Crowd-Funding new Paths to $$$

From: Peter
Sent on: Thursday, May 15, 2014 11:22 AM





Crowd-Funding new Paths to $$$





A talk by Ralph Patterson,
BAE Workshop at Entrepreneur Meetup 08 May 14







On-line CFs: Angel.com (Angel List), Caplinked



[Both are loose communities of accredited
investors & entrepreneurs] +
Funders Club & Equity Net





Super Angels / Micro VCs: Mainly ex-entrepreneurs, who got bought out
& Invest as individual angels & in small groups.





New Models: Y-Combinator [Incubator], BAE Workshop [Help write Biz Plan & Find Funding]





Large VC Firms: Set up small funds ($100M) to invest in Seed
stage - even pre-revenue







Crowd-Funding



Essentially donations (exceptions discussed later)



People send in $ because they like what they
see/hear



- Exchanged for Mdse, T-shirts, coffee mugs,
etc.



-
Sometimes money is deposited on a gadget that may/not be created



-
You might get your money back if the company fails to meet its target or you
might not



- Most likely little difference in CF with
legislation (JOBS Bill)





Impact of the JOBS Bill



1) Implemented 05 April 12, 2) JOBS Stands
for Jumpstart Our Business Startups, 3) Securities & Exchange Commission
(SEC) has published prelim-inary regulations on the implementation of the law,



4) it’s charged with protecting Widows &Orphans,



5) to ensure there are protections against
Get-rich-quick & Too-good-to-be-true schemes,



6) otherwise, it’s just a Crooks &
Shysters full employment law LoL,



7) SEC proposed no significant change in the rules. [Only people with either $1M net worth or
$200k revenue for previous two years (Accredited Investors) can invest for
equity.





What the JOBS Bill did



Modified Securities Law: 1) Increased the number of investors a private
Startup can have from 500 to 2,000, 2) Lifted the prohibition on “general
solicitation,” allowing Startups to solicit Investors on their website, for
instance. But they have to



be “Accredited Investors.” 3) The “Funding”
is limited to $1M, 4) Another provision (yet to take effect), will allow
companies to raise funds from average investors through a process known as
“Equity Crowd-funding” & ups the amount to $5M.





What’s New?



Some Crowd-funding sites are
setting up sections for Accredited Investors:
1) This allows Investors
to buy equity, 2) The entrepreneur would set Terms & Valuation, (as with
traditional angel groups), 3) Then they hope Investors would be attracted. 4)
Disadvantages: Not much opportunity for Due Diligence, therefore a very risky
Investment.



Cross section of
Entrepreneurial Ecosystem:



1) 50% are unfundable by anybody at any time,



2) Other 49.9% have one problem or another



3) Hard to
separate the wheat from the chaff





What Else is New?



Some Start-ups are using CF
as Sales channels:



1)
a
Market-entry strategy, 2)
Charge full or partial price for a future delivery, 3) Another way to get
Bridge financing by showing sales (ie, LumenLED, Gogi)














Crowdfunding Sites Site Web address Comments



33needs ready.33needs.com
Social
entrepreneurs



Appbacker www.appbacker.com Wholesale mkt. for
mobile apps



Chipin
www.chipin.com Agnostic -
Creative projects



Cofondos www.cofundos.com Open-source SW



FansNextdoor
en.fansnextdoor.com Creative projects



IndieGoGo www.indiegogo.com Agnostic -
Creative projects [BAE*]



Kickstarter www.kickstarter.com Creative
projects [#1]



MicroVentures www.microventrues.com Tech, products &services



Peerbackers www.peerbackers.com Business owners, peer focus



Pozible www.pozible.com.au Novelty
merchandise



Quirky www.quirky.com
To
get “a share of the Revenue”



RockectHub www.rockethup.com Agnostic -
Creative projects



VimFunding www.vimfunding.com



*
BAE recommended



Your approach to CF



1) Google to find new sites [they spring up like
weeds all the time], 2)
Read the
fine print: a)
Some crowdfunding
sites charge only $10 to list and take only 8% of the gross money raised, if
you meet your goal and b) Others charge $100 to list, take 10% of the total,
& charge PayPal fees [Most are somewhere in between], c) Some offer
extensive Marketing tools, d)
Widgets
on your website, blog, etc, e) Links to FB, Twitter, etc. (
Some don’t), f) Investigate thoroughly before
you sign up





Kickstarter: Launched in ’09, is the biggest of them all
&
Has raised $1B for
over 100,000 projects





Kickstarter Project Categories





Category Total $$ Pledged # of Projects Average $$



Film/Video $60M 7,135 $6,236



Music $38M 7,545 $5,140



Design $29M 854 $29,409



Games $20M 857 $26,910



Publishing $11M 2,128 $5,482



Art $11M 2,426 $4,312



Technology $10M 356 $27,673



Theater $8M 1,867 $4,085



Food $7M 751 $9,009



Comics $5M 647 $8,382



Other $8M
1,799 $4,637





So If You Are Interested in CF: 1) Investigate the Sites carefully, 2) Make sure you know what it will
cost if you succeed & if you don’t, 3) Pick one that has appeal to people
in your market, 4) Make a Video (there are many Pros on the Internet), who will
do it for you). Good Luck!





Contact Speaker - Ralph Patterson (CEO Bay Area Entrepreneurs Workshop) @



www.BAEworkshop.com [address removed]



 



People in this
Meetup are also in:

Sign up

Meetup members, Log in

By clicking "Sign up" or "Sign up using Facebook", you confirm that you accept our Terms of Service & Privacy Policy