1. What is Buzzbnk?
Buzzbnk is an online marketplace that connects social ventures from all walks of life with backers, supporters and fans.
Buzzbnk is a unique online platform that is set to change the way people give, offering a whole new way of doing good with their money to make bright ideas a reality. We offer ventures and entrepreneurs the chance to raise seed capital, gather funding from family, friends and other networks, and keep them in touch with the progress of a project.
Buzzbnk Backers support the initiatives they like by pledging money, time or both and carry the message to their own social networks and communities.
2. What is crowd – funding?
It is funding for great ideas from a crowd of people who back those ideas. There is a specific time frame for funding targets to be reached, and everyone who gives receives something in return. If the funding target is not met in the time frame defined, then the money is returned to the Backers.
Each member of the crowd gives a little, then tells their friends, who give a bit more, and so on until it all adds up; the initial idea becomes a reality, and the crowd of people who made it happen all get something back.
3. How does crowd-funding provide a needed service?
With bank and grant funding being more and more difficult to get, crowd-funding provides a valuable alternative to traditional funding means. It offers vital working capital to help great ideas get off the ground. Furthermore, crowd-funding is more than just about the money, it is about participation and a having a sense of co-ownership in the projects people are excited about, encouraging greater involvement of a community of people around the social venture.
4. How does Buzzbnk work?
At Buzzbnk, crowd-funding works a bit like this:
Step 1: The Buzzbnk team works with each Venture to understand its funding needs and fundraising targets, what the money will be used for, and how results will be measured in terms of social and financial impact.
Step 2: Each Venture devises a variety of backer levels and benefits in return for Backers’ support. These benefits can be unique events, goods and services, money-can’t-buy experiences or interest payments on sums loaned by Backers. The type of benefit that a Backer receives corresponds with the amount of money they give.
Step 3: Crowd-funding can begin! The Venture defines a target time period within which to raise funds.
5. How much money we are talking about?
Typically Ventures seek to raise between £5,000 – £30,000 in units of £10 to £20. Additional benefits can be offered at higher levels, such as at £50, £100, £250 and £500.
6. What sorts of ventures can use Buzzbnk?
Any venture that seeks to deliver social or public benefit, whether it is structured as a charity, social enterprise, a not-for-profit venture or a for-profit enterprise. Social entrepreneurs can use Buzzbnk to get support for small community projects or to develop big world-changing ideas, to supporting the publication of books or the creation and distribution of films. More details can be found here.
7. How many projects will get funding this year and what sort of amounts on average will they receive?
We seek to have 80 successful projects funded in the first commercial year with amounts ranging from £5,000 to £30,000 in units of £10 to £20.
8. Is it entirely web based?
Buzzbnk is an entirely web based platform with the main team based in London; however, the crowd-funding campaigns on Buzzbnk need to be woven into any other initiatives the projects uses to promote themselves in order to maximise fund raising.
9. Is Buzzbnk regulated by the UK Financial Services Authority (FSA)?
We have reviewed our business model in detail with the FSA under the guidance of our lawyers, Bates Wells & Braithwaite, and the conclusion is that there are no activities which currently need to be regulated, including our service to introduce potential lenders (Backers) to borrowers (Ventures) for unsecured loans.
We will review this on an ongoing basis if either any current regulatory laws are introduced or amended as well if we change any parameters of our business model.
10. Is Buzzbnk registered with the UK Charity Commission?
Buzzbnk is setup as a social enterprise where 63% of our assets are held by registered charities and over 63% of our profits will be donated to charity. As such, we are not ourselves registered with the UK Charity Commission; however within our company charter our primary purpose is to promote Social Investment according to the definition of the UK Charity Commission to comply with the conditions of our charitable investors.
11. Is Buzzbnk a Bank?
Buzzbnk is not a bank in a legal or financial sense – we do not hold saving deposits and act only as an agent to introduce the Backers to the Ventures. Funds are held on behalf of the Ventures until the fundraising period is either successful and the funds are transferred or if unsuccessful, returned to the Backer.
12. Then why the name?
Buzzbnk is all about harnessing the collective power of communities to make good things happen. It is a bank of energy, of people, and of good will – aggregating the power of crowds to give life to charitable and ethical initiatives. What is ‘banked’, therefore, is not money but energy – the ‘buzz’ – that gets right to the heart of the notion of ‘crowd power’.
13. So it’s pronounced Buzzbank, but we’re not allowed to call it that?
Technically the pronunciation should be “Buzzbnk” not “Buzzbank”. However as with “MyBnk” most people assume it is “text” speak and, for ease of use, say “buzzbank”.
14. Isn’t this a bit confusing for everyone?
We hope not. What we want to make sure people know is that we are the social venture crowd-funding platform for them to back big, bold, bright ideas.
In time, we are happy to see Buzzbnk develop into a brand adopted by the community the best way they see fit.
15. Who are the people behind Buzzbnk, are they investors or employees?
The idea was developed by Michael Norton, OBE – founder of Centre for Innovation in Voluntary Action (CIVA), which incubates start-ups by social entrepreneurs around some of the ideas that it develops for social change – and he is working in partnership with Theresa Burton – Sloan Fellow from London Business School, formerly with Swiss Re – who has an extensive background in web and e-business development.
