Round 9

tip me - the global tip

Connecting people of both ends of the global supply chain
$
145,000
worth of XLM on the day of pay-out*
worth of XLM on the day after voting*
Website

Buy a t-shirt and tip the people who sewed it. We are tip me and we make it possible. When buying products online, you can tip the makers directly via the tip me widget. Your tip will be managed transparently through the blockchain: 100% is transferred directly to the individual workers wallets. Together, we can reduce global inequality one tip at a time.

tip me is a German purpose company that developed the global tip to tackle global financial inequality. Through the global tip, we connect people from the beginning and end of global supply chains and enable consumers to be part of the solution to global inequity.

With the SCF, we will transfer tip me’s solution to the Stellar blockchain. We reduce our administration overhead by 50% and transfer fees are cut by 90%. Stellar unchains tip me’s potential: we are a real-world use case that can show the world how Stellars borderless microtransactions can improve the lives of millions of workers worldwide.

In operation since

2018

Based In

Berlin and Cologne, Germany

Stage

Growth

Products & Services

tip me

The next time you buy a t-shirt, you can tip the garment workers who made it. 100% of your tip is sent directly to the workers’ individual bank/ or mobile money accounts be it in Pakistan, Vietnam or Kenya. Like this, consumers can directly impact the lives of the people who made their products. In only 30 min, brands can implement our tipping solution as a widget in their online shops. By using tip me, brands improve their customer loyalty, retention rates and long-term revenue.



tip me creates a win-win-win situation for all stakeholders involved:

  • On average, workers receive an additional income equivalent to a 13th monthly income. For the first time, they receive feedback from the end-customers who value their work. This changes not only their income, but also their self-esteem.
  • Consumers can give back directly and effectively, knowing that 100% of donations go where they should. They learn about the origin of a product.
  • Companies can position themselves as responsible brands. Because of the unique emotional experience consumers connect stronger with the brand and the products. This directly translates into higher revenue as the retention rates, shopping cart values and referrals increase because of tip me.



In 2019, we launched our first pilots. From day one, our solution proved to be very attractive and successful both to consumers and our partner brands. The most important parts of the system have now been automated: we can onboard and administer thousands of workers effectively. Installing our solution into new online shops is fast and convenient. The bottleneck for us to reach millions of workers worldwide is the traditional banking sector. The high transfer fees, the administration overhead and low transparency of the old system are big main pain points.


As Stellar has specialized on cross-border money transfer, it is the most attractive blockchain network available for our use case. The possibilities of the Stellar network, especially with its instant payments at an extremely low cost and high transparency, would be a breakthrough for the scalability of our mission. The automation of payments will decrease our administration overhead significantly.

Stellar will reduce the transaction cost of tip me by 90%. In our business model, brands pay these transfer fees. Especially for corporate brands with over 100.000 workers, these transaction costs from tip me amount to millions of USD per year. Stellar reduces them to a minimum. This new pricing made possible by Stellar will make the tip me product an absolute no-brainer for large brands looking for impact and marketing.

By reducing our administration overhead, tip me can reach 2x more workers with at the same team size.

Thanks to the inherent transparency of blockchain transactions, we can create a donation/tipping experience where consumers, workers and brands can trace their impact in real-time. They can see proof that 100% of their tips have been sent to the wallets in question, instead blindly trusting our organisation.



The SCF grant will enable us to move the global tipping solution onto the Stellar network. Thanks to the blockchain capabilities, we can create truly borderless donations directly to individuals, safe and transparent.


This investment creates another powerful real-world Stellar use case. It shows how Stellar enables new business models and donation solutions that would not be possible in the old banking system. It shows the potential of microtransactions and borderless payments by creating direct social impact for garment workers around the globe. It enables tip me to scale our impact to millions of workers.

No items found.

Goal & Budget

In six months, we want to have integrated the Stellar blockchain from the tip of the consumer to the worker for at least one of our projects in Kenya. The process shall include automated conversion and stablecoin USDC payments to the addresses reserved for each particular worker. We will carry out Stellar education programs for these workers. They will learn how to use USDC, XLM, wallets or how to cash out. We have already found a payment partner to provide the exchange and transfer directly from stable coins on Stellar to Kenyan Shilling (KES) for workers without smartphone access. 

Furthermore, all tipping consumers of our current project in Kenya will be able to track the status of their tips in real-time and receive proof when their tips arrived in the wallets of the workers. Starting to implement the project in Kenya will allow us to extend the infrastructure fast to Tanzania, Uganda and Rwanda and then South-East Asia.


Past the six months mark, we shall have an infrastructure able to expand to our other projects located in countries like Vietnam or Pakistan. On the basis of the first crypto education program, we will create an online course for all the 200.000 workers who we will onboard to Stellar by the end of 2023. It explains the concept of tip me and how to use a Stellar wallet. We will provide workers with an app which allows them to set up a personal profile at tip me. Here they can share their public key with tip me, do the necessary KYC and update the information tip me needs for our solution. The app allows us to keep the maintenance effort for the thousands of workers at a minimum and reach our growth targets.

1) How will you bring your product/service into production? What are the necessary resources?


