Tag Archives: investor

Why Crowdfunding Is A Gamechanger For Texas Startups

Why Crowdfunding Is A Gamechanger For Texas Startups

By | June 24, 2015 | Fort Work Blog

It’s true. Almost anyone can become an investor in a startup thanks to the Texas State Securities Board, which approved the rules to regulate the way startups and investors conduct equity crowdfunding. As a result, more than 20 million unaccredited investors will soon be able to invest up to $5,000 per year in equity investments for small businesses raising under $1 million. The equity crowdfunding rules are important to Texas because of the many startups — especially technology companies — relying on investment capital to grow. Two companies in Texas have successfully raised capital using Texas’ new equity crowdfunding portals. The new regulation will help small, midsize, and high growth companies raise the capital they need to take their company to the next level. Additionally, crowdfunding will spawn innovation, prove business models and create new jobs. This new rule presents a tremendous opportunity for entrepreneurs, investors and the great state of Texas. “In order for equity crowdfunding to work effectively for all, we need more education for issuers and investors in the business community,” states Cynthia Nevels founder of Thinkcrowdfund.com

Are you interested in learning more? We invite you to join us to hear from the experts on how the new rules work, meet leaders from approved equity crowdfunding portals and network with investors. RSVP here: http://bit.ly/ThinkCrowdFund

4 Steps to Creating a Safe Crowdfunding Environment

Why Minimizing Fraud in the Equity Crowdfunding Frenzy is Important

By Cynthia Nevels | Senior Editor and Founder of ThinkCrowdFund.com

As a small business owner and a female entrepreneur operating in the male dominated technology field, I know all too well the challenges we face when it comes to raising capital for your small business.

There are many options available for funding a small business or new idea. The problem isn’t quantity nor is it access. The myth of accessing capital is being debunked by crowdfunding.

Crowdfunding is removing barriers to capital in a major way. Currently, with 13 states now allowing intrastate equity crowdfunding utilizing approved online platforms, access to capital, in certain communities, will no longer be an excuse for stifles growth and innovation.

The transfer of cash from one party to another in exchange for equity in a legal business is enticing to those educated on how the process works and the risk factors. However, I cannot help to think it only takes one huge scandal to uproot the movement. One “bad apple” to ruin the consumer sentiment in an instant to which even Olivia Pope and Associates couldn’t spin.

Can you see it now? “Story at 10, how one local business man steals $1 million dollars from unsuspecting investors for fake company using xyz.com Crowdfunding website.” David Manshoory, Co-Founder and CEO of @AssetAvenue says it’s difficult as an investor to ensure you are in a safe place when it comes to crowdfunding.

Creating a “safe” environment for the crowd and the issuer are important. I believe most leaders in this field are placing too much responsibility on the “crowd” to regulate itself and ensure safety in the exchange. If that were true we wouldn’t need police men and women to keep our streets safe. Humans will be humans and relying on the crowd to validate an issuer or campaign is irresponsible.

I believe there’s equal responsibility on both sides of the transaction. The issuer must be willing to be transparent in all crowd funded deals whether it is reward, debt or equity. If you are not willing to share data, provide proof of ownership and
open the books to potential investors then you shouldn’t be allowed to put your offer on the street. Equally, if you are an investor looking for the next Apple or Amazon.com, you should be willing to take the time to conduct adequate due diligence, demand certified validation and to fully review all disclosures and records prior to forking over your hard earned cash. Investors should be willing to validate their capacity for risk by certifying themselves as an accredited investor but for the regular guy or girl who doesn’t have $1 million sitting in a cash account, the best guard against fraud and risk is education.

Creating a safe crowd to ensure there is a level playing field occupied by upstanding stakeholders with good intentions is a minimal requirement to ensure the viability of a stable economy. We’ve created four simple steps below to help issuers and investors play nice.

4 Steps for Creating a Safe Crowd for Issuers Before Launching an Equity Crowdfunding Campaign

1. Think about Your Processes
Evaluate your current internal processes and systems to ensure you have the infrastructure to support the sale of equity in your company. In the state of Texas, you can privately sell shares in your company offline. According to a source at the State Securities Board, only 35 businesses in Texas have utilized this law to sell shares in their private companies, legally. Don’t try this alone, get the help you need to comply with the regulations. Also, consider the federal or state reporting requirements before, during and after the sale and budget for the costs to your business to comply. Think about the process for creating a campaign, what marketing strategy you will employ and be sure to research what the rules are before announcing your plans.

2. Develop Your Plan and Marketing Strategy
Create or update your business or growth plan. It will be important for you to know where you have been, where you are and where you are going operationally and financially. Hire professionals to help you if you don’t have the intern staff to pull it off. Eric Senn, Chief Executive Officer, Bumbershoot Ventures raised $118,000 on Kickstarter this year and prior to launching his company’s Kickstarter campaign they privately raised $75,000 to manufacture the first line of products and to invest in their online crowdfunding marketing efforts.

