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ASSOB CrowdcubeWhile equity crowdfunding for unaccredited investors is not yet legal in the U.S.A. until Title III is passed,  it is alive and well in other jurisdictions. Capital raising from unaccredited investors takes place every day.

The two most active countries in equity crowdfunding or raising capital with the support of unaccredited investors are Australia (8 years) and the United Kingdom (3 years).

ASSOB in Australia and Crowdcube in the United Kingdom have enough runs on the board to pass on some capital raising lessons to us.

Each operates equity crowdfunding under differing legislation but in reality both have established and operate the largest platforms in each of their countries, ASSOB has facilitated capital raisings of $138 million and Crowdcube $36 million.

One of the best ways to understand the learnings from the platforms is to look at some examples of successful capital raisings.

1. Preshafood (ASSOB) – $3.3 million raised from 29 accredited and unaccredited investors

Business

Preshafood Limited is a food and beverage company using a revolutionary High Pressure Processing (HPP) method to produce fruit juices and food products of an exceptional quality.

Funding Needs

The initial capital raising was for $1.5 million to increase production six times. Subsequently further funds were sought to further expand production and distribution.

Result

The initial raise of $1.5 million was oversubscribed by $1 million. Eventually $3.3 million was raised

Going Forward

Preshafood won first prize in both the ‘Best New Juice or Juice Drink’ and the ‘Best New Beverage Concept’ categories, from over 340 entries from 40 countries. The awards served to cement Preshafood’s position as a growing competitor in the quickly developing non-alcoholic beverages industry. The also won Telstra Small Business of the year award and are now profitable, growing and will probably exit to a major drinks industry player

2. E-Car Club (CROWDCUBE) - £100,000 raised from 62 accredited and unaccredited investors

Business

E-Car Club, the UK’s first entirely electric car club, was formed in September 2011 and was funded via the Sustainable Venture Development Partners.  The company also had a grant from the Technology Strategy Board (TSB)

Funding Needs

Following the successful launch of three Nissan LEAF cars in Wolverton and Milton Keynes, a capital raising of £100,000 was sought to fund operations, including establishment of additional hubs in Southern England and development of strategic partnerships.

Rewards involved free E-Car Club membership, free driving credit, an invitation to join the E-Car Advisory Committee and lifetime community membership (worth £15/month).

Result

E-Car Club successfully raised £100,000 from 62 investors allowing them to continue to develop the business.

Going Forward

In February 2014, E-Car Club secured £500,000 of funding from Ignite Social Enterprise LP, the social impact fund backed by Centrica Plc. The additional funding will allow E-Car Club to pursue its social mission, delivering access to lower cost transport solutions and improving the quality of life for local communities in up to twenty new locations.

3. Opmantek (ASSOB) – $700,000 raised from 28 accredited and unaccredited investors

Business

Opmantek Ltd is an Australian business that develops, markets, packages and distributes software in the network management field.

Funding Needs

They were seeking $600,000 in exchange for 25% equity in the company, to launch commercial modules and services to the existing customer base.

The funds raised through this offer were predominantly to:

  • Hire a Chief Technology Offices and two Developers to support and develop parallel innovations;
  • Fund the commercialisation and marketing of NMIS v8;
  • Apply for patent protection of intellectual property.

Result

$700,000 was raised and due to continued demand in the shares secondary sales eventuated

Going Forward

Opmantek Ltd has confirmed that another major Latin American telecommunications provider has licensed its award winning Network Management Software – NMIS .he company continues to grow and will probably exit to a major telecommunications player

4. Righteous (CROWDCUBE) – £225,000 raised from accredited and unaccredited investors

Business

Righteous, the ‘all natural’ salad dressing brand was set up by ex-Unilever marketer Gem Misa in 2011.

Funding Needs

In 2012 Gem raised £75,000 to create a marketing campaign and nurture growth. At the end of 2013 Misa a capital raising for further £150,000 to expand into overseas markets, including Canada via Costco and the USA via Whole Foods distributor KEHE.

Result

The potential for this London-based business is huge, with the USA condiments market worth ten times that of the UK (£11 billion).

Going Forward

Righteous products are now sold in over 600 supermarkets in the UK (Tesco, Waitrose, Ocado, Boots, Sainsburys) and more than 500 in North America. Business turnover has grown by 1,260% in three years (from £122,500 in 2012).