The global tip is already implemented in Vietnam, Pakistan and Kenya. The main task is to improve the money transfers by transferring the process to the Stellar blockchain. This, as we expect it, will involve the following tasks:


  • Step 1: Legal support including KYC to design the Stellar blockchain payment infrastructure to transfer money to the workers directly in a way that is fully independent from brands, banks and international payment providers, compliant with banking regulation: (25h from tip me = USD 750, legal advisory costs = USD 22.000)
  • Step 2: Establish an official payment partnership to convert USDC into local currencies: (25h from tip me = USD 750 + USD 2.500 legal support for contracts)
  • Step 3: Adapt tip me backend/ worker management software to Stellar blockchain: adapt tip me worker management software to handle cryptocurrencies, update worker data to store public keys, fetching current status of tip transaction via API, making tip status visible in front-end for tip me team, update transaction data model to stellar: (Concept: USD 2000, UX: USD 3.500, Back-end: USD 7.500, Front-end USD 5.500 = USD 17.000)
  • Step 4: implement Stellar tipping solution for Kenya: Conduct KYC for our first partner brand producing in Kenya, onboard them to Stellar, introduce them to blockchain transactions, KYC service for all garment workers, first online course for all garment workers in Kenyan production site on how to use Stellar. The tipping solution can then be expanded to other production sites in Kenya (e.g. rose farms): (USD: 3.500)
  • Step 5: Design and implement a transparency feature: make the total tip transfer process fully transparent to consumers. Consumers can check the status of their tip transaction in real-time and receive proof when their tips arrived: (concept USD 3.000, UX design: USD 2.000, IT backend  USD 8.000, Front End USD 9.000)
  • Step 6: Develop an app for workers: Worker can register for tip me. They share their public key, fulfill KYC requirements and upload the relevant information to tip me. When they received tips, they can sign the transaction and confirm they have received them. Later, they can check how many tips they will receive in the next payout and share how they used their tips. This app makes the onboarding of workers truly scalable, reducing our maintenance cost per factory by 50%: (Concept: USD 5.000, UX design: 3.000, Front End: USD 10.000, Back End: USD 8.000)
  • Step 7: Online Education program for all workers we onboard to Stellar: How to use XLM and USDC and convert USDC into local currencies, in English, Vietnamese, Hindi, Urdu and Spanish: (concept & copy writing USD 6.000, plus USD 8.000 for video production)
  • Step 8: Develop and implement a marketing campaign to inform brands and potential customers, consumers and beneficiaries of the global tip about the benefits of moving the payments to the Stellar Blockchain . Onsite factory visit in Kenya with camera man/woman to generate marketing material on social impact from tip me, video for Stellar community & social media: (flights: USD 2.500, 7 day stay for 3 people: USD 2.500, camera man/woman onsite: USD 2.500, post-production: USD 2.500, campaign plan: USD 2.000, marketing budget: USD 3.000)
  • Step 9: Establish an official payment partnership to convert USDC into local currencies of all a) mayor garment production countries relevant for tip me: ie. India, Pakistan, Bangladesh, Vietnam, Turkey, (China excluded because of crypto-ban) b) mayor agricultural exporting countries in South America: i.e. Brasil, Columbia, Ecuador and Peru: (300h from tip me = USD 9.500 + USD 10.500 legal support for contracts)


2) Legal environment: do you need any special licences or register trademarks? Before going live, it's always a good idea to seek legal support to make sure your project is compliant with local regulation.

  • The legal environment of our product has already been checked with the financial lawyers of Hogan Lovels in Frankfurt, Germany.
  • What is now required, is the adjustment of the current legal cross-border payment model to the blockchain payment infrastructure. This involves legal support in implementing KYC where necessary.
  • Finally, we have to get legal support for the different national contexts we are operating in.


3) We need personnel and freelance support in the following areas:  

  • See above

Our Request

Our goals are of a large project scope. We decided to apply for USD 145.000 of funding from SCF. This amount allows us to enable global tipping via the Stellar blockchain for 6 million customers and 200.000 workers by the end of 2023. tip me has a product that is tested and has already positively changed the lives of hundreds of people around the globe for the better. 40% of customers already use tip me in our partner shops and give nearly USD 5 each. Now it is time to scale!

The SCF enables us to adapt our backend and all transaction processes to Stellar. We also can create a transparent tip transaction directly to the wallet of workers. The workers can give us all relevant information directly via an app and confirm they received their money.

With the SCF funding, tips can be sent cost-effectively and transparently and we create a real-world use case proving the potential of Stellar for new business & charity models.

Progress so far

After two years of product development, tip me is ready to scale. More than 7.500 users already gave a global tip to the makers of their products. 40% of all people who see our widget online give a tip. This shows the revolutionary potential of tip me: If the global tip would be implemented in every single online shop and on every single platform in this world, we could impact the lives of millions of workers and their families every day. With only four online shops, more than 32.000€ have already been collected for garment workers in Pakistan, Kenya, Vietnam and Germany.

Now, our solution can go live in 30 min in a new online shop. We have built a worker management system that enables us to onboard and manage thousands of workers at a time. Our last bottleneck is cross-border transactions. Together with Stellar, we can take this to the next level!

