Analysis: Not enough crowdfunding dollars at 'world's crowdfunding festival'

[thelakelander]

Interesting study:

So it turns out that participants in the world's crowdfunding festival didn't do that much crowdfunding.

The amount of crowdfunding money distributed ($363,739) at One Spark 2014 represents just a fraction — about a third of 1 percent — of the total funding goals of creators (approximately $99 million), according to economist Chris Markl's calculations.

"That's a huge gap," said Markl, a former Florida State College at Jacksonville economics professor and entrepreneur. "A massive disconnect between the money a creator says they need and the amount received."
Markl said his purpose in releasing his "One Spark Impact" study this week is not to smear the reputation of the event.

Markl, himself a 2014 participant, wants to point out what he sees as a disparity between One Spark's claim as "the world's crowdfunding festival" and its tangible results.

full article: http://www.bizjournals.com/jacksonville/news/2014/05/19/not-a-lot-of-crowdfunding-dollars-at-worlds.html

[FSBA]

While I agree that One Spark isn't everything it is hyped up to be, without looking at why the numbers are the way they are it is meaningless. In my time at One Spark I was asked to vote for projects ranging from well thought out mobile apps to some girls break dancing in Ninja Turtle costumes. Lumping in serious ideas with those who were there to have a good time doesn't tell us anything.

One thing to consider is the heavy emphasis on the voting system. One of the key  components of crowd funding is direct funding from individuals to creators. The voting system creates a false equivalency that a vote for a particular project means some kind of automatic funds. Perhaps there needs to be more emphasis on individual contributions?

[BoldBoyOfTheSouth]

He does make valid points even if he may have gotten the impression this crowd sourcing was more that it was meant to be.

I can tell you, a lot of people have the impression that their votes actually counted which perhaps One Spark needs to do a better job expressing what it truely is about.

We don't need One Spark to flame out because of mispercieved hype. 

These kinds of events are either passing fads or they have staying power.  We will see within a couple of years if any struggling start up went to the next level because of One Spark funding or at least exposer of their product/services from the various powers that be that can get these people/organizations bank lines of credit and/or government/university grants and money from private investors not formally assocatiated with One Spark.

If the powers that be with the money begin to think that One Spark is mostly a place that's fun and creative but more of a waste of their time with too many groups who make the equivalent of great high school science class volcanos and/or folk rap dancers then they won't really come in the future.

[BoldBoyOfTheSouth]

The sad part was that during mid-day, I personally witnessed people formally presenting their goods and/or services to an empty set of chairs.  The only people even listening were the ones who were about to present.

Though, I went to the one on the vacant lot on the wrong side of the library which apparently turned out to be the secondary place to present.

[BoldBoyOfTheSouth]

With all of the above said, I'm very happy that so many people and groups were willing to express their creativity at One Spark.  These people will remember their positive experience there for the rest of their lives and may even encourage them to advance further in their creative endevors.

[Bativac]

I have spoke to several artists, and 90% of them had negative things to say about the experience participating in One Spark. They expressed positives, too, but the negatives outweighed them to the extent that they will not be involved in next year's. The artists I knew in year 1 stayed away from year 2 (which obviously did nothing to hurt the hype).

One Spark was definitely heavy on the "crowd funding" hype. I think the event was great for everyone attending... not so much all of those participating.

[chrismarkl]

I see there are many comments on why I focus on crowdfunding so much.  Its because the reason One Spark has been in Time and Entrepreneur magazine is because of the crowdfund.  Because one spark claims its main value proposition is the crowdfund.  To be overly obvious, according to one spark the crowdfund is the main value proposition.  So I analyze One Spark as any other crowdfunding platform.

I think a creator's funding goal is definitely reasonable to discuss. One spark brands itself as an in person kickstarter. Whether its kickstarter or indiegogo, crowdfunding is built upon a creator setting a goal and raising money towards that goal. Kickstarter provides no guidance for how a goal should be developed. Almost no one spark projects made significant progress towards her goal. 43% of kickstarter projects reach 100% of their funding goals.

But lets table creator goals. If we focus on money received, each project received very little money. When costs are included, its likely most projects likely didnt make money.