5. SelfWealth (ASSOB) – $1.65 million raised from 32 accredited and unaccredited investors

Business

SelfWealth is:

  • The new paradigm in investing;
  • A community of self investors; and
  • “Self Investment Made Simple”.

SelfWealth offers a low-cost, holistic solution to self-directed investors delivered seamlessly on-line, enabling investors to take greater control of their own wealth creation for an annual subscription fee without commissions.

Funding Needs

SelfWealth sought $1,492,551 to build their on-line offering to self-directed investors.

Result

$1.65 million was raised with two angel investors starting the raise off with $200,000 each.

Going Forward

The Company has developed a  social network for investors. Instead of paying fees and commissions to professionals, SelfWealth enables pension fund owners to collaborate with the community and construct their own portfolio. SelfWealth is providing portfolios, performance, reporting and great research tools – all in one place.

Each of the above equity crowdfunding raises needed a compliant professional equity funding platform but more importantly each needed a story, team and followers.

For companies considering raising funds they should self-assess to check they have:

  1. A Convincing, Compelling, Credible Story coupled with a perceived viable business model
  2. A Balanced, Passionate, Capable and Likeable Team
  3. Lots of Suitable People to share the story with and engage

StoryTeamFollowers

Each of the examples above had a great story, good business and capital raising teams and lots of followers.

In regard to followers, ASSOB’s experience is that the campaign manager and the capital raising team must motivate their own networks and drive support and investments from friends, family, fans and followers.

The capital raising teams (including intermediaries) for each of the above raises will have personally engaged with 80% of the eventual investors. Experience shows that around 50 to 60 percent of the investors usually come from people 1 to 2 levels out from the entity raising capital. That is friends, family, fans and followers. A further 20 to 30 percent come from the second level contacts. Friends of 1st level contacts. Finally the rest, and usually later in the raise and often by far the most money comes from so called “smart money”. People the raisers initially have no contact with but these people wait to see that people are supporting the offering which give it legitimacy.

To successfully raise the capital, capital raising teams need to roll up their sleeves. The need to point their 1st and 2nd level contacts towards the profile page on the capital raising platform and once they are there they need to reach out, nurture and convert investors at each level of contact. Online marketing isnt enough. Frequent updates and personal interactions are essential.

Once Title III is enacted these examples will be multiplied many fold.

Crowdfunding in 2020

crowdfunding2020Looking 6 years into the future, what can we expect crowdfunding to be in 2020

Firstly, the word “crowdfunding” will have virtually disappeared as peer to peer transactions will have become the norm.

Same thing happened with the term social networking.

Thats just the way most people communicate now and few call it social networking.

Secondly, even equity crowdfunding will have moved more towards the “instant gratification” favoured in rewards based crowdfunding offers and be reflected as follows:

  • Royalty based crowdfunding will draw business away from equity crowdfunding as computer systems can monitor and manage complex royalty disbursements
  • Large Companies using crowdfunding extensively for R &D strategies and marketing
  • Several very large stand out verticals as in pharma, green tech, clean tech, food processing etc
  • Peer to peer business loans taking business from equity crowdfunding as credibility statistics become more the norm for entrepreneurs and valuation models like Equidam become more sophisticated
  • Debt-equity hybrids developed that are not burdened by securities legislation
  • Lots of “Linked campaigns” like Veronica Mars followup
    • VM raised $5.6 million on Kickstarter, now they are contributing to charity with the deliverable (The Movie Launch) Linked campaigns like  go.omaze.com/r0Ji

 Also, participants will be both larger and either non-geographical or local

  • eCommerce players becoming established in the crowdfunding market
  • Businesses outsourcing to crowdfunding platforms
  • Women more successful than men due to being better at collaboration and social media
  • Most campaigns will be either “local” or “non-geographic”. Meaning it will mostly depend on where the support community resides.

 Looking at the actual raise process (Pre-raise, Raise and Post-rise) there will be more crowd involvement and more transparency.

