Crowdfunding is gaining popularity in Poland. The co-founder and vice president of the Polish Crowdfunding Association talks about the phenomenon.
Cover of "Crowdfunding. From Idea to Business Thanks to Society"by Karol Krol
"With a growing number of successful projects, even more people will be convinced about crowdfunding", says Karol Król, the co-founder and vice president of the Polish Crowdfunding Association, and author of Crowdfunding. From Idea Down to Business Thanks to Society.
Thanks to websites such as Wspieramkulture.pl, Beesfund.com, PolakPotrafi.pl and MegaTotal.pl, crowdfunding is becoming more and more popular in Poland. Each network helps users present their various projects and seek funding. Wspieramkulture.pl is specifically designed for cultural projects in 15 artistic categories, including design, film, photography, comics, fashion, music, writing, visual arts, dance, theatre and performance art. Since it kicked off on the 12th of December 2012, it has helped to raise 203,000 złoty (nearly 50,000 euro) for 33 projects.
Culture.pl presents an interview by Krzysztof Markowski of the Polish Press Agency (PAP) with Karol Król, co-founder and vice president of the Polish Crowdfunding Association, and author of the book Crowdfunding. From Idea Down to Business Thanks to Society.
Krzysztof Markowski: What is the difference between crowdfunding and fundraising?
Karol Król: With fundraising and others types of donation, money is raised to support organisations or groups of people [...] the target is not as precise as with crowdfunding. Fundraising is a type of charity, the endeavor is of social nature.
Crowdfunding on the other hand has a defined goal for which the money is being raised, and everyone who gives money is offered something is exchange. This can be a CD, a book, a ticket - something directly related to the project. Receiving something in exchange confirms that the project we gave money toward will be put into effect. The key elements of crowdfunding are a concrete target, the exchange and the fact that the entire process take place via the Internet. It's worth underlining that crowdfunding is also open, and actually encourages commercial and business initiatives.
What kind of projects can be financed through crowdfunding?
There are no limitations. Everything depends on the creativity of the author of the project and the "social decision" whether or not to support the given project. These can be cultural projects such as films, CDs, photographs, an exhibition, concerts or other events, but they can also be projects of a commercial nature whose authors want to put into effect some kind of undertaking with which they will be earning money. Additionally, they can be niche projects aimed towards small communities of people.
In the end, it's the society of Internet users who decide which project to give support to by giving money. When it comes to the amount of money, the only thing that is fixed is the minimum value to which an object of exchange is assigned.
What types of crowdfunding are there?
Generally crowdfunding assumes the form of a non-shareholding type of financing. Every person who commits money receives an object related to the project or service. The type of good that one receives depends on the amount of the contribution. The creator does not have to give up any copyright or property laws related to the project.
The second possibility is the so-called shareholder model. In exchange for the money, the Internet users receives a share, an equity stake or another type of instrument of proprietorship. This means that the users become actual co-owner of the stockholding company that uses these channels to gather capital as a start-up or for development. For now, this model is less frequently used, but I believe it will gain popularity because it is very useful for supporting start-ups.
Is crowdfunding safe?
The safest way of taking part in crowdfunding is through special Internet portals.They dispose of a set of rules that must be respected by the people putting forward a project. The owners of such portals verify the projects before they are admitted to make use of their site. The verification process involves checking the author of the project, its basis of functioning, meaning whether or not the project is realistic and can be put into action, the requested amount which the author hopes to gather and what is offered to the Internet users in exchange for their financial support.
One can also check the credibility of the project him or herself. It's worth noting if the person behind the project shared their contact information, whether those can be verified, whether they answer to e-mails and questions regarding the project or for example whether the amount of money that is being gathered is being updates on the profile of the project. It's also important to judge the project, whether it can be put into effect according to the description, whether the timeline looks credible. It's worth paying attention to whether or not the author of the idea appears to have competencies to put their project into action.
Of course problems can occur - a project may not come to fruition despite the fact that it raised enough money, or for example, once it is put into effect, the quality of the undertaking doesn't answer to expectations. This can hardly be avoided. However, it's worth underlining that within the 2 million projects that reached funding over the last four years, no more than a couple of showed of these negative results up.
Millions of dollars are being raised in the U.S. and other countries through crowdfunding. In Poland, for now, those amounts do not exceed hundred of thousands of złoty. How do you explain this?
Crowdfunding has started to develop very dynamically in Poland. This is visible through the rising amount of projects that raised their desired budget and the amount of projects that are seeking financing. There are almost ten crowdfunding Internet platforms. While most of them are universal, some are devoted exclusively to cultural projects, some only to musical once.
I agree that there are no"'big" projects yet, but they will surely start appearing in the foreseeable future. When thinking of Poland one has to bear in mind that crowdfunding hasn't been around here for long and we have to reach critical mass, meaning that in order for more people to be convinced about crowdfunding, a large amount of projects has to have a positive turnout.
Karol Król's book Crowdfunding. From Idea Down to Business Thanks to Society [editor's translation] was published with the support of Internet users.
Based on a conversation with Krzysztof Markowski for the Polish Press Agency.
Translated by MJ (19.08.2013) from the Polish language text edited by JHP