PROBLEM & SOLUTION

Using traditional cross-border payments to deliver the global tip from the consumer to the producer we face several problems:

  1. High costs: With USD 1,35 - USD 3.50/ per transfer our transfer costs are extremely high. In order to keep these costs at a minimum, we send out the tips only every three to six months. Faster or even real-time payments would increase the customer experience & satisfaction and enhance the impact for the workers significantly.
  2. Little scalability: Using traditional cross-border payment infrastructure to deliver the tips is highly time consuming and involves several manual processes within the traditional banking system. Once a tip transfer is initiated, it usually takes several days or even weeks for the workers to access their tips.
  3. This lack of automation and therefore scalability is our biggest bottleneck in scaling our impact.
  4. Lacking transparency: Using the blockchain for borderless payments would allow tip me’s money transfers to become truly transparent. This would allow consumers, brands and workers to trace the transactions in real-time. A completely transparent donation flow leads to more trust in the real impact of tip me and faster growth.



How do you use Stellar in your solution?

With Stellar, we have the unique opportunity to move tip me’s financial product to the blockchain. This means that the whole payout process of global tips to the individual workers can be improved significantly:


1.) Sending tips through Stellar to reduce costs:  By using Stellar, we can cut transaction cost by 90%. We are currently discussing cases with large corporate brands that would involve 140.000 workers around the globe. The implementation of Stellar saves 1,1 million USD in transfer fees per year for every corporate brand. Only with Stellar, tip me can onboard these large brands who have the biggest leverage for social impact.


2.) Automating all payments with Stellar to reduce time: Using Stellar will allow us to cut our administrative costs and manual work per new brand by 50%. Tips can be distributed much faster, even real time. This will not only make the tipping experience more fulfilling, it unleashes the full potential of tip me by removing our last bottleneck towards scalability. Brands can be onboarded 2x faster, as Stellar decreases our administration overhead which leads to 2x more impact.


3.) Using the Stellar blockchain to become truly transparent: The transparency of the Stellar blockchain will give customers proof their tips arrived at workers. They can verify their direct positive impact. This leads to higher trust and more engagement which will increase the number of customers tipping and the amounts given. Workers, brands or even NGOs can also trace the funds through the system.


We want to start by implementing the blockchain with our project in Nairobi, Kenya, because of the tech infrastructure and good smartphone coverage (91% in 2019). We currently pay out the tips via mobile money (e.g. M-Pesa). We already have a local payment partner that can convert USDC to Kenyan Shilling. This helps us to make our solution also accessible for people without a smartphone or who are illiterate.


TARGET MARKET

The solution of tip me is a B2B2C product, meaning that we can divide our customers into two groups:


1. Consumers (approx. 7.000 so far)

Our average conversion rate is 40%, meaning that nearly every second customer tips in the online shops that offer tip me. The average tip is USD 4,77, which is close to a daily living wage in Pakistan.


Our conversion rate exceeds all competing online donation solutions by factors of 8-40 because tip me makes it extremely easy and convenient to do good. We’ve managed to exceed all our competitors, because our solution requires one click and 100% of tips go directly to the actual real workers behind the product.


Tipping is not only a society wide phenomenon, but also through emerging digital tipping solutions e.g. food delivery apps, giving a tip is becoming more and more mainstream. This helps tip me to be a “non-brainer” and to attract more and more users. Our heavy users are statistically female, 25-45, well-educated and from urban centres. Their purchasing decision are influenced by ethical, sustainable and emotional aspects of a products.

Worldwide there are 100 million consumers with this background, often referred to as LOHAS. For brands, this target group represents an attractive market as with growing consumer awareness they are growing every year and are willing to pay more for sustainability and fairness.


2. Companies and brands

Brands have to adjust to the rising demands for sustainability and ethics from their customers. At the same time new legislation such as the supply chain laws planned by the EU-Parliament requires them to adjust their purchasing practises and show commitment to improving the wages and working standards of their suppliers. tip me provides them with an innovative CSR solution that also strengthens their brand and customer loyalty significantly.

With tip me they can add new, emotional touchpoints to their user experience which turn customers into fans. Our analysis of over 7.000 transactions in our partner shops shows that with tip me we were able to increase the retention rate of brands by 5,2% and the average shopping cart values by 2%. In practice, this results in 3% higher revenues for the brand.

Brands receive valuable, authentic marketing material from the garment workers i.e. quotes and pictures from garment workers on how the tips were spent.

Tipping consumers also receive regular update emails from tip me on the status and impact of their tips. These additional touchpoints perform extremely well: 20% of all tipping customers sign up, 45-60% open the mails and 11% engage with the content (click rate). Here brands can position themselves within the industry and retarget their most loyal and ethical customers with discounts and updates.

REVENUE MODEL

It is crucial to tipping customers that 100% of their tip goes to garment workers. Therefore, we do not take a share of the tips given. Instead, our revenue model is based on fashion brands paying a monthly usage fee for our solution. Additionally, they pay a 2% commission on tipped shopping carts and a commission of up to 25% for new customers from tip me’s channels.

As our software solution is plug & play and we have optimized the onboarding of workers and the set-up costs per client are quite low. Therefore, with our revenue model we achieve positive unit economics after the first 10-12 months of working with a brand. tip me has a strong lock-in effect and 100% of our current partner brands stick with our solution.

In our business model, brands pay the transaction fees of sending the tips to garment workers. This means, the lower transactions fees are the more attractive and affordable the tip me solution becomes. By moving tip me to stellar, we can provide our solution at 50-70% less cost to the brands. This enables us to onboard more brands and scale our impact faster.


PRICING STRATEGY

There are various price strategies you can employ, such as the cost plus strategy (the costs of making/obtaining your product or providing your service, plus enough to make a profit), and the value based strategy (based on your competitive advantage and brand).  Find more information on pricing strategies in this blog post.