Pre-raise

  • more transparency
  • facial recognition authenticates parties relative to their internet history – or other identity management that will evolve which could include biometrics.
  • whistleblowing is the norm from the crowd and sites will centralise known data. We have seen with MH370 how the crowd picks up information from many different sources and in the end mission control has to recognise that the crowd needs congruent information. Lack of transparency is quickly sensed by the crowd.
  • for some raises crowd will determine rewards, assist with offering preparation and solve any issues before launch

Raise

  • rewards can be contrived by the pledger / investor rather than being specified.
  • two way negotiation can be built into platforms and a market for rewards may develop
  • cross-border equity crowdfunding raises focussed at accredited investors will be a new norm
  • most investor matching and documentation processes will be fully automated
  • strong communities will be built,  developed during the raise and live longer than the raise itself
  • niche communities will build raises as a group

Post-raise

  • outcome monitoring is readily available as different services focus on what happens after the money is raised scoring both the entrepreneurs and the investors
  • This participants performance history will be freely available with decisions being made much in the same way people do when they decide who to purchase from on eBay. The eBay “Feedback profile” is explained as  “The positive Feedback percentage is calculated based on the total number of positive and negative Feedback ratings for transactions that ended in the last 12 months”. Crowdfunding project tracking will be a derivation of this.

A glimpse at the future … and it is all good!

 

 

Equity Crowdfunding can reduce friends and family tension

Family TensionSo Auntie Madge has a bit of money. You have a brilliant idea that needs funding. Madge is not so savvy about startups but she loves your story, your enthusiasm (and you) and hands over her $10,000. supposedly for equity.

Other than hope … what does she get in return.

And how do you feel?

Over the past few years as companies have approached ASSOB to raise equity capital I’ve noticed that many barely have a register or recording of equity transactions that involved people like Madge who are friends and family. These transactions are usually put in the “I’ll sort it out one day pigeon hole”.

But how fair is that on Madge? Her hard earned cash has been entrusted with you and all you and she have of it are memories.

Thats where Equity Crowdfunding can assist.

In the U.S. entrepreneurs raise around $60 Billion from friends and family.  Most of it with limited record keeping. Often it is only when the company does a “proper” capital raise or similar that time has to be wound back to record equity transactions that happened in another context.

The legitimisation of earlier transactions and the recording of them in  a proper share structure is something that is easily achieved with equity crowdfunding. Before a new raise can occur the company’s capital structure has to be finalised, share certificates or holding statements issued to all share holders, and, records updated with the Companies Office.

This process can remove lots of bad thoughts and pent up emotions. Relationships are easily strained when there is uncertainty about financial transactions between parties.

Transparency is often the issue as the actual situation with the funding has been unclear from the beginning. We have seen some “rediscovered” investors really happy that they now have a proper shareholding … and often they invest more!

Win-win all around.

Future funding is then a breeze. A well structured, transparent, compliant equity crowdfunding raise can be mentioned in passing at a family gathering then followed up with a link in a promised email. No need to go for the cheque over desert.

ASSOB‘s experience shows that nearly two thirds of each equity crowdfunding raise comes from friends, fans, family and followers. So it is going to be fairly certain that if you take the equity crowdfunding route you will need to approach family and friends for the initial investment. Social networking that includes your family and friends will be the start of any viral communication and social media build-up. Social Proof begins at home!

 

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Linking your Crowdfunding raise with a Charity drive

The Veronica Mars film crowdfunding raise has added a new “charity” dimension to it’s progress so far.  A recap first though starting with the Kickstarter raise. Kristen Bell’s / Veronica Mars charity raise follows.

Story: Veronica Mars was a TV show that aired between 2004 to 2007; Kristen Bell played the title character. The show developed a cult of devout followers but was cancelled after just three seasons. The devout followers yearned for Veronica Mars to either get picked up again, or for the characters to return for an encore in a movie.  After several years, the writer and producer of the show Rob Thomas was finally able to convince the studio that owned the series to make a movie if they could show sufficient interest in it by fronting up with $2 million. Thus began the resurrection of the cult network-cancelled TV show by doing a raise on kickstarter.

Team: The video on Kickstarter showed the team being assembled and as the raise progressed the team was expanded. Seeing the original actors as passionate as their fans about the movie solidified them as the team to do the  job together with their fans.