Again One Spark brands itself as the World's Crowdfunding Festival - thus measuring how that funding is distributed at the end of the festival is reasonable.

I don't have a monopoly on proving impact. Thus I welcome anyone to measure impact of one spark by employing data and logic and reveal methodology and data.

[chrismarkl]

Meh.  the guy seems to have a small ax to grind and a product to sell, if you read the article a bit.

The festival itself is supposed to be crowd funded with a crowd funding element built into the prize money.

What this guy did was a bit of sleight of hand by pretending that the 'goal' of the festival was actually to get everyone who entered it to find 100% funding and then measure how close to that new and imaginary goal the festival dollars actually came.

Which isn't what the festival is trying to achieve in the first place.

Its a red herring.

That said, the festival could probably improve itself by setting up a second tier crowd sourced funding by including all participants who care to participate in an ongoing website that allow creators to crowd fund for between six months and a year beyond the festival itself.

First off, I have no ill will towards one spark, I love one spark.   Reporters always try to get you to say something terrible and i have been incredibly reserved.  There is no grinding of an axe.   I conducted this analysis for free and to make one spark better, and in the analysis I included my consulting business's twitter.

But intention of the study shouldn't matter, what should is the logic and math. 

I am fully transparent in my analysis and methodology. For the full study http://www.onesparkimpact.org/ - thus any claim of slight of hand is just incredibly incorrect.  Infact compare my openness with the recent UNF tourism study.   UNF reveals very little methodology, or data. 

But I do appreciate the discussion. 

cheers

chris

[BoldBoyOfTheSouth]

Thats ok, its supposed to be like that though.  Marketplace of ideas and what have you.

People learned from the first festival and they stepped up their game for the second festival, which made the second event a lot more fun.

Very good way to think about it. 

The greatest people in history failed a few times before making their mark.

AARs or After Action Reviews can make some of these people/groups even stronger next year or understand the need for a solid buisness plan or reajust their presentations when they go out to raise funds and awareness at future One Sparks or other financing avenues.

Over all One Spark was a positive.

Though, One Spark itself can learn and adapt and grow.  They should understand that there is a misconception out there as to what One Spark is and what can people expect out of One Spark especially has they take their Spark on the road/planes to Germany.

[fieldafm]

Even before last year's festival, it was easy to see that if you were relying on the voting to allow you to 'fully fund' your project... then you needed to rethink your approach. Simple math would allow you to surmise a pretty realistic distribution of the prize money... and that math (something very useful if you are trying to start a business) would have painted a very clear picture that the 'prize money' would not be substantial.

The smart people use the event to get a) direct market feedback about their idea b) tremendous visibility (which would have relied on a very focused marketing plan to get noticed among all of the 'noise'- seriously, how many people just had a hand out passing business cards saying vote for xxx... that's not a meaningful interaction)  c) had a plan that encouraged/incentivized people to give direct donations and d) did research ahead of time to find out what kind of money-people would be attending and had a specific plan to get in front of them and speak to them directly.

The idea is just the first step. Everyone has ideas. The hard part is implementing the idea. One Spark represents a tremendous opportunity to make that idea happen... but it's up to the individual to make the kinds of connection presented at OneSpark to aid in the process.

Having been involved on many sides of the convention business, there are winners and losers... the winners usually don't stand around yelling among all the noise and just hoping they somehow find meaningful business leads.

That said, I would be in favor of things like a bigger prize pool, curated pitch sessions with specific kinds of investors (which is preceded by a very lenghty pre-festival screening process), limiting the amounts of votes per per person/per category and maybe a 50/50 emphasis at the voting booths on the actual direct contribution aspect of the event versus simply voting for projects.

[fieldafm]

43% of kickstarter projects reach 100% of their funding goals.

To keep that in context, do you have the same data on Kickstarter in it's earlier years (considering One Spark was essentially 'one year old' at the time of the second festival)

BTW, one of the many highlights of the event was your discussion with the Rogers Towers attorney during First Coast Connect. There was an interesting and clear dilleneation as to what the entrepreneur felt they needed, and what the attorney that represents entrepreneur thought they needed.

[chrismarkl]

43% of kickstarter projects reach 100% of their funding goals.