Our pricing that has proved successful is based on the following aspects:

  • a monthly usage fee of USD 380 per online shop & factory
  • 2% provision on tipped shopping carts
  • The transfer fees are paid by the partner brands on top


Optional bonus features:

  • Brands send bonus payments to workers via tip me at a 10 times lower cost than through the supply chain
  • tip me refers new customers to ethical brands
  • tip me receives pictures and quotes from workers for social media
  • tip me can conduct a survey on wage levels, working standards
  • tip me can offer a channel for workers to report grievances as we are directly connected to workers via WhatsApp


Our pricing is similar to certifications and trust building elements on the website and packaging of brands. tip me stands out not via pricing, but because it is a unique and innovative idea that helps brands to improve their customer loyalty.

SALES FORECAST

After having done the Stellar implementation by mid 2022, we strive to work with 24 brands and reach a monthly tip volume of USD 125.000. By the end of 2023, tip me aims to break even with 120 partner companies in the program. tip me reaches these brands by targeting factories where multiple fair brands are manufacturing. Apart from factories, marketing agencies also support the sales process of tip me and can earn a finder’s fee.

As tip me scales up we will reach up to 15.000 customers tipping per day. In total, USD 30 million in tips will make a difference for 200.000 workers and their families around the globe, and enable all of them to experience the financial freedom and ownership provided by blockchain assets.


If we send out all tips with the traditional banking infrastructure, the transaction fees cost would amount to USD 1.200.000 / per year by 2023. Through the Stellar blockchain, we should cut 90% of fees and 50% of administration work.

FINANCIAL PLAN

How much money will we get? How much money will we send? How many tips? We spending Stellar Money on.

In the last two years of product development, tip me has been operating at a loss. The expenses have been paid with scholarships & grants from the German state (NRW Gründerstipendium), the German Federal Environmental Foundation (DBU) and philanthropists and capital from our founders. In order to scale tip me, $520.000 in capital is needed. $135.000 have already been raised via a crowd-lending campaign.

See financial plan here.

INDUSTRY AND MARKET RESEARCH

Especially in the apparel and food sector, our solution is attracting a lot of interest. For tip me, companies that cover our extended target group of Lohas (Lifestyle of Health and Sustainability) are particularly interesting. This target group, which cares about a healthy and conscious lifestyle, has a market share in Germany of 27.8%. In Europe Lohas make up 20% of the population. Worldwide, the target group contains more than 100 million consumers. Companies want to meet the demands of this target group as these customers pay premium prices for brands who they trust.

Our current usage figures show that the average tip is about 4.4% of the shopping cart. This figure allows tip me to send USD 360.8 million worth of tips to workers each year. Our license cost is a commission 2% of each shopping cart with tip. Currently, 40% of purchases are tipped. So our income is equivalent to 0.8% of the turnover of our partner companies. From the turnover of the German e-commerce fashion market of Lohas of USD 4.9 billion, this results in a market potential of USD 424.17 million for tip me. If we consider the entire textile industry, including the analog stores with a turnover of USD 74.466 billion in Germany (which we could cover with an offline tipping solution), the same calculation results in a potential of USD 3.26 billion and USD 640.40 million turnover for tip me.

tip me’s concept can easily be expanded geographically. Especially the DACH region, France, U.K. and the U.S. opening further expansion opportunities.

THREATS AND OPPORTUNITIES

Strengths:

  • extremely high conversion rate: 40% use tip me and give an average tip of USD 4,77
  • High impact for workers: One additional month's pay per worker per year
  • Easy integration: live in a new online shop in 30 minutes and 9h per factory
  • Authentic marketing material for partner brands and strong customer loyalty
  • Interdisciplinary tip me team with founding experience


Weaknesses:

  • High transaction and administrative costs when sending through traditional cross-border payment solutions
  • 5 brands live: still a small portfolio


Opportunities:

  • Stellar allows tip me to do easy, fast and transparent borderless payments that make tip me’s solution more scalable
  • tip me as one of the biggest players in CSR solutions & transparent supply chains, which are increasingly relevant due to pressure from legislation and consumers
  • Expansion to many industries and different points of sales possible (i.e. food, fashion retail, supermarkets)
  • Direct communication channel to workers can be used to collect important information for certification organizations & brands (e.g. on working conditions, wages and required living wages, local price fluctuation)
  • Including Blockchain payments and transparency on the payment status


Threats:

  • Wages need to be monitored further to avoid a wage reduction after implementing the global tip.
  • tip me has to verify workers and their accounts and identities further to add additional security layers to our system
  • tip me has to compete against other solutions in shopping contexts that capture the customer’s attention


COMPETITION

Competition comes from the broad landscape of affiliate marketing programs and trust symbols for brands. These try to bring about customer loyalty and new customers to online stores. The online stores pay a small commission for this service, from which a percentage is given to social causes. Well-known examples include Amazon smile and PayPal's new donation feature. We compete with them to be allowed to use the shopping process for social purposes. What distinguishes tip me from all of the above-mentioned providers is our solution is used by 4-10x more users. The consumer's contribution is returned directly to the source of the products. tip me therefore creates a direct link to the product itself and supports the people who made it. This creates a personal connection and shows how your consumption decisions can help you be part of a solution.