Followers: The group of of devout Veronica Mars followers gathered between 2004 to 2007 plus fans of Kristen Bell’s other movies was enough to get real momentum upfront and during the campaign.

VeronicaMars

This resulted in the fastest project ever to raise $1 million on Kickstarter and it became the website’s biggest film project so far by both dollars and the most backers of any project to date.

Fast forward to March 2014 and the film has been shot and ready for release on March 15th.

veronicamarsmovie

 

But the team has not stopped there. This is where linking a crowdfunding raise with a charity drive comes in. With nearly 92,000 backers the “project team” has embarked on  another crowdfunding raise, this time for Charity.

KristenBellOmaze

What a smart way to both promote the movie and contribute to a worthy cause.

All funds got to PATH. PATH is a family of agencies working together to end homelessness for individuals, families, and communities throughout Southern California.

Kristen Bell and her team have …

1) Crowdfunded their film

2) Filmed it and will deliver as promised on March 15th

3) Started a second raise to benefit the PATH charity.

Nice!

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One of the effects of the U.S. leading the world in crowdfunding regulation advances is that its introduction is following the regulators step by step. Title II then Title III.

Incumbent players like broker dealers, investment bankers and other vested interests get to have a go first. This brings in a focus on things like diversified portfolios.

If we look at pledge and reward crowdfunding it started with the people, by the people and for the people. Very little curation and certainly not someone else making decisions for the pledgers.

As the more traditional investment operators have ventured into the equity crowdfunding space  there has been more and more written in the vein of …

  • Most startups fail
  • 90% of the returns come from 10% of the startups
  • Thus … dangerous grounds for individual investors
  • They need to build diversified portfolios
  • Incumbent investment organisation are the best at picking winners
  • Best take a fund approach, we have the track record to manage your investments
  • You can trust our curation and selection criteria
  • We will charge you a “small” percentage each year to manage your investment

Meaning, you are better off getting someone else to choose which equity crowdfunding ventures you put your money into and paying them to do it for you. Doesn’t seem like true “democratisation of finance”.

If this was true why over the last 10 years in Australia have self-managed super or pension funds grown rapidly at the expense of organisations that are paid to be very experienced at managing other peoples money?

In 2004 there were 271,515 self-managed pension funds and by June 2014 extrapolated figures should reach 540,000 a doubling in 10 years. People are voting with “their” money. We also have platforms like SelfWealth emerging with a business idea of being “Australia’s first investment solution that enables you to compare yourself to your peers, professionals and the market & use this knowledge to improve your own portfolio performance.” Crowdsourced investing!”  SelfWealth used the ASSOB Equity Crowdfunding platform to fund the first stage of its development with a raise of $1.6 million.

Looking back over the last 8 years on ASSOB we see that investment isn’t always about the numbers. Funds, brokers and other incumbents in the investment space take a predominantly analytical view of opportunities in the space and to them it is basically a numbers game.

However this is predominantly NOT the case with crowdfunding.

Crowdfunding is predominantly about people’s natural affinity to support causes they believe in. It is a strong human emotional drive and is at the opposite end of the spectrum to that which funds and brokers operate in. It is only now that the intersection of the technology to handle volumes of small investors and the desire of people to be more meaningfully involved is changing the game.

TechnicalCulturalCrowdfunding

“This chart comes to us from Jonathan Sandlund’s piece The Rise of Meaningful Investing at TheCrowdCafe.”

This trend “A desire to connect more meaningfully with the things we buy, the things we do, and the things we invest in” is what is driving crowdfunding now that the technical disruption required is marching forwards.

Equity crowdfunding will lift the crowdfunding industry to a new level. Pre-sales and patronage only work for some products and services. Not everyone can market their opportunity or product on the basis of pre-orders. Many opportunities and companies need money in the operational entity and usually it is a lot more money than can generally be achieved by pledge or reward crowdfunding.

These opportunities will attract their own tribe of people looking for a meaningful use of their funds and often a strong emotional connection to the people who are going to be the custodians of their hard earned dollars. This is not the area for a gatekeeper to make the decision for them.

However, as the title of this post says “Equity Crowdfunding is not just about diversified portfolios”. Which means there will be a place for people managing “diversified portfolios” where the more analytical can decide the best place for say 2% of someone’s investment portfolio in a high risk early stage venture. But, you can’t write human nature off.

