Crowdfunding of a social enterprise: The GloW project as a case study

Abstract

Crowdfunding (CF) is emerging as a fairly potent tool of civil society by providing an alternative mode of financing outside traditional and formal systems for creative and innovative projects. In this article, the focus is on using CF for financing initial phases of a social enterprise (SE). The first part begins with a brief description of the CF phenomenon and its characteristics. Then, the positioning of CF in the context of traditional financing is discussed. Further, various factors that make CF a particularly relevant tool for providing the much needed start-up capital for an SE are enumerated. The first part ends with a short discussion on current regulatory issues for the CF industry in Germany and its implications for SEs. In the second part, a case study of the recently concluded CF campaign of the “GloW project” is taken up. This is a pilot phase of an SE called GloW Energy. The vision and the business model of this SE, which aims to pre-assemble energy-saving stoves locally and supply them to well-identified partners in developing countries, is presented. Details of the CF campaign and strategies employed are then given. Analysis of data from this CF campaign reveals a number of insights which are presented in detail. The positive role played by the coverage of the project both in traditional and social media is briefly discussed. Inferences from this study that indicate aspects, which might make CF a sustainable option for both SEs and the CF industry, are given.