3. Validate Your Company
Trust and transparency are important to any capital exchange and eco-system. Being aware of your legal requirements and open with your management data can help you build trust among the crowd whether you are raising capital for real estate development projects, school tuition or an oil and gas venture being open and communicating with investors is important. At a recent UCLA Real Estate Crowdfunding Conference in Los Angeles, Jilliene Helman, Co-Founder and CEO of @RealtyMogul shared this observation, “#transparency and communication are important when it comes to equity crowdfunding.” If you’re planning on launching a debt, equity or reward-based crowdfunding campaign hire a firm or subscribe to a service that can certify your legal entity, verify your owners background and validate your financials. This will help eliminate questions and distrust from the crowd.

4. Engage and Connect
Remember, not all crowdfunding platforms are created equal. Once you have found the right equity crowdfunding platform, for your business and campaign, it is time to connect with and engage potential investors utilizing the platform. Keep in mind some real estate platforms require you to complete a diligent review of your raise and your campaign may not be accepted on all portals. Once approved, be prepared to plug your data and certified profile into their platform and prepare to raise the capital you need. Once you are funded and all fees paid, it is time to execute the plan and communicate your performance, financials and outcomes on a regular or annual basis to your investors and regulators.

Don’t forget to budget for this activity. No one set creating a safe crowd would be inexpensive.

Kerry Washington’s Speech Could Inspire More Women to Crowdfund

Photo by John Shearer/Invision/AP

Kerry Washington was recently awarded the 2014 Crystal Award for Excellence in Television in Los Angeles, California. Her work as the fearless leader of Pope and Associates on ABCs Scandal is now in its fourth season. During the award gala this month, Washington shared a speech that struck a nerve of truth that resonated with many women across the nation. Women normally shy away from being open risk takers because of their fear of failing publicly. Being perceived as less than perfect can sometimes paralyze women who want to start their own business, raise capital or fulfill their passion.

The effort to start a new business and to raise capital using online crowdfunding platforms is not an option for some because women generally believe everything has to be perfect before taking on the risk. For those who believe crowdfunding is an option, they typically will not set a goal of half a million dollars initially. Women entrepreneurs tend to shy away from asking for the true investment amount needed to launch their businesses.

According to Dr. Richard Swart, Director of Research for the University of California, Berkeley’s Program for Innovation in Entrepreneurial and Social Finance, 84% of men use crowdfunding as a tool for raising capital in a public setting. Women certainly use crowdfunding as a source for social finance but in far lower numbers.  Women often tend to set lower goals for their crowdfunding campaigns yet are more successful at achieving the goals set.

Moola-Hoop.com co-founder, Brenda Bazan, launched a crowdfunding platform and designed it with women entrepreneurs in mind. Her goal was to help thousands of women realize their dreams by providing a path to fund their business and creative ideas. “Women tend to under sell and over perform which is appropriate for crowdfunding,” shares Bazan in a recent interview on Disrupt Radio.

Research shows start-ups and new ventures that successfully raise capital via crowdfunding typically will find it easier to raise or have access to additional capital from angel investors, venture capitalists and other traditional mechanisms of financing. Investors are typically looking for the dramatic vision and the rich story of how the idea will grow. But, women fail to tell their stories or talk about themselves in front of investors due to the fear of making a mistake.

Washington dispelled the notion of women feeling they have to be perfect. In her speech given on June 11, 2014. Washington shared,

We as women put ourselves in this situation of feeling like we can’t take a risk, like in order to step out there we have to be perfect, because we’re scared that if we don’t say the right thing, or do the right thing, that we’ll reflect poorly on ourselves and our community, whether that community be women, people of color, both.

Helping women recognize the true opportunity that exists in the market today will be vitally important to further development of women-owned microenterprises, job creation and an increase in economic development in local communities. Creating an ecosystem that welcomes women crowdfunders who have innovative ideas and disruptive companies is the responsibility of all stakeholders. Women, like Cate Blanchett, the winner of the 2014 Crystal Award for Excellence in Film, should be celebrated for their words of wisdom. When analyzing the data, men continue to outnumber women when it comes to high paying jobs and raising capital for start-ups.

The problem, however, is not with the system per se, it is the mindset of the women. Washington went further to point out the need for change,

“[Women] need to be willing to be uncomfortable, to be flawed, to be imperfect, to own our voice, to step into our light, so that we can continue to inspire other people and employ other people, and make room for more and more voices and presence.”

If more women start to see successful female business owners overcome their fear of failure, take on more risks and build strong enterprises others just may follow and the crowd will cheer them on.

4/1/14 – CrowdFunding Conference World Tour 2014

20140402-070139.jpg This week Silicon Valley will host #crowdfunding industry leaders from around the globe. Disruptive View is headed to Palo Alto, California to cover the Crowdfunding Conference World Tour 2014 (SVCrowdfunding).

SVCrowdfund is expected to provide participants with a unique opportunity to discuss the current state of the emerging Crowdfunding industry, to learn from experts in venture capital, business angel and crowdfunding fields, and to network and find new friends. The Conference takes place April 3-4, 2014 in Palo Alto at the Sheraton.

Attendees will learn about relevant experiences and strategies from business builders who implement crowdfunding as part of their current fundraising and marketing strategies; and also from those actively working with the US Securities & Exchange Commission to make equity crowdfunding in the United States a viable and productive alternative to traditional capital raises.

Watch for up-to- the-minute coverage and important stories on Disruptive View.