Tag Archives crowdfunding

WePay: A growth story that leveraged on PayPal’s glitch

WePay, PayPal

Anything that heckles the fun of a bachelor party deserves to be mended. At least this is what Rich Aberman, one of the co-founders of WePay, thought when he saw an opportunity for WePay. Aberman’s knotty affair of raising money for a friend’s bachelor party ended when he was finally able receive money through a series of cash, checks, and PayPal money transfers [not without technical difficulties of course]. But, it left some important questions to answer and an opportunity to evaluate in starting a direct payments processor. In 2008, Aberman along with Bill Clerico founded WePay. The company is currently based in Palto Alto, California.

In the past one year, WePay has emerged as a leading online service provider that allows crowdfunding platforms to accept hassle free payments. With its donation tool, it processes up to $1.5 million per day in hundreds of campaigns. Utilizing its years of experience in underwriting business, WePay invested heavily in the development of its Application Programming Interface (API). At present, it offers a high merchant and payer conversion while also taking care of fraud detection and operations support. Unlike e-commerce, its scope is relatively less, but the payments start-up has done well. It is drawing on an average 648 percent more crowdfunding volume every month than in 2012­­ with daily transactions up to $1.5 million. People are paying much attention to Braintree and Stripe but WePay believes that it is no different from them in terms of size. WePay CEO and co-founder Bill Clerico believes that no one has realized the true potential of WePay from volume perspective.

There is huge difference between WePay and e-Bay-owned Braintree, which boast of processing more than $12 billion per annum. But, WePay exhibits strong growth in the crowdfunding market, with platforms like Fundly, Fundable, Honeyfund, YouCaring and GoFundMe, adorning its client list. Since Oct 2011 when WePay got its first crowdfunding API partner, it has attained an average monthly growth of 35 percent. Clerico further added that they’re getting more and more partners to help them grow. WePay boasts of powering six of the top 15 crowdfunding platforms, with a seventh major partnership underway. According to a Massolution research report, the market for crowdfunding is predicted to grow at 81% in 2013. At these figures, WePay is also upbeat about its growth story.

The company asserts that it understands crowdfunding. If a crowdfunding campaign rises from nil to a million dollars in a week then it’s nothing scary for them [as it looked with PayPal]. This year in August, PayPal refused to release $100,000 raised by Italian Google Glass competitor GlassUp. Although later on, PayPal reinstated the account and released the funds for GlassUp. In 2010, in an almost similar instance, PayPal froze the account of Flux Foundation and refused to release unless the group would attain the non-profit status. After a public outcry, Paypal went on to release the funds. All these events have impacted PayPal’s reputation in this market segment. A month ago, PayPal updated its policies to provide a fair opportunity for the crowdfunding players.

Fraud prevention and Expanding focus

WePay prevents fraud by verifying user’s real identity by social data connections. To be specific it is their Veda risk engine that handles the fraud detection.

When WePay started their traget customers were service groups & organizations. However, of late it has begun to target all types of small & informal merchants.

Kickstarter: Fuse-ing funding with Marketing

Crowdfunding is hitting the popularity charts with more and more people applying the thought in their projects. Latest in the list are Dr.Phil Windley and Stephen Fulling, serial entrepreneurs who launched an online campaign at Kickstarter for a project called Fuse. Fuse is a device with in-built GPS and cellular modem for channeling data from the vehicle to a personal cloud.  It may be applied to map the car route or to ping a rider if you are near to him. It manages fuel economy by alerting the fuel fill-in time and location. It also apprises the owner of the maintenance needs by accessing the engine code.

But, for Dr. Windley and Fulling, crowdfunding is not just about a funding the project. In fact, Kickstarter also turns out to be a medium for marketing and public relations to popularize company’s technology component. Although the funds raised through sites like Kickstarter are trivial, when compared with the traditional means, the attitude of the people regarding the product is exposed. It gives them a feel of the market they are trying to enter into.

According to Social Media Today, Kickstarter raised $786 million for different campaigns (September, 2013 figures). As of today, many entrepreneurs depend on crowdfunding without taking into account the risks involved.  To that effect, while 56% of the projects failed to get funded as they fail to attain the goals; another 10% did not receive even a single contribution pledge. But, what these campaigns still produced was some useful market research and insights from the general public about why these ideas didn’t click!

Kickstarter, Marketing, Public relations

A glimpse of the Fuse App for the iphone

What all should you take care of while facing the crowd? Below are some of the expert suggestions to muscle the marketing quotient in your crowdfunding campaign –

  • Keep the project description vivid, concise and affable
  • Highlight the potential success attained through market research study or by past sales
  • Offer compelling gifts to the investors and donors
  • Remember that some crowdfunding websites, do not allow you to retrieve funds unless you succeed in your goal
  • Note that if your ideas can be easily duplicated by others, then crowdfunding may not be a good idea. As a counter-measure, you may register a provisional patent for your product.
  • Know your target customer. If you target other businesses [i.e. a B2B product], then the likelihood is that the crowd may not be excited about your product. Crowdfunding may not work here as most products or ideas suited to mass interest are a hit.
  • Crowd prefers to fund relatively lesser complicated and low capital projects. Even for projects not requiring prolonged R&D, crowdfunding seems to hit off well.

[Do you too intend to or suggest use of crowdfunding as a part of the Marketing and PR campaign? Comments invited.]