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STARTSOMEGOOD BUSINESS MODEL

CROWDFUNDING FOR A CAUSE

First things first: what does “crowdfunding” mean? Even though this term is quite popular by now, crowdfunding can be described as a funding mechanism where money (namely, “funds”) are collected from vast networks of people (namely, the “crowd”) to finance specific projects or new businesses. Crowdfunding campaigns usually take place on the Internet, either via social media or dedicated platforms, as it helps reaching out to wider audiences.

For quite some time, crowdfunding was meant for profit-driven initiatives only. As a matter of fact, we have seen hundreds of crowdfunding platforms spreading worldwide. And by “platforms” we mean websites entrepreneurs could use to upload their projects and start raising money from the crowd.

Luckily enough, some realized that this mechanism could actually work for non-profit initiatives too. It is 2011 when Tom Dawkins decides to give it a try and launch StartSomeGood, the first Australian crowdfunding platform to get social innovations funded. From the crowd.

Problem in context

As StartSomeGood CEO and co-founder Tom Dawkins discussed in this article published by Rank&File “(..) in the social sector, it has historically been very difficult to find risk capital. There has been a permanent feeling of scarcity – that the resources available are not up to the task“. As a consequence, philanthropists often decide not to fund new ideas that have not been validated yet. Thus, the rise of new socially-oriented initiatives gets constrained, and so does the impact on individuals and communities.

As mentioned earlier, for a long time the for-profit sector kept “crowdfunding” just for itself. As a result, there was a lack of crowdfunding platforms suitable for the specific needs of changemakers. Up until Tom and his former colleague Alex Budak decided to dig into this new world and shake things up.

Ever since its launch in 2011, StartSomeGood revolutionized the way changemakers could seek and raise funds. Tom and his team provided an alternative to philanthropists/foundations that are reluctant to give financial support to new experiments. And the “crowd” turned out to be just the right audience to help social innovators raise risk-tolerant capital.

StartSomeGood business model

StartSomeGood business model definitely falls into the “matchmaking model” category, as our friends at Business Model Zoo would describe it. In fact, a “matchmaking model” connects two different counterparts (i.e. buyers/sellers) inside the same physical or digital platform. The platform creates value by facilitating exchanges between both sides, and then captures value by charging commissions or brokerage fees.

Since its early days, StartSomeGood has been doing pretty much the same. The company charges a 5% service fee on all pledges for each campaign that reaches its funding goal. So, the happier the social entrepreneurs using the platform, the better for SSG revenue model. [We will discuss more about the StartSomeGood revenue engines in the next paragraphs]

De-coding SSG: Social Business Model Canvas

Now it’s finally time to use the Social Business Model Canvas to further analyze StartSomeGood business model.

Ready, set.. let’s begin ?