Crowdfunding In Wine: A Case Study Looking at Fundovino

Crowdfunding is a fast-growing finance tool that has taken the world by storm in recent years. Start-ups and established businesses alike have taken to the internet to find new ways to fund their projects and ideas, namely, through collecting donations from individual consumers

Photo courtesy Flickr user Rocio Lara

instead of getting a loan from the bank. Crowdfunding statistics reports that globally, crowdfunding fundraising volume in 2015 was $34 billion, which is over double that of the previous year ($16.2 billion in 2014). (More crowdfunding stats here for the curious).

While there is a lot of information and statistics out there for crowdfunding and general and for other industries, information for crowdfunding for the wine business specifically is not well known. Due to regulations by both government and crowdfunding platforms, using crowdfunding as a way to raise money hasn’t been as easy for wineries than say someone selling a tech product. Specifically, well-known crowdfunding sites like Kickstarter and Indiegogo don’t allow campaigns to offer alcohol as a reward or perk for their campaigns, making raising money for an alcohol-specific product more problematic.  Typically, if someone is looking to fund a wine-related project, they are probably interested in receiving some wine at some point in return.

In terms of wine-specific crowdfunding platforms, there appears to be only two (that I know of, anyway): Fundovino (France) and Cruzu (USA).  A new study, published in the journal Wine Economics and Policy, took a closer look at one of those sites (Fundovino) and presented a case study on how a campaign in the wine sector can be successful. The remainder of this post will focus on presenting results from that study.

A quick description of the Fundovino platform

  • Fundovino uses an All-or-Nothing model, meaning that if they don’t reach their financial goals set forth at the beginning of the campaign by campaign’s end, then they don’t get any of it and the backers get their money back.
  • Management at Fundovino will carefully scrutinize each potential project for feasibility, seriousness, etc, before allowing the campaign to launch publicly.
  • Since launching in August 2014, Fundovino has funded 22 projects (as of 07/26/2017), with the success rate for all projects being 47.83% (meaning over half the projects launched on the site don’t get funded).
    • Of these funded projects, a total of 188,058€ has been raised, with the average amount of 7,878€ per project.

Back to the study itself….

Brief Methods

The researchers collected various statistics on the projects launched on Fundovino: success rate, campaign goals, funds collected, number of backers, length of campaign, donation levels, and rewards/perks offered.

An email interview was also sent to Fundovino management.

Lastly, a two-part questionnaire was sent to backers of Fundovino projects to identify things like sociodemographic characteristics, as well as their motivations for funding wine-related projects on the Fundovino site.

Selected Results

  • Fundovino management highlighted three key factors for a successful campaign on their site:
    • A good self-introduction.
    • A detailed description of the project, as well as donation levels appropriate/proportionate to the project.
    • Having good or “worth it” rewards.
    • The ability to pull in close friends and family for the first wave of donations.
  • 81 total backers participated in the online surveys sent out by the researchers.
  • Sociodemographics of these backers showed:
    • 84% of backers were men.
    • 38% of backers were between the ages of 45-54.
    • 27% of backers were between the ages of 35-44.
    • Around 27% of backers were over the age of 55.
    • 46% of backers held a Master’s Degree or Ph.D.
    • 34% of backers held a Bachelor’s Degree.
    • 21% of backers held a secondary/high school diploma.
    • Most of the backers were French, though there were some other nationalities represented (3% Belgian, 3% Swiss, 2% Italian, 1% German, 1% Dutch, 1% U.S., and 1% Belarus).
  • Funding behaviors of these backers showed:
    • 47% of backers claimed they have only funded projects on Fundovino.
    • 39% of backers donated between 51 and 100€.
    • 26% of backers donated up to 50€.
    • 24% of backers donated between 101 and 300€.
    • 54% and 28% of backers were satisfied and very satisfied with their experience donating on Fundovino, respectively.
    • 5% and 3.8% of backers were unsatisfied and very unsatisfied with their experience donating on Fundovino, respectively.
    • Young backers tended to be more satisfied with their experience donating on Fundovino than older backers.
    • There was a significant relationship between the amount a backer donated and how many projects a backer donated to. In other words, if a backer donated more money to one project, they were more likely to donate to other projects as well.
    • Motivations for donating to a given project included in the following order: “the project’s goal” (most important), “willingness to support small winemakers projects”, “for the fun of it”, “interaction with winemakers”, and lastly “rewards in wine”.
    • Motivations for donating to a given project differed depending upon age group:
      • Example: Backers aged 45-54 cared about these motivators the most: “rewards in wine”, sense of belonging to a community of winelovers”, and “interactions with winemakers”.
    • There was a significant relationship between donation amounts and whether or not a backer knew the people involved in the campaign. In other words, if a backer knew the person running or otherwise involved with the campaign, they were more likely to donate a larger amount.
    • Whether or not a backer knew the people running the campaign was also related to how many other crowdfunding sites they have donated to before. In other words, it sounds like a lot of the people claiming to have only donated on Fundovino were simply there to support their friends and family who were running the campaign, and that they may not have come there to donate otherwise.
    • In terms of sharing the project with others, 33% shared it in private conversations with others and 31% shared it on social media. 36% said they did not share it with anyone at all.