16. How much do the founders own and what will they take out of the business?
Buzzbnk is owned 63% by UK registered charities with key funding provided by CIVA, Esmée Fairbairn Foundation, The Tudor Trust, and The Wates Foundation. The remaining amount is owned by private corporations and individuals. Depending on targets met, over 10 % and up to 20% of profits will additionally be donated to charity, making a total contribution to charity of over 73% of any profits.
17. How is Buzzbnk setup?
Buzzbnk is a social enterprise incorporated as a Limited Liability Partnership with not-for-profit, for-profit, and individual shareholders. Buzzbnk is owned 63% by charities with key funding provided by CIVA, Esmée Fairbairn Foundation, The Tudor Trust, and The Wates Foundation.
18. Does Buzzbnk charge a fee?
Buzzbnk charges a small registration fee (£25) for social ventures to join the site and for support in developing the offer. There is a 5% administration fee on funds raised successfully for each Venture. Note no administration fee is collected if the Ventures receives no money i.e does not meet its fundraising time frame. Buzzbnk seeks to build a financially sustainable platform which will have the ability to grow and support other social ventures.
19. Is Buzzbnk in the UK only?
Buzzbnk is developed for primarily UK based ventures although we will accept organizations registered in other countries under certain criteria. Our plans involve extending Buzzbnk to other countries via local partnerships.
20. What happens to the money if the target is not reached?
If the financial target is not met within the defined timeframe, funds pledged by backers are returned. This facilitates that Backers commit their funds towards projects that have sufficient financial backing to be delivered successfully.
21. What happens to the money until the target is reached?
The money is held in an escrow account which only pays out when the crowd-funding period is complete, provided the target was achieved. Otherwise the money is returned to the Backers who can choose to either a) back another project or b) withdraw the funds. In a future release the Backer will also be able to donate the money to a nominated charity or social venture.
22. Does Buzzbnk protect personal and financial details? Is it secure?
For e-payments, we use Secure Trading, the UK’s leading independent payment processor, offering the most reliable and secure internet payment gateway.
23. Can I cancel my backing and make a withdrawal?
A withdrawal can only be done after the crowd-funding period ends and if the project was unsuccessful in raising the necessary funds. We will offer backers the option of withdrawing their money or backing another Buzzbnk project.
24. How does Buzzbnk ensure legal copyright compliance of materials produced?
The legal contract signed between Buzzbnk and the ventures stipulates that projects will use the Buzzbnk website for lawful purposes only and in a manner which does not infringe the rights, restrict, or inhibit the use and enjoyment of the site by any third party, copyrights included.
25. How does Buzzbnk monitor delivery of rewards as initially promised?
In the Venture Contract, project owners agree to use all reasonable endeavours to provide the benefits and ensure that any goods provided to backers are of satisfactory quality.
In the platform, we do track the terms of each benefit offered and will update the status of the Venture’s project when they have delivered their benefits.
26. How does the ‘BITs’ system work when backing one of your projects?
BITs are our fun way of saying a loan unit. Each BIT represents your share of the loan to the Venture*. Note, not all projects have a loan element.
We have three types of loans:
- Revenue Participation (RP): With revenue participation, you receive a percentage of sales for a given period of time from the project. This will be stipulated in the project’s Benefits Terms. An example would be that 1 BIT (loan unit) would receive 0.004% of sales for the next five years.
We call this type of loan “Sharing the Risk” – as you participate in the upside (or downside!) of the success of the venture.
- Interest (INT): With an interest bearing loan, you receive a fixed interest payment for a given period of time from the project. This will be stipulated in the project’s Benefits Terms. An example would be that 1 BIT (loan unit) would receive 4% interest per annum (£0.04/BIT) for the next five years. After the loan period is completed, the loan would be repaid at a rate of £1 per BIT.
We call this type of loan “Taking a Cut” – as you get a fixed interest payment.
- Principle Only (PRI): With a principle only loan, you lend to the venture without receiving any interest or revenue participation, but the Venture returns the loan to you at a rate of £1 per BIT at the end of the loan term. This will be stipulated in the project’s Benefits Terms.
We call this type of loan “Feeling Generous” – as you are lending the money but not expecting any interest payment.
* Note that loans to the Venture, as with any type of benefit in their crowd-funding offer, only become due if the Venture successfully reaches its funding target.
27. Are BITs shares in the company, or legally guaranteed in any way?
A BIT (loan unit) is not an actual share in the equity of a company and we are currently not offering to issue equity to the general public.
Buzzbnk is a platform to raise social loans which means the primary purpose for backing a venture is the charitable outcome they seek to achieve and any financial returns secondary. The loans are not secured.
Buy why, you ask, would a “lender” make a loan if there is no security?
We encourage ventures to do more then just take donations and build a community of backers who can participate in their success and share this success with others. Thus we create a community which can “recycle” any financial returns towards other projects.
Of course, we allow the user to withdraw any cash proceeds they receive in return – but do hope they will put the funds towards other worthwhile projects or donate to charity to keep the circle going.
Have more questions for us? Post a comment and we will seek to answer it and update our FAQs!