Many people invest because they have a natural affinity to support causes they believe in. They will be friends, family, fans, followers where they passionately love the technology, people, geographical location or the general buzz. For these people a diversified portfolio is not their definition of equity crowdfunding.

 

 

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Crowdfunding is not a “set and forget” model

Univerity of California, Berkeley logo

University of California, Berkeley logo (Photo credit: Wikipedia)

This post is inspired by a quote from Dr Richard Swart. He is a globally recognized authority on crowdfunding, equity crowdfunding and crowdfund investing. He directs the University of California, Berkeley research program studying crowdfunding and innovation. Recently he hosted an event where five years of statistics from the ASSOB equity crowdfunding platform were presented in the form of a research report entitled  “Signaling in Equity CrowdFunding” at the UC Berkeley’s Fung Institute’s ACADEMIC SYMPOSIUM ON CROWDFUNDING.

This was the inspiring quote:

I don’t believe the vast majority of people who start a crowdfunding campaign know what they’re getting into. The entrepreneur or the founder has to be ready, willing and able to commit a good chunk of energy and time to crowdfunding once they start. It’s not a set and forget model.” — Dr Richard Swart – See more here!

 At ASSOB, the world’s oldest equity crowdfunding platform, an equity or investor crowdfunding raise goes through six separate, but connected stages. Each stage needs continuous attention and actions to give the highest possible chance that capital will be raised.

Lets skip all the compliance stuff (boring) and go directly to the marketing tasks that the entrepreneur or the founder has to be ready, willing and able to commit a good chunk of energy and time to.

The basics are, over a period of time, a raise goes through the following phases:

  1. Pre-launch
  2. Soft-Launch
  3. Live!
  4. Post-launch

All stages require “a good chunk of energy and time”. Especially “Post-launch” when you deliver on the promises you made in your offering communications. If you “forget here” you will be reported to the regulators.

To gain and keep investment, from pre-launch to post-launch, you need to communicate what an investor will get from handing their hard earned money over to you. Usually these communications follow a sequence:

  1. First you need to determine what the investment opportunity is for investors and how you/they will articulate it’s value.
  2. Friends, family fans and followers will be initial targets for your influencers, ambassadors and potential investors list but it is important that you dig deeper and identify the investor audience that will resonate with your offering. Some people go as far as to build an avatar and a description of the perfect investor.
  3. Once you have identified the investor audience you need to build the communications program that will be communicate with them to attract and engage. This will include social media, public relations, email, press releases and events.
  4. Once you have the communications program nailed down, and followers attracted to your offering, you need to consistently communicate value to all followers so that they are kept up to speed and find the communications compelling. Then they invest!

These four steps are time consuming but essential. After 300 or so equity crowdfunding raises on the ASSOB platform the ones that get filled are the ones that are worked!

 

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A_Crowd_Funding_Revolution_Online_Radio___BlogTalkRadio A_Crowd_Funding_Revolution_Online_Radio___BlogTalkRadio_and_Enough_Said_2013_HDRip_x264_AC3-MiLLENiUM_mkv_and_Downloads-2

Investor, analyst, Blog Radio host and senior industry executive Doug Atkin takes a look at how technology and crowdfunding are changing Wall Street. He travels the country to talk to key players in the sector, discovers new businesses based on this funding model, and is joined by some of the financial and tech industry’s leading experts to discuss the impact that crowd-sourced financing is having on people’s lives and the global economy.

In this Blog Radio interview Doug Atkin interviews Paul Niederer on the differences between Crowdfunding for Accredited investors, Unaccredited investors and a mixture of both.

Crowdfunding and Fraud is also covered.

While the Australian market for crowdfunding is in a state of change from a regulatory point of view it is home to Australia’s the world’s first equity crowdfunding platform, ASSOB. ASSOB has been running it’s equity crowdfunding platform since 2005 and has raised $136 million for over 300 companies. The ASSOB technology has been licensed to the U.S. where it will operate under the Offerboard.com brand name.

This hands on experience and track record over the past nine years means that Paul Niederer has valuable insights from running a platform on a day to day basis.

