Sunday, August 23, 2015

Black People, Venture Capital and Crowdfunding

I recently gave a talk at the 2015 National Black MBA Association, INC. Washington DC Chapter (NBMBAA-DC) Entrepreneurship Expo. My talk, titled “Black People and Venture Capital: Why You May Never Get Funded,” available below.

I started with a discussion of the key financial institution in the country, the Federal Reserve Board, which controls the allocation of capital via monetary policy, the tools used to control the supply of money.  The Fed is located at 20th Street and Constitution Avenue N.W. and I encouraged DC entrepreneurs to visit the institution, since the Fed directly impacts the ability of small businesses to get capital.

I also encouraged Black businesses in DC to use the recently established Offices of Minority and Women Inclusion as a powerful potential source of capital and contracts. Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act contains a provision creating an Office of Minority and Women Inclusion (OMWI) responsible for monitoring diversity efforts at the agencies, regulated entities and agency contractors. (For those unfamiliar with these Offices, we offer a seminar describing in detail the duties and performance of the 29 OMWI Offices.

In the video, I cite my belief that crowdfunding, or raising money online for people, projects and products, is one of the only viable ways Black companies can get funded. I referenced my books on the subject: Top 50 Crowdfunding Campaigns: Fifty Most Successful Crowdfunding Campaigns at: and The JOBS Act: Crowdfunding for Small Businesses and Startups at: 

Key trends in crowdfunding include the following:
•             Kickstarter and Indiegogo continue to dominate crowdfunding.
•             Corporate America is into crowdfunding..major brands, including Kia and Kimberly-Clark, have launched campaigns to test the market for new products.
•             Startups raised $204 million through equity models in 2013; that number was expected to top $700 million—7 percent of the overall crowdfunding market—in 2014.

I also discuss my belief that the key to getting angel or venture capital funding lies in being referred to investors by another investor or entrepreneur. I identify Keiretsu Forum, a global angel investor network, as a good resource, but noted they have not funded a single African American firm, however.

I referenced “Dunbar’s Number”, named for psychologist Robin Dunbar, who found that “humans are able to maintain relationships with no more than roughly 150 people at a time.” Dunbar’s research shows that “when it comes to meeting people who can help you professionally, three degrees of the magic number because when you’re introduced to a second- or third-degree connection, at least one person in an introduction chain personally knows the origin or target person.” 

As I said on Mashable,  1% of VC funding goes to Black people. This is no accident. Other studies have confirmed that “venture capital funding overwhelmingly goes to white men.” Given this, it makes no sense to solicit funding from a group you know is not going to fund you. Viable alternatives include crowdfunding, angels, bootstrapping and possibly bank financing (but not really).

At one point, I outlined a strategy of buying real estate in Black communities to use as an asset for a startup franchise location. Further, I referenced my Blank Crowdfunding Business Slides as one way to begin to outline your startup capital needs and strategy.

I discussed using credit cards, personal loans and other resources to accumulate enough capital to start a business and about how “an increasing number of VCs want startups to engage in crowdfunding before requesting backing” but how VCs are still too racist and greedy to allow Black companies the room they need to serendipitously discover and uncover market value. I pointed out how this was exactly how Google uncovered the strategy that eventually led them to a $200 billion market value.

Finally, for those foolish  enough or determined to pursue VC funding, I discuss the main reasons why people don’t get funded:

·  Your character, integrity or leadership is questionable
·  You failed to spot issues with your team because you’re too trusting, too polite, or too focused on yourself
·   Not referred to investors by another investor or entrepreneur
·  Hard-headed to the point of being unable to listen to input from an experienced, reasonable and knowledgeable investor
·  Not deeply embedded in your niche or area of expertise
·  An inability to stop, and think, and finally, 
·   99% of VCs are racist and/or sexist

Thursday, June 4, 2015

Tech808 is this Saturday June 6th at George Washington University

Tech808 is this Saturday June 6th at George Washington University and it's shaping up to be one of the rarest types of tech conferences to hit the DC area. Tech808's mission is to bring awareness of the possibilities of tech entrepreneurship within the urban culture.

Who Should Attend Tech808?
Wantrepreneurs: You are the new guy/girl on the block. You want to start a company but have no idea how. You might have a 9 to 5 gig, been laid off, or decided it was time for a change. All of our speakers have been there, #Tech808 will not only educate you on tactics needed, but it will also leave YOU INSPIRED TO CHASE YOUR DREAMS!

Entrepreneurs: So you already started to chase your dreams? Salutes on that! Now join us at #Tech808 to learn how to take your company and yourself to the next level. We’ve brought together some incredible speakers to teach YOU their tactics that have led them to success.

Speakers/sessions include:
Paul Brunson - "Business Lessons I Learned From 3 Billionaires"
Sheena Allen / Benjamin Young - "How To Build Your First App" These two combined have over 10 millions downloads on the app store.
Dwight Peters - "Hustlers Ambition" How he came from sleeping on a couch to a $100,000 in profits building a tech business in 1 year.
And many many more!

Tickets are on sale now for $75, but using the promo code "family" will bring the cost down to just $55.
RSVP now to learn actionable tips you can apply to your business the same day.

Saturday, May 23, 2015

Illinois Approves Intrastate Crowdfunding

As one author noted, "Here are some of the main points of the Illinois Intrastate Crowdfunding Bill (HB 3429).

Adds new definition of 'accredited investor' which is now tied to the federal definition (see new 815 ILCS 5/2.34).

Amends the transaction exemption provided by 815 ILCS 5/4(H) to allow for offers, sales and/or issuances of securities to any 'accredited investor' and for the general promotion of the same (to the extent specified in the Bill).

Provides new definition of  'qualified escrowee,' which includes title insurance companies and banks authorized to do business in Illinois who maintain at least one (1) physical location in the state (see new 815 ILCS 5/2.35).

Provides new Intrastate Crowdfunding Exemption (see 815 ILCS 5/4(T)). Highlights include:
$1,000,000 funding cap unless the Issuer has made available to prospective purchasers audited financial statements, in which case the funding cap will be $4,000,000. – See subsection (2)
Max amount received by an issuer from any particular purchaser (other than accredited investors) is limited to $5,000 per year. – See subsection (3).

Requires use of a 'qualified escrowee' for the collection of funds from potential purchasers. – See subsection (8).

Requires the issuer, and each internet portal used, to establish commercially reasonable measures for limiting access to information to residents of Illinois. – See subsection (11).

Allows for 'general announcement' of offering by issuer. – To be in final administrative rules.
Requires delivery (or electronic access to) internally prepared quarterly financial statements/business reporting of issuer.  – To be in final administrative rules.

Provides new definition of 'registered internet portal.' (see 815 ILCS 5/2.36).

Establishes new provision related to offerings made through a 'qualified internet portal' (see 815 ILCS 5/8d). Highlights include:

Provides for an exemption from registration as a 'dealer' or 'investment adviser' under the Act for an internet portal that meets certain requirements. Specifies certain actions which do not, by themselves, constitute offering investment advice or recommendations. – See subsection (b).

The portal shall be owned by an entity organized, or otherwise qualified to do business, in Illinois and in good standing. – To be in final administrative rules.

Allows for 'general announcement' of offering by internet portal. – To be in final administrative rules."