Lately, the Zoku team has been working hard on the development of an additional space that will help to bring the building to the next level and offer even more value to the Zoku community: an innovative meeting- and event space that will find its place next to the Zoku social spaces on the top floor at Zoku Amsterdam. But this is all that we will reveal for now about this. Stay tuned for more updates on this topic!
As we pointed out before and as many of you know from previous interactions with us, Zoku is built on the principle of co-creation: hundreds of global nomads have helped us over the years, test-bouncing our beds, walking around in our prototypes and even brainstorming about community events. Taking that co-creation a step further, we wanted you, our Zoku community, to have the opportunity to become a true part of Zoku. Therefore, the decision to use crowdfunding to take co-creation to the next level was a logical one. While it has been in our heads for quite some time, we waited for the right opportunity to start a project like this.
Our ultimate dream is to let you, the Zoku community, become our partners in opening future Zoku’s – concerning the search for new locations, the right partners and of course the funding itself. This will eventually provide more value to you: guest picked locations in an ideal environment.
Claiming to always be in beta modus, we thought we should try this out and see if we can involve our more people in the funding of Zoku, making the crowd a part of the whole process.
Before explaining further about how it went and what the outcome was, we prepared a crash course about crowdfunding for you:
To be able to decide what kind of crowdfunding we wanted to do, we needed to gain a proper understanding of the different types of crowdfunding. There are four main categories in the crowdfunding industry that can be distinguished as donation-, reward-, loan- and equity-based.
The first group to look at are donation- or charity-based and reward-based crowdfunding platforms. While the former was one of the first to emerge, reward-based crowdfunding saw its upheaval almost simultaneously. Donation- or charity-based crowdfunding is often directed at a greater good or at projects aimed at helping a person in need. Reward-based crowdfunding is meant to help an individual or a team to fulfil their dream, business idea or personal cause.
Charity crowdfunding has its roots in microfinance, which was first advocated by the Nobel- prize winner Muhammed Yunus and his Grameen Bank in Bangladesh to tackle poverty. He provided microloans to local farmers and entrepreneurs so they would be able to grow their business. Instead of relying on hardly accessible and very expensive loans from banks or middlemen, they would be able to build up a financial buffer to lift themselves above subsistence level.
While Prosper.com, launched in 2006 is said to be one of the first successful platforms of the reward-based crowdfunding, Kickstarter.com and Indiegogo.com are clear market leaders in this segment by now. Made famous by one of the most successful projects so far, the Pebble Watch on Kickstarter.com, which raised over $ 10 million in its first campaign in 2012 (while having a goal of only $ 100.000), this crowdfunding type is responsible for most of the positive news coverage around crowdfunding.
If successful, the campaign leaders promise to deliver the product/reward within a certain timeframe. The types of rewards can however vary widely from a direct equivalent to the money pledged (e.g. the Pebble Watch) to emotional or intangible rewards (e.g. mentioning the name of the funder on the homepage), depending on the pledged amount or the nature of the campaign.
The second group of crowdfunding types are lending- and equity based crowdfunding. Lending based crowdfunding is closest to the concept of micro financing. Here, platforms fundamentally take over the role of a bank for the campaign leader. The only difference to a bank is, that it is not the bank who decides if the loan is granted but a wider audience of backers. Another role that the platform can play here is to pre-select campaigns to increase their chance of success as well as to decrease the chances for lenders or investors to loose their investment. In this straightforward process, the borrower usually provides a business plan or some kind of prognosis that is evaluated by the platform. A certain credit score is determined after which the interest rate is set. These interest rates usually move around 6% to 8%, making it much more interesting for both parties to use this type of financing and investing, rather than e.g. using the banking system that provides much lower returns and demands higher interest rates.
Since 2012, lending-based crowdfunding campaigns have surpassed any other type when comparing the raised revenue with a market share of 68% of all funds raised globally in 2014. In comparison, this makes $ 11.1 billion raised through lending-, $ 1.8 billion raised through equity- and $ 1.9 billion through reward-based crowdfunding.
Equity-based crowdfunding works much similar to the lending-based variant and together, these projects draw the most funding in comparison to the other two types. The difference between equity- and lending-based funding is that instead of providing a loan that will bare interests and will be paid back after an agreed timespan, the backer purchases equity in the company, making him eligible for a share in the companies (possible) success.
Now that you know the headlines, its time to talk about the outcome of our campaign: our goal was to raise € 300,000 through crowdfunding as part of the total investment of € 425,000. The conditions for this were that backers could invest in increments of € 500, at an interest rate of 7% and a linear mothly payback in 48 months. The first few days was a pre-publication to our Zoku “fathers and mothers” and after the go-live to the public the last € 100.000 was raised within only 18 minutes.
This is an amazing achievement and we are overwhelmed by the support we received to make this project possible in such a short time! At this point, a big thank you goes out to all of our supporters that helped us making this journey a successful one so far. Literally, we couldn’t have done it without you.
The meeting- and event spaces will be opened at the same time as Zoku Amsterdam spring 2016.
A little bonus: in case you have any questions on how our campaign went or would like to know more details, feel free to shoot an email to firstname.lastname@example.org.