From the Crowd to the Cloud. How Technology is Changing The Way Investors Manage and Save Their Money. Hosted by Doug Atkin.  Doug Atkin interviews ASSOB’s Paul Niederer.

You can listen to the interview here!

 

 

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Prevention of Fraud in Equity Crowdfunding

FraudANDcrowdAfter 300 or so raises on the ASSOB Equity Crowdfunding platform it may be valuable to others to understand what processes are in place to prevent fraud. Since 2005 there have been zero cases of fraud. Firstly though what is Fraud? Usually any definitions of fraud include statements like …

 

  • an untrue statement of a material fact
  • representation that the person making it knows is not true
  • doesn’t have the basis to make such a statement
  • to omit to state a material fact that is necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading

Often it is difficult to tell whether it is an “honest mistake” or “reckless disregard”. Where would you place the following examples choose from … an “honest mistake” or “reckless disregard”

  • Failure to transfer intellectual property into capital raising entity
  • TM expired, patents lapsed
  • Failure to properly disclose contracts not at arms-length
  • Company or business does not exist. Founder or associate names are fake.
  • Company or business claims to be associated with reputable businesses
  • Domain names are usually not in the correct names of the capital raising company.
  • Founders Issuing equity during a capital raising in addition to those in the raise offer document.
  • Failure to observe basic corporate governance obligations – lodging share notifications, holding Stockholder Meetings, preparing audited financials
  • Failure to send stock certificates or holding statements to investors
  • Material changes / events occurring and not keeping investors updated, e.g. intellectual property expired, material contracts fallen through.
  • Undisclosed debt for equity or convertible notes transactions that exist prior to the raise

The competent operation of the crowdfunding platform or portal is essential for the prevention of fraud in equity crowdfunding. Based on my experience with the ASSOB platform we have learned that it is very unlikely that fraudsters would be bothered jumping through all the hoops a competent platform or portal places in the path of each transaction. As a guide here are just some of the steps each transaction needs to pass through or adhere to for ASSOB raises:

  1. An Intermediary exists. In most white collar fraud there is seldom a buffer between the fraudster and the victim. ASSOB has independant accredited partners to hold the hand of issuers during the raise process.
  2. Upfront Fee paid. Fraudsters often dont have the funds to pay to get a fraud started
  3. Founders and Entity Due Diligence. ASSOB has two stages of due-diligence. The first stage involves “ASSOB Legal ” checking out the capital raising entity, the founders and the IP to ensure all of this is appropriate and in the right entity for investment.
  4. Marketing Materials Due Diligence. The second due-diligence stage is to check that the material used to market the offering gives a true and fair view. Any statements that misrepresent the opportunity are communicated as not appropriate and the issuer needs to resubmit.
  5. Own Crowd feedback. Before the offering goes live the issuers own crowd has an opportunity to speak up if they done believe what is offered is legit.
  6. External Crowd feedback. Once the offering goes live there is plenty of opportunity for the world at large to report anything that doesn’t stack up.
  7. Funding Targets & Escrow. Targets and escrow mean that funds are not distributed unless special conditions are met.
  8. 10 day Cooling off period. Investors can get their money back within 10 days of a transaction not needing to give a reason.
  9. 3 Directors and Auditor. Directors and Auditors have responsibilities under the law and they will usually tend towards protecting themselves before turning a blind eye to fraud within an organisation.

All these steps, together with corporations law, provide a barrier to fraud that has yet to be breached at ASSOB. If equity crowdfunding platforms and portals take a similar responsible path then I’m certain that fraudsters will head for easier territory.

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An assortment of United States coins, includin...

An assortment of United States coins, including quarters, dimes, nickels and pennies. (Photo credit: Wikipedia)

Just because someone has money (an Accredited Investor) doesn’t mean they know how to invest.
Or that they can afford to lose it.

It seems the way regulators assess investor eligibility is based on the fact they can “probably” afford to lose if the investment goes bad.

Wouldnt it be better if the prospective investor had to self certify that they were firstly fully aware of the risks, meaning they were prepared to lose all of their money, and secondly they have the knowledge and experience to invest.

So thats …

1) Aware of the risks
2) Knowledge and experience to invest

 

Aware of the risks is just making sure they sign a statement that includes they realise they could lose all their money, that this is a high risk area and they should do their research before investing.

