equity crowdfunding: is it a good funding option for your startup?
TRANSCRIPT
Equity Crowdfunding: Is It a Good Funding Option for Your Startup?Geri Stengel, President / Ventureneer 8.12.2015
EQUITY CROWDFUNDING: IS IT A GOOD FUNDING OPTION FOR YOUR STARTUP?
●What and why
●Just the facts, ma’am
●Give it to me straight
●What’s it take to succeed
●Both sides of the equation
●Resources
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What Is Equity Crowdfunding?
Regulation D of Title II of the JOBS Act
●506(b)
●506 (c)
●Title III, still to come
Why Equity Crowdfunding?
●Centralizes
●Streamlines
●Simplifies
●Shortens the fundraising process
JUST THE FACTS, MA’AM
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Equity Crowdfunding Is In Its Infancy
Venture Capital Angel Investments
$48 Billion
Real world $24 Billion
Crowdfunding $.5 Billion
Source: MoneyTree, Center for Venture Research and Crowdnetic for 2014
Success Rate Among Entrepreneurs Seeking Angel Investments
Real World
19%Crowdfunding
24%
Top 10 Cities for Equity Crowdfunding
GIVE IT TO ME STRAIGHT
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Misconceptions Cloud Equity Crowdfunding Reality
●Verifying accreditation
●Managing investors is complicated
●Financial reporting
●Expensive
●Venture Capitalists diss crowdfunding
●If you build it, they will come
●Social media outreach will make your campaign go viral and the rest, as they say is history
Photo credit: Flickr, Faungg's Photos, Cloudy Mountain
The Ugly of Crowdfunding
Photo Credit: Flickr, Tambako The Jaguar, «I'm ugly, and?»
Equity Crowdfunding: To Carpe Diem or Not
Photo credit: Flickr, Hamish Darby, kasplosh
●A large market
●Solving a major pain-point
●Defensible competitive advantage
●An exit
●A great team
Fundraising: No One Size Fits All
●506(b)
●506(c)
●Offline
●RewardsPhoto credit: Flickr, David Goehring, Emptily Nested
Choosing an Equity Crowdfunding Platform
● Compensation
● Deal structure
● Due diligence
● Exclusivity
● Minimums and maximums
● Products
● Regulation compliance
● Regulatory Profile
● Self service vs. full service
● Stage of company
● Syndicates
● Tools
● Track record
● Value added
Success Stories
Wonder TechnologiesCrowdfunderCommitted: $800,000
DigitzsCrowdfunderCommitted: $2 million
ONEVESTOnevestCommitted: $2 million
Le Grand CourtageCircleUpRaised: $400,000
Good Clean LoveCircleUpRaised: $400,000
Smarty Pants VitaminsCircleUpRaised in 2 rounds: $4.7 million
The Benefits of Leading With a Rewards-Based Crowdfunding
●Debt and Equity free
●Market research
●Social proof
●Validation
●Customer engagement
●Marketing
Use Rewards-Based Crowdfunding as a Stepping Stone
Other Company MachineKickstarterGoal: $50,000Raised: $312,000
VROUPlum AlleyGoal: $30,000Raised: $32,000
ThinxKickstarterGoal: $50,000Raised: $65,000
IndiegogoGoal: $10,000Raised: $19,000
Website$25,000
TOTAL: $110,000
Real Food BlendsIndiegogoGoal: $10,000Raised: $16,000
BumblerootIndiegogoGoal: $9,000Raised: $10,000
WHAT’S IT TAKE TO SUCCEED
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Equity Crowdfunding Pointers
●Build your network before you need it
●Get organized
●Segment network, target appropriately
●Communicate clearly
●Focus on solving a pain point
●Highlight the skills of the team
●Make a compelling video
●Emphasize traction: customers, partners, media mentions, etc.
●Show momentum
●Reach out often using different
●Make the ask and ignore rejection
●Attend to details
Photo credit: Flickr, Anonymous Account, Where
Skills Required
●Organized, diligent
●Marketer
●Story teller
●Clear communicator
●Realistic projections
●Aligns words with actions
●Frank when mistakes happen
●Good follow up
Photo credit: Flickr, Bob Bob, Getting airtime in the women's boarder cross at The Brits 2010 at Laax, Switzerland
BOTH SIDES OF THE EQUATION
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What’s in It for the Investor?
●Make a profit
●Apply their own skills and experiences
●Give back
●Participate actively in investing
●Join boards of directors, especially true for women
●Finding like-minded people to invest in – values driven
Photo credit: Flickr, Simon Cunningham, Return on Investment
Why Angels Like Crowdfunding Platforms
●Increased deal flow
●Curated deals
●Centralized/convenient
●Transparency
●Streamlines process
●Saves time
●Diversifies portfolio
●Learn from others
RESOURCES
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Resources
●Stand Out In the Crowd: How Women (and Men) Benefit From Equity Crowdfunding
●All Geri Stengel’s articles on crowdfinance
●6 Common Misconceptions About Equity Crowdfunding
●How to Ensure a Successful Crowdfunding Campaign
●5 Secrets to a Successful Equity Crowdfunding Campaign
●Study Reveals Secrets to a Successful Crowdfunding Campaign
●Going For it through Crowdfunding
●Women vs. Men: Who’s Better at Crowdfunding?
●How Crowdfunding Is Closing The Funding Gap for Female Founders
Questions
STAND OUT IN THE CROWD:How Women (and Men) Benefit From Equity Crowdfunding
THANK YOU
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