H&M Foundation taps Indiegogo to foster innovation
The venue was rather impressive. Every year on December 10, the Stockholm City Hall, with its gilding and Nordic iconography, is home to the Nobel Prize ceremony. After the prize presentation of the H&M Foundation’s Global Change Awards and the official selfie by the chairman of the H&M group's board of directors, Stefan Persson, the awards’ young winners celebrated their achievement at the City Hall, until late Wednesday night.
The five start-ups, winners of the Global Change Award (GCA) for the innovative solutions they are developing for the textile and fashion industry, will also benefit from a one-year mentorship, meeting with several strategic industry players in Europe, the USA and Asia. They are also sharing among themselves the awards’ €1 million grant endowment, a significant sum for these entrepreneurs, whose innovative solutions are at the initial development stage.
“Usually, only 10% of start-ups live beyond the two-year mark,” said Erik Bang, in charge of innovation at the H&M Foundation. “We are truly happy to be able to say that all the winners of the [GCA’s] last three editions are still in business, and continue to expand their projects,” added Bang. Nevertheless, finding the financial backing to drive such innovative projects forward towards industrialisation remains one of the main challenges.
Management consultancy firm Accenture, a GCA partner, interviewed the over 6,000 applicants for the award’s 2019 edition. For 45% of them, raising capital to fund their research and add to their staff is the main challenge. According to Accenture figures, funding remains the key issue for 61% of project developers whose solutions are ready to be launched.
The share of GCA applicants from emerging countries is steadily rising. The majority of applicants come from India, Nigeria and Pakistan. And, while raising funds from established organisations and institutions in Europe remains difficult, doing so in these African and Asian countries is even more complex. Funding is seen as an obstacle for two thirds of African project developers.
Crowdfunding seems to be an increasingly convincing alternative. Last year, 10% of GCA applicants resorted to crowdfunding, while nearly one third of those for the 2019 edition did so. It is certainly worth looking at. Last year, some $16 billion were reportedly raised through crowdfunding worldwide. In the last 10 years, the amount raised tripled each year. On April 4, the H&M Foundation launched a partnership with crowdfunding platform Indiegogo, in parallel with the GCA’s €1 million endowment. The award’s five winning projects will each have their own web page to approach potential investors.
“The award gives energy to the project. We have organised this month-long campaign for [the winners] to exploit this visibility,” said Bang. “It’s also a showcase with end-consumers. Often, one of the hurdles is that brands and groups that are interested in an innovative solution wonder whether it is relevant for the market. The existence of a community of consumers who support the project is a first acknowledgement.”
The goal is therefore to aggregate interest around the projects and foster a network of emotionally involved supporters. “We launch 12,000 campaigns per month,” said Danae Ringelmann, co-founder of Indiegogo.
“Some of them make it possible to raise up to €1 million. Also, becoming part of an eco-system made of change-makers is interesting. Supporters must be kept up to date, to engage in the project. The majority of [crowdfunding] projects are targeted to end-consumers, but there are also opportunities for innovative start-ups,” added Ringelmann.
On average, crowdfunding campaigns raise a few tens of thousands of euros each. Yet, according to Bang, there is also the chance of attracting investor partners: “A campaign objective could be sending a sample to an industrial company. This makes it possible to reassure potential clients and also to meet a genuine demand.”
A B2B approach that could turn out to be interesting for both parties. The next challenge for innovative project developers may well be, in addition to technology research, to be able to launch attractive campaigns and learn how to build and foster a community.
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