Knowledge and experience could be based on a points system, say 100 points an investor needs to self certify to be able to invest.

Jordan Green and I have built the following list as a start. 100 points to qualify. There are probably 50 more qualifications but this is a start.

Fellow of an Angel Investors Group 100
Member of an affiliated Angel Group 40
Graduate of an Angel training (one module) (cumulative) 20
Graduate of Angel training (all modules) 60
Fellow of the Institute of Directors 70
Graduate of Company Directors Course 50
Graduate of Mastering the Boardroom 40
Graduate of Foundations of Directorship 20
Graduate of International Company Directors Course 20
Director of Public Company (at least one year, only counts once) 20
Director of Private Company (at least one year,only counts once) 10
Financial Services Responsible Manager (at least one year) 30
Institute of Management Advanced Diploma of Management 40
Graduate Stock Exchange Shares Course 10

The qualification should imply some specific ability to address the risks of an early-stage high growth venture.

An “Informed Investor” is a self certification that covers risk and knowledge / experience. It seems far more appropriate than taking the line that just because someone has money they can afford to lose it.

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Crowdfunding and Innovation

teslaMany a good innovation dies on the vine due to the lack of funds to make a prototype or take it to market.

Crowdfunding is bridging this gap.

The main idea with reward and equity crowdfunding is that the innovators and their helpers set up a fund raise as a new project on a crowdfunding platform. The innovators, now promotors, invite others to assist them with funding their goal within a specified timeframe. Most projects have a funding goal that if reached makes their project worthwhile. Depending on whether the crowdfunding is donation, reward or equity based backers receive a gift, product, a good feeling or shares.

In a recent Indiegogo presentation I attended it became obvious to attendees that reward crowdfunding is not just about the money. Innovation is at the core of virtually all raisings. The presentation highlighted five reasons innovators may use a rewards crowdfunding platform to raise capital.

  1. To validate the market. The innovator wanted to open a “Cat Cafe” in London, needed £108,000 to do it, but was unsure if there was enough interest. The campaign raised £109,510 in two months which validated the idea of opening a cat cafe where visitors will have the opportunity to kick back and relax with a cup of tea and spend time in the soothing company of our purring feline friends.
  2. To test a market. Canary pitched itself as the first smart home security device for everyone. Canary is a single device that contains an HD video camera and multiple sensors that track everything from motion, temperature and air quality to vibration, sound, and activity to help keep you, your family and your home safe. Unsure of the market the promoters pre-sold their units in a crowdfunding campaign with an initial sales goal of $100,000. The market responded with orders for over $1.9 million. Over 7000 units were sold. A very successful market test.
  3. Get extra promotion. Sometimes your sales may be confined to the market as you know it and need a wider audience.  Take the Robot Dragonfly for example. The dragonfly was developed at the Georgia Institute of Technology, as a joint effort between 20+ researchers, PhDs, professors and students from multiple universities across the world. Through their crowdfunding project they raised over $1.1 million and gained 3200 customers.
  4. To capture data. The Scanadu Scout is a personal scanner packed with sensors designed to read your vital signs and send them wirelessly to your smartphone in a few seconds, any time, anywhere. The device promotors used crowdfunding to target the consumer market but the backers they attracted, and the data generated by these backers, is certain to capture the attention and significant budgets of the medical industry around the world.
  5. Money and matching money. Sometimes it is about the money. This was the case when Tesla’s final laboratory came up for sale. A non-profit wanted to buy the property and turn it into a Nikola Tesla Museum. The property was listed at $1.6 million, and this non-profit would receive a matching grant from New York State of up to $850k if it raised the money.  33,253 contributed over $1.3 million and the building was saved.

Equity crowdfunding and innovations also go well together. On the ASSOB platform hundreds of products and services have reached the world due to raises on ASSOB’s proven capital raising platform. The examples that follow raised a total of $16.8 million  include plastic wine barrels, pressurised fruit juice, dental plans, a self managed superannuation portal, open source network management software, proximity advertising, childrens’ designer furniture, encryption software, mining tenements, welding technology and an on-line photography marketing site.

There are now thousands of examples world-wide where innovation and crowdfunding go hand in hand.

And … this is just the beginning.

 

 

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by Paul Niederer

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