Inside Listening and Speaking 4

Unit 8 Assessment

AUDIO SCRIPT

[M1: lecturer; F1: student, M2: student]

M1: OK. So suppose you have a great idea for a product and you’ve worked out a
great business plan. You have your people lined up, a place to work from, suppliers
ready, and communication systems in place. But how do you get money? Very few
people have all the money they need to start the business of their dreams. And
without capital – without some money up front – it’s very hard, if not impossible to
be successful. Today I’m going to talk to you about an increasingly popular way to
fund a business or service or creative endeavor: crowd funding.

I’m sure you’ve heard the term. Can anyone tell me what it means?

F1: It means getting money from people online.

M1: Yep. Crowd funding involves getting money from people online. Can you tell me
more about how it works? Do you just put a request for money on your website, or
ask for money in your blog?

F1: No. With crowd funding, you present your idea, and sometimes you give people
some incentive to chip in and help you.

M1: That’s right. There are three parties to crowd funding. First, the person with the
idea. Second, the investors. And third, the people who run the platform, for example
the website, that gets the idea people and the investing people together. Now, there
are two types of crowd funding. In the first type, rewards crowd funding, investors
don’t get a share in the company, but they get a reward for investing – for example,
you don’t compensate them with money, but they get some of the product for free.
The second type is more like the investing you see with venture capitalists and it’s
called equity crowd funding. The investors get shares of a company in exchange for
the money they contribute. So if the company grows and does well, these investors
can continue to make money. But they also run the risk of losing what they first
invested.

Let me go into a little more detail about the two types of crowd funding, first the
rewards-based funding. Within this type, there are two sub-types. In both sub-types,
usually the party with the service or product sets a goal. But in one sub-type, if the
party doesn’t meet the financial funding goal, they keep all the money anyway. This
is called Keep It All. The second type is called All or Nothing. With this type, as the
name implies, if the goal isn’t reached, the person with the service or product
returns the money – or doesn’t collect pledges, money that is promised. The first
sub-type, Keep It All, is riskier, of course, for investors. But there is never complete
assurance of success with any crowd-funding project

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Inside Listening and Speaking 4
Unit 8 Assessment

The other main type of crowd funding was the type in which investors get shares.
This is called equity funding. That’s “e-q-u-i-t-y.” With crowd funding, the law allows
for many small investors to participate in one project.

I should add that a lot of crowd funding is for charitable work.

M2: What sort of charitable work?

M1: Ideas that help the poor or that assist in environmental preservation, for
example. Or sometimes a person will want to make a film or write a book to bring
attention to a social problem or to promote something positive, like peace. Usually
these people don’t offer shares. They’ll offer copies of the book or film to investors
who are willing to contribute money to something they see as a charity or not-for-
profit.

Also, there are some platforms that offer crowd funding for education-related
projects. For example, funding that somehow gets materials for teachers. Or funding
of university students’ academic projects by alumni or the general public.

For the creator of the product or service, there are many benefits to crowd funding.
One is that the person develops a profile, meaning that the product and creator get
the attention of people who are looking for things to invest in. Also, with crowd
funding, a creator can interact with investors, with the audience. That might give
good ideas for future projects or business partners, or might provide qualitative
feedback that can make the original idea better.

That’s about all I’m going to say about this topic today. What I want you to do next is
to go online. Just search for “crowd funding.” You might also try “kick-starting.”
These are good key words for searching. Go to at least ten or fifteen different
platforms – sites that coordinate crowd funding. Write the name of each platform
you visit and take notes.

M2: What should our notes include?

M1: Well, the product, the launch date – the date the product will be available – the
incentive, if there is one. Also note whether the funding is the Keep It All type or the
All or Nothing type. But the most important thing is what I was going to say next:
identify your favorite project, and explain your interest in it.

F1: It sounds like we might have a crowd-funding project in our future.

M1: Well, that thought had crossed my mind. We’ll see how interested we all are
after you’ve identified some projects. You never know. If any of you have dreams,
this may be a step toward making them come true.

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