There are also a few projects in the agricultural sector trying to reach the exact people within a certain supply chain:


  • XtraPay: a GIZ project collecting money for pineapple farmers in Ghana. The project completed a pilot in 2019 and is currently stagnating.
  • Tip2Farmer was founded in 2018 in the Netherlands, but no concrete project was put into practice.
  • Propina collects money for the pensions of Colombian coffee farmers. The difference is that they work with an app and that farmers are not able to decide what to do with the tips. Their website is no longer live.
  • FarmerConnect by IBM connects people with their coffee farmers. FarmerConnect uses the blockchain technology and is currently only working in the coffee industry. We couldn’t find the app they promote for a download.


While tipping is an extremely old tradition, we are the only competitor with a solution that operates in the fashion industry and that can be integrated immediately into any e-commerce system. This allows our conversion rate to be much higher than apps like FairChain and Propina who can only activate about 6% of consumers, because with tip me there is no media break. With much higher conversion rates, tip me can impact more people. We can apply our solution to any sector and place. Moving our solution to the Stellar blockchain, would be a further breakthrough for the scalability of our mission, creating a fully automated and transparent tipping experience that makes us stand out against all the competition.


MARKETING AND  SALES

Our main focus lies on the decision makers of our prospects: the CEO of a brand, Head of Corporate Social Responsibility (CSR) and Head of Marketing.  The tip me sales team is reaching prospects via four channels:


1. Webinars:

We target the decision makers within brands we want to work with by organising webinars with them. This creates a powerful personal entry point and at the same time involves the network of our potential partners, thus creating more reach. This form of content marketing generates direct results as the attendees are informed about tip me and leave their contact information with us. This makes the leads easier to close.


2. Fairs:

Ethical brands and suppliers wanting to expand into new markets are often at fairs and conferences. When entering a new market, brands invest a big marketing budget, making it a great time to pitch our solution.


3. Factory network effect:

Brands nowadays often source from different suppliers. Those suppliers have a minimum of five to ten brands sourcing regularly from them. In this way, once a factory is part of the tip me program it is extremely easy for us to implement tip me at all the other brands sourcing there. The production sites promote tip me and can receive a commission for introducing new partners to tip me.


4. Marketing Agencies & Supply Chain Transparency (SCT) Solutions:

We also partner up with marketing agencies and SCT solutions who have a broad portfolio of customers. These partners promote tip me and tip me promotes the possibility of adding marketing and supply chain transparency to the cooperation.


RESOURCES AND RELATIONSHIPS

Optionally, you can share any strategic relationships or resources at your disposal. If you need to use spaces in between sections, we recommend to first type this in a word document and then copy and paste it into the editable field.


Our partner brands:

Currently the global tip is implemented in these Onlineshops:

  1. Bayti hier: https://bayti-hier.de/ (Refugees in Germany) - Marc Ernst, Project Manager at bayti hier: "The brand improvement is simply outstanding. Our products become much more human and are remembered by our customers. Introducing tip me was done in a the blink of an eye."
  2. Ethletic: https://ethletic.com/ (Shoemakers in Pakistan) - Marc, Founder and CEO from Ethletic: “The team behind tip me has to be admired for their persistence, which is needed to achieve difficult goals. We need people in this world who dream big and who believe in visions! If we support tip me, we support a visionary idea that is extremely important and that gives many people confidence and hope.”
  3. Dawn Denim: https://dawndenim.com/ (Garment workers from Vietnam) - Marian von Rappard, Owner Dawn Denim: "Sustainability & transparency have become buzzwords. With tip me's direct connection to workers, the truly fair brands stand out.More brands and factories should join in!"
  4. Kipepeo: https://kipepeo-clothing.com (Garment workers in Kenya)
  5. Adventsome: https://adventsome.de/ (Disabled people in Germany)


Strategic partnerships:

  • Fairtrade
  • World Fair Trade Organisation (WFTO)
  • Fair Wear Foundation (FWF)


Payment Partners so far:

  • Beyonic
  • Transferwise/Wise
  • CDI
  • LEF
No items found.

PROBLEM & SOLUTION

Using traditional cross-border payments to deliver the global tip from the consumer to the producer we face several problems:

  1. High costs: With USD 1,35 - USD 3.50/ per transfer our transfer costs are extremely high. In order to keep these costs at a minimum, we send out the tips only every three to six months. Faster or even real-time payments would increase the customer experience & satisfaction and enhance the impact for the workers significantly.
  2. Little scalability: Using traditional cross-border payment infrastructure to deliver the tips is highly time consuming and involves several manual processes within the traditional banking system. Once a tip transfer is initiated, it usually takes several days or even weeks for the workers to access their tips.
  3. This lack of automation and therefore scalability is our biggest bottleneck in scaling our impact.
  4. Lacking transparency: Using the blockchain for borderless payments would allow tip me’s money transfers to become truly transparent. This would allow consumers, brands and workers to trace the transactions in real-time. A completely transparent donation flow leads to more trust in the real impact of tip me and faster growth.



How do you use Stellar in your solution?

With Stellar, we have the unique opportunity to move tip me’s financial product to the blockchain. This means that the whole payout process of global tips to the individual workers can be improved significantly:


1.) Sending tips through Stellar to reduce costs:  By using Stellar, we can cut transaction cost by 90%. We are currently discussing cases with large corporate brands that would involve 140.000 workers around the globe. The implementation of Stellar saves 1,1 million USD in transfer fees per year for every corporate brand. Only with Stellar, tip me can onboard these large brands who have the biggest leverage for social impact.


