
Ruth Hedges: Thank you for having me.
Danielle: Thank you so much guys for tuning in again this is Ruth Hedges, Iâ€™m Danielle Ford and this has been another episode of Leading Las Vegas Iâ€™ll see you in the next one.
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