Conclusions

Overall, this research presents a case-study on crowdfunding wine-related projects on the wine-specific crowdfunding platform, Fundovino. The sample size was small (only 81 backers participated), so results should be taken with a grain of salt.

Looking at the results, it sounds like the most successful campaigns owe their success in a big part to their own friends and family.  If a backer knew the people running the campaign, they were more likely to donate larger amounts.  A key take-away here would be to really pump up your friends and family prior to and at the beginning of the campaign.  The more of them you get on board, hopefully the more of them will share the project with their own friends and hopefully snowball from there.

Another result I found interesting was the reported motivation for donating to a given campaign. Not taking age into account, the goal of the study was the most important factor for donating, followed by wanting to support small winemakers and doing it “just for fun”.  The most surprising part of all this for me what that receiving wine as a reward was actually the least important motivator for donating to a given wine-related project.  I would think that getting wine as a reward would be a major driver, but according to the results of this case study, I was wrong. Of course, when you break it down by age groups, there were some folks that did put a higher level of importance on wine as a reward, but if you look at all the donors, it doesn’t matter nearly as much.

While this case study was interesting, I would be more interested in seeing how wine-related campaigns on other platforms (like Kickstarter or Indiegogo) perform, and how successful they are compared with wine-specific sites like Fundovino and Cruzu.  Are you more likely to raise more money on a relatively unknown wine-specific platform? Or will you see greater success using a more general platform? I’d love to see that research done. What other comparisons or questions would you like to see answered in future research on wine-related crowdfunding?

This brings to mind a project launched by Boony Doon’s winemaker, Randall Grahm, a couple of years ago.  He launched on the popular crowdfunding site, Indiegogo, and was 108% funded by the end of his campaign in August 2015 (they are still raising money for this, BTW. Click here if you’re interested).  I was a backer of this project, and as a perk chose a set of

wine-related poster prints signed by Grahm. He was clearly successful in his wine-related crowdfunding endeavors, and he did not use a wine-specific platform to do it.

If you are interested in using crowdfunding to raise money for your wine business, please don’t discount the many other platforms there are out there!  Take a close look at their rules and regulations, however, as you may not be able to use wine as a specific perk or reward.  That doesn’t mean you can’t get funded using these platforms!  You might just need to get a little more creative in finding other things your potential backers might enjoy.  Since this study found that the backers of projects on Fundovino actually cared about receiving wine a reward the least, so using non-wine rewards for potential backers might be more successful than one would think.

Compare all of the platforms and do your research into what you need to do to prepare and create a killer campaign.  While this post only touches on a few details, there is A LOT more you will want to read about before launching your own campaign.

Source:

Mariani, A., Annunziata, A., Aprile, M.C., and Nacchia, F. 2017. Crowdfunding and the wine business: Some insights from Fundovino experience. Wine Economics and Policy 6(1): 60-70.

 

3 comments for “Crowdfunding In Wine: A Case Study Looking at Fundovino

  1. July 28, 2017 at 11:28 am

    I was very interested in ready this case study, especially since I was responsbility for executing Randall Grahm’s Popelouchum crowdfunding campaign during my time as his Director of Marketing.

    I was also intrigued to see your data downplay the effect of receiving wine as a perk. In fact, Grahm choose Indiegogo specifically because it allowed giving wine as a perk. That perk was vitally important towards meeting our goals and seemed to generate much of the late-innings excitement in the campaign.

    • Becca
      July 28, 2017 at 11:37 am

      Thanks for your great insights, Austin! In regards to the downplaying of wine as a perk: I’m wondering if this was related to the fact that most people donating knew the people running the campaign. In other words, they just wanted to see their friends/family succeed and didn’t care as much about the perks.

      I would love to see a much larger study looking at multiple platforms, as I would be willing to bet the results would change quite a bit.

  2. HFR
    July 29, 2017 at 4:02 am

    Hi Becca,
    Living in France I funded 2 Fundovino campaigns, at the beginning of the site. Each time I chose a liquid reward.
    As a wine enthusiast, being able to taste a winemaker’s products is a better incentive than receiving any other goodie. As an “investor” I believe it is the fairest deal, if the value of the reward is correlated to the value of the investment.
    I also funded Pierre Gallet’s encyclopedic work listing the 10000 known vitis cultivars in an early bird offer – of course this time the reward was the book, no wine !

    Sadly, I haven’t had news from fundovino for a long time – it seems they only supported one project this year. I can’t even login on the site. I am wondering if they are still in business.

    You can find some wine/alcohol related project on kisskissbankbank. As examples I selected some projects offering liquid rewards (sorry for the French !) :
    https://www.kisskissbankbank.com/le-retour-de-la-vigne-en-ile-de-france
    https://www.kisskissbankbank.com/un-cheval-pour-des-vignes
    https://www.kisskissbankbank.com/vin-nature-en-aveyron

What do you think about this topic?