2.) Automating all payments with Stellar to reduce time: Using Stellar will allow us to cut our administrative costs and manual work per new brand by 50%. Tips can be distributed much faster, even real time. This will not only make the tipping experience more fulfilling, it unleashes the full potential of tip me by removing our last bottleneck towards scalability. Brands can be onboarded 2x faster, as Stellar decreases our administration overhead which leads to 2x more impact.


3.) Using the Stellar blockchain to become truly transparent: The transparency of the Stellar blockchain will give customers proof their tips arrived at workers. They can verify their direct positive impact. This leads to higher trust and more engagement which will increase the number of customers tipping and the amounts given. Workers, brands or even NGOs can also trace the funds through the system.


We want to start by implementing the blockchain with our project in Nairobi, Kenya, because of the tech infrastructure and good smartphone coverage (91% in 2019). We currently pay out the tips via mobile money (e.g. M-Pesa). We already have a local payment partner that can convert USDC to Kenyan Shilling. This helps us to make our solution also accessible for people without a smartphone or who are illiterate.


TARGET MARKET

The solution of tip me is a B2B2C product, meaning that we can divide our customers into two groups:


1. Consumers (approx. 7.000 so far)

Our average conversion rate is 40%, meaning that nearly every second customer tips in the online shops that offer tip me. The average tip is USD 4,77, which is close to a daily living wage in Pakistan.


Our conversion rate exceeds all competing online donation solutions by factors of 8-40 because tip me makes it extremely easy and convenient to do good. We’ve managed to exceed all our competitors, because our solution requires one click and 100% of tips go directly to the actual real workers behind the product.


Tipping is not only a society wide phenomenon, but also through emerging digital tipping solutions e.g. food delivery apps, giving a tip is becoming more and more mainstream. This helps tip me to be a “non-brainer” and to attract more and more users. Our heavy users are statistically female, 25-45, well-educated and from urban centres. Their purchasing decision are influenced by ethical, sustainable and emotional aspects of a products.

Worldwide there are 100 million consumers with this background, often referred to as LOHAS. For brands, this target group represents an attractive market as with growing consumer awareness they are growing every year and are willing to pay more for sustainability and fairness.


2. Companies and brands

Brands have to adjust to the rising demands for sustainability and ethics from their customers. At the same time new legislation such as the supply chain laws planned by the EU-Parliament requires them to adjust their purchasing practises and show commitment to improving the wages and working standards of their suppliers. tip me provides them with an innovative CSR solution that also strengthens their brand and customer loyalty significantly.

With tip me they can add new, emotional touchpoints to their user experience which turn customers into fans. Our analysis of over 7.000 transactions in our partner shops shows that with tip me we were able to increase the retention rate of brands by 5,2% and the average shopping cart values by 2%. In practice, this results in 3% higher revenues for the brand.

Brands receive valuable, authentic marketing material from the garment workers i.e. quotes and pictures from garment workers on how the tips were spent.

Tipping consumers also receive regular update emails from tip me on the status and impact of their tips. These additional touchpoints perform extremely well: 20% of all tipping customers sign up, 45-60% open the mails and 11% engage with the content (click rate). Here brands can position themselves within the industry and retarget their most loyal and ethical customers with discounts and updates.

REVENUE MODEL

It is crucial to tipping customers that 100% of their tip goes to garment workers. Therefore, we do not take a share of the tips given. Instead, our revenue model is based on fashion brands paying a monthly usage fee for our solution. Additionally, they pay a 2% commission on tipped shopping carts and a commission of up to 25% for new customers from tip me’s channels.

As our software solution is plug & play and we have optimized the onboarding of workers and the set-up costs per client are quite low. Therefore, with our revenue model we achieve positive unit economics after the first 10-12 months of working with a brand. tip me has a strong lock-in effect and 100% of our current partner brands stick with our solution.

In our business model, brands pay the transaction fees of sending the tips to garment workers. This means, the lower transactions fees are the more attractive and affordable the tip me solution becomes. By moving tip me to stellar, we can provide our solution at 50-70% less cost to the brands. This enables us to onboard more brands and scale our impact faster.


PRICING STRATEGY

There are various price strategies you can employ, such as the cost plus strategy (the costs of making/obtaining your product or providing your service, plus enough to make a profit), and the value based strategy (based on your competitive advantage and brand).  Find more information on pricing strategies in this blog post.


Our pricing that has proved successful is based on the following aspects:

  • a monthly usage fee of USD 380 per online shop & factory
  • 2% provision on tipped shopping carts
  • The transfer fees are paid by the partner brands on top


Optional bonus features:

  • Brands send bonus payments to workers via tip me at a 10 times lower cost than through the supply chain
  • tip me refers new customers to ethical brands
  • tip me receives pictures and quotes from workers for social media
  • tip me can conduct a survey on wage levels, working standards
  • tip me can offer a channel for workers to report grievances as we are directly connected to workers via WhatsApp


Our pricing is similar to certifications and trust building elements on the website and packaging of brands. tip me stands out not via pricing, but because it is a unique and innovative idea that helps brands to improve their customer loyalty.

SALES FORECAST

After having done the Stellar implementation by mid 2022, we strive to work with 24 brands and reach a monthly tip volume of USD 125.000. By the end of 2023, tip me aims to break even with 120 partner companies in the program. tip me reaches these brands by targeting factories where multiple fair brands are manufacturing. Apart from factories, marketing agencies also support the sales process of tip me and can earn a finder’s fee.