To keep that in context, do you have the same data on Kickstarter in it's earlier years (considering One Spark was essentially 'one year old' at the time of the second festival)

BTW, one of the many highlights of the event was your discussion with the Rogers Towers attorney during First Coast Connect. There was an interesting and clear dilleneation as to what the entrepreneur felt they needed, and what the attorney that represents entrepreneur thought they needed.

Thanks link to that interview is here http://news.wjct.org/post/coaching-startups-any-incs-entrepreneur-boot-camp

I ran into Steve Kelly, last week at the KYN DEV+DES event. He is a very nice and smart guy.

Kickstarter data is available here https://www.kickstarter.com/help/stats

if we look at money received 79% received of one spark projects received less than 500 dollars.  Thus after expenses most projects lost money. 

You would think there would be some huge winners, as other commenters state its a marketplace.  But there werent many winners and even the winners just didnt get that much money.  A pool of 360k isnt anywhere near big enough to service the needs of 600 project.

If we remove the crowdfund, what is One Spark?  Just like 100 other arts and entrepreneur festivals?  If so, thats fine, its awesome to attend, but I ask that we be honest about its impact on creators

Please know i do appreciate the discussion.

[Tacachale]

Welcome to the forums, Chris. You make some good points that could certainly be used to improve the event for the future. I'm sure you understand why your comments may come off as sour grapes to a lot of people who had positive experiences with the event.

You make some interesting points about full funding of projects. But I don't know that's ever going to be a realistic aim for One Spark, at least as far as the $360k crowdfunded amount is concerned (which seems to be what your research focused on). Creators set their own goals and they know going in that the total crowdfunded amount is capped. I expect that any number of them set their goals knowing that anything they got out of that amount was only going to be part of what they needed (I expect the aquarium project, for instance, understood that their multi-million dollar aquarium wouldn't be fully funded even if they got the entire fund). And still others were likely doing it for reasons beyond getting the crowdfunded amount, for instance receiving personal contributions, or just exposure in front of thousands of people.

I don't know that full funding for more projects should ever be a goal, unless the crowd fund increases dramatically. In fact, I'd almost rather that *fewer* projects got funding, so that more could go to the top projects.

[chrismarkl]

Specifically I'll speak to the sour grapes comment.  Its just silly. Any thoughts about me or my intentions are irrelevant. I believe focus should always be on data and logic.  I don't have a monopoly on proving impact. Thus I welcome anyone to measure impact of one spark by employing data and logic and reveal methodology and data.

Im passionate about impact evaluation.  A lot of my work is in very poor countries, where well intentioned people try to 'help'.  These same people get angry and upset when their help has no impact.  My kenyan friend created a tv show about this - http://aidforaid.org/.  In an emerging economy impact can save lives.  Obvious the stakes are much lower at One Spark. 

When I start any impact evaluation, here or in Africa, I begin by assuming an organization has no impact and work to prove impact through logic and data.

One Spark is founded to help entrepreneurs.  One Spark has released almost no data to support its impact on creators.

Thus I am curious if One Spark is like the well intended but misguided visitors to Africa, or the event does help entrepreneurs. 

At the end of the day, the interview I linked to above on melissa ross shows that I am incredibly passionate about helping entrepreneurs and this is why I compiled these numbers.

[rbirds]

Hats off to chrismarkl for responding so completely to posts in this forum. He certainly didn't have to and, considering the number of ad hominem attacks, albeit fairly mild attacks, he could have just written this all off.

The public image constructed for OneSpark was that good ideas would receive encouragement and funding. I can't count how many promotional messages, images and news stories that focused on all the money that would be flowing through the event. So Markl's analysis is entirely appropriate.

I note that despite the avalanche of opinions on the analysis found here, via news outlets and at the OneSpark site, no one has provided any substantive criticism of the data and the analysis of that data.  If the components of the analysis are sound then why not just incorporate the findings into the planning for the next OneSpark instead of all this name-calling and gnashing of teeth?

My personal feeling is that Chris Markl crossed a line when casting a critical eye on an event favored by the opinion-makers and movers/shakers of Jacksonville who are not used to empirical analyses of their pet projects.