As tip me scales up we will reach up to 15.000 customers tipping per day. In total, USD 30 million in tips will make a difference for 200.000 workers and their families around the globe, and enable all of them to experience the financial freedom and ownership provided by blockchain assets.


If we send out all tips with the traditional banking infrastructure, the transaction fees cost would amount to USD 1.200.000 / per year by 2023. Through the Stellar blockchain, we should cut 90% of fees and 50% of administration work.

FINANCIAL PLAN

How much money will we get? How much money will we send? How many tips? We spending Stellar Money on.

In the last two years of product development, tip me has been operating at a loss. The expenses have been paid with scholarships & grants from the German state (NRW Gründerstipendium), the German Federal Environmental Foundation (DBU) and philanthropists and capital from our founders. In order to scale tip me, $520.000 in capital is needed. $135.000 have already been raised via a crowd-lending campaign.

See financial plan here.

INDUSTRY AND MARKET RESEARCH

Especially in the apparel and food sector, our solution is attracting a lot of interest. For tip me, companies that cover our extended target group of Lohas (Lifestyle of Health and Sustainability) are particularly interesting. This target group, which cares about a healthy and conscious lifestyle, has a market share in Germany of 27.8%. In Europe Lohas make up 20% of the population. Worldwide, the target group contains more than 100 million consumers. Companies want to meet the demands of this target group as these customers pay premium prices for brands who they trust.

Our current usage figures show that the average tip is about 4.4% of the shopping cart. This figure allows tip me to send USD 360.8 million worth of tips to workers each year. Our license cost is a commission 2% of each shopping cart with tip. Currently, 40% of purchases are tipped. So our income is equivalent to 0.8% of the turnover of our partner companies. From the turnover of the German e-commerce fashion market of Lohas of USD 4.9 billion, this results in a market potential of USD 424.17 million for tip me. If we consider the entire textile industry, including the analog stores with a turnover of USD 74.466 billion in Germany (which we could cover with an offline tipping solution), the same calculation results in a potential of USD 3.26 billion and USD 640.40 million turnover for tip me.

tip me’s concept can easily be expanded geographically. Especially the DACH region, France, U.K. and the U.S. opening further expansion opportunities.

THREATS AND OPPORTUNITIES

Strengths:

  • extremely high conversion rate: 40% use tip me and give an average tip of USD 4,77
  • High impact for workers: One additional month's pay per worker per year
  • Easy integration: live in a new online shop in 30 minutes and 9h per factory
  • Authentic marketing material for partner brands and strong customer loyalty
  • Interdisciplinary tip me team with founding experience


Weaknesses:

  • High transaction and administrative costs when sending through traditional cross-border payment solutions
  • 5 brands live: still a small portfolio


Opportunities:

  • Stellar allows tip me to do easy, fast and transparent borderless payments that make tip me’s solution more scalable
  • tip me as one of the biggest players in CSR solutions & transparent supply chains, which are increasingly relevant due to pressure from legislation and consumers
  • Expansion to many industries and different points of sales possible (i.e. food, fashion retail, supermarkets)
  • Direct communication channel to workers can be used to collect important information for certification organizations & brands (e.g. on working conditions, wages and required living wages, local price fluctuation)
  • Including Blockchain payments and transparency on the payment status


Threats:

  • Wages need to be monitored further to avoid a wage reduction after implementing the global tip.
  • tip me has to verify workers and their accounts and identities further to add additional security layers to our system
  • tip me has to compete against other solutions in shopping contexts that capture the customer’s attention


COMPETITION

Competition comes from the broad landscape of affiliate marketing programs and trust symbols for brands. These try to bring about customer loyalty and new customers to online stores. The online stores pay a small commission for this service, from which a percentage is given to social causes. Well-known examples include Amazon smile and PayPal's new donation feature. We compete with them to be allowed to use the shopping process for social purposes. What distinguishes tip me from all of the above-mentioned providers is our solution is used by 4-10x more users. The consumer's contribution is returned directly to the source of the products. tip me therefore creates a direct link to the product itself and supports the people who made it. This creates a personal connection and shows how your consumption decisions can help you be part of a solution.


There are also a few projects in the agricultural sector trying to reach the exact people within a certain supply chain:


  • XtraPay: a GIZ project collecting money for pineapple farmers in Ghana. The project completed a pilot in 2019 and is currently stagnating.
  • Tip2Farmer was founded in 2018 in the Netherlands, but no concrete project was put into practice.
  • Propina collects money for the pensions of Colombian coffee farmers. The difference is that they work with an app and that farmers are not able to decide what to do with the tips. Their website is no longer live.
  • FarmerConnect by IBM connects people with their coffee farmers. FarmerConnect uses the blockchain technology and is currently only working in the coffee industry. We couldn’t find the app they promote for a download.


While tipping is an extremely old tradition, we are the only competitor with a solution that operates in the fashion industry and that can be integrated immediately into any e-commerce system. This allows our conversion rate to be much higher than apps like FairChain and Propina who can only activate about 6% of consumers, because with tip me there is no media break. With much higher conversion rates, tip me can impact more people. We can apply our solution to any sector and place. Moving our solution to the Stellar blockchain, would be a further breakthrough for the scalability of our mission, creating a fully automated and transparent tipping experience that makes us stand out against all the competition.


MARKETING AND  SALES

Our main focus lies on the decision makers of our prospects: the CEO of a brand, Head of Corporate Social Responsibility (CSR) and Head of Marketing.  The tip me sales team is reaching prospects via four channels:


1. Webinars:

We target the decision makers within brands we want to work with by organising webinars with them. This creates a powerful personal entry point and at the same time involves the network of our potential partners, thus creating more reach. This form of content marketing generates direct results as the attendees are informed about tip me and leave their contact information with us. This makes the leads easier to close.


2. Fairs:

Ethical brands and suppliers wanting to expand into new markets are often at fairs and conferences. When entering a new market, brands invest a big marketing budget, making it a great time to pitch our solution.


3. Factory network effect:

Brands nowadays often source from different suppliers. Those suppliers have a minimum of five to ten brands sourcing regularly from them. In this way, once a factory is part of the tip me program it is extremely easy for us to implement tip me at all the other brands sourcing there. The production sites promote tip me and can receive a commission for introducing new partners to tip me.


4. Marketing Agencies & Supply Chain Transparency (SCT) Solutions:

We also partner up with marketing agencies and SCT solutions who have a broad portfolio of customers. These partners promote tip me and tip me promotes the possibility of adding marketing and supply chain transparency to the cooperation.


RESOURCES AND RELATIONSHIPS

Optionally, you can share any strategic relationships or resources at your disposal. If you need to use spaces in between sections, we recommend to first type this in a word document and then copy and paste it into the editable field.


Our partner brands:

Currently the global tip is implemented in these Onlineshops:

  1. Bayti hier: https://bayti-hier.de/ (Refugees in Germany) - Marc Ernst, Project Manager at bayti hier: "The brand improvement is simply outstanding. Our products become much more human and are remembered by our customers. Introducing tip me was done in a the blink of an eye."
  2. Ethletic: https://ethletic.com/ (Shoemakers in Pakistan) - Marc, Founder and CEO from Ethletic: “The team behind tip me has to be admired for their persistence, which is needed to achieve difficult goals. We need people in this world who dream big and who believe in visions! If we support tip me, we support a visionary idea that is extremely important and that gives many people confidence and hope.”
  3. Dawn Denim: https://dawndenim.com/ (Garment workers from Vietnam) - Marian von Rappard, Owner Dawn Denim: "Sustainability & transparency have become buzzwords. With tip me's direct connection to workers, the truly fair brands stand out.More brands and factories should join in!"
  4. Kipepeo: https://kipepeo-clothing.com (Garment workers in Kenya)
  5. Adventsome: https://adventsome.de/ (Disabled people in Germany)


Strategic partnerships:

  • Fairtrade
  • World Fair Trade Organisation (WFTO)
  • Fair Wear Foundation (FWF)


Payment Partners so far:

  • Beyonic
  • Transferwise/Wise
  • CDI
  • LEF
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About the Team

Jonathan Funke

CEO & founder

Jonathan came up with the idea for the global tip. From early on he devoted himself to social projects. At the age of five, he founded the international children’s radio “Radijojo”. In his teens he started winning awards and initiated social initiatives such as “Sharewood” and “Stadt, Land, Flow”. He is among the youngest TEDx Speakers in Germany and has a background in sustainable business development. Apart from being tip me's CEO, he is responsible for sales and marketing.

https://www.linkedin.com/in/jonathan-funke-751332146/


Helen Deacon

Co-founder, Head of International Cooperation

Bio

Helen Deacon is responsible for onboarding new factories and workers worldwide and coordinates the cooperation with local NGOs. Before joining tip me, she worked for the German foreign ministry and the German parliament. She was also working with NGOs in Colombia and Haiti and in 2014 she founded TECHO Germany, part of a Latin American NGO that operates in the field of poverty reduction. In the team she always has the perspective of the workers and the impact of tip me on her mind. She has studied Peace and Security Studies (M.A) and Cultural Studies (B.A) in Hamburg, London and Frankfurt (Oder).

https://www.linkedin.com/in/helen-deacon-74b3819a/


Renan Veronesi Compagnoli

Head of Financials

Renan has 11 years professional experience in finances, risk management and product. He worked in the financial market in Brazil with structured fundraising for renewable energy projects. After studying social entrepreneurship in Sweden, he became dedicated to social impact and became CFO and partner at AVANTE, a microfinance institution in Brazil dedicated to serve micro entrepreneurs in low income regions. In 2019 he was the Financial and Operations Director at the Secretariat for Education in Paraná. In October 2020 he moved to Germany and joined tip me to build a social project of global reach.

https://www.linkedin.com/in/renan-veronesi-compagnoli-7b2a9622/


Oliver Sonnenwald

CTO

Oliver is the company's CTO. He develops the IT-infrastructure and ensures that tips can be given in our partner shops at any time. Previously, he founded "Viduals Media", a knowledge sharing video platform for students. Oliver brings in fascination and knowledge for scalable web and backend solutions.

https://www.linkedin.com/in/oliver-sonnenwald-63b2226a/


Emily Richter

Worker Management

At tip me Emily is responsible for the worker data management and tip accounting. She studied International Business Management with Focus on Supply Chain Transparency and wrote her Bachelor Thesis on the motivation of consumers to give a global tip.

https://www.linkedin.com/in/oliver-sonnenwald-63b2226a/


*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on September 27, 2021 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
* The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on the date of transfer as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on December 16, 2021 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)