Wednesday, October 30, 2013

2013 Entrepreneur Expo - Lecture on Crowdfunding

2013 Entrepreneur Expo

National Black MBA Association, Inc. - Washington DC Chapter

Tuesday, November 5, 2013 from 6:00 PM to 9:00 PM (EST)

Wednesday, October 23, 2013

SEC votes to allow full crowdfunding

The full Securities and Exchange Commission voted today to approve rules allowing full crowdfunding. This means that, in short order, you will be able to sell stock in your small or startup company over the Internet.

Title 3 of the JOBS Act means that issuers can sell securities online to anyone. The SEC voted to create a new SEC Act exemption to do so. The amount of money you can raise and the amount of money you can invest is limited, however. SEC Staff Members John Ramsey and Sebastian Gomez were two of the authors of this exemption. Ramsey noted the new rule requires crowdfunding intermediaries to register with the SEC and FINRA. The new rules create an entirely new type of business financing firm: a Funding Portal (FP). Portals bring investors, companies together. He noted that FINRA will issue a regulatory notice on FPs.

SEC Staff Member Lela Bond noted that the proposed rules exclude foreign companies, investment companies, companies with no business plan, and companies looking to raise money for the purpose of financing a merger or acquisition from using US-based equity crowdfunding. The proposed rules also require intermediaries to provide investor education, collect information about investor income and net worth, and abide by anti money laundering laws. The risk of fraud is to be managed by the intermediary FP. 

While SEC Commissioner Aguilar noted that the new rules could help minorities and women, in later conversations with SEC Officials it became clear that they had no intention of using Title VII of the Act, which requires the SEC to reach out to women and minority owned companies to inform them about these new fundraising opportunities. This may be due to the lack of diversity on the SEC staff. Virtually none of the Senior Staff and actually none of the Commissioners are African American.  

SEC Open MtgSEC Commissioner Gallagher supports proposal and said it would give effect to the will of Congress and the President. He noted that the proposal is carefully written not to add friction and balances investor protection and innovation. Commissioner Stein noted the rule would allow investors to use the wisdom of the crowd to identify and reward good ideas. Commissioner Piwowar noted that the JOBS Act forces SEC to think out of traditional regulatory box and presents a number of challenges. 
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Tuesday, October 22, 2013

Senate pushes SEC on crowdfunding

Letter from the US Senate to the SEC about the JOBS Act.
October 21, 2013
The Honorable Mary Jo White
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Chairman White:
We write in response to recent news reports that the Securities and Exchange Commission (SEC) is nearing the point of proposing regulations on crowdfunding.  Proposed regulations have been delayed significantly, and we urge the SEC to move forward with its proposal as soon as possible.
The Jumpstart Our Business Startups (JOBS) Act was adopted with bipartisan support in both the Senate and the House of Representatives. The legislation was signed into law on April 5, 2012, and in it Congress directed the SEC to publish rules on the crowdfunding provisions within 270 days of enactment.  It has now been over 530 days since the JOBS Act became law, and we have not seen a proposal from the SEC on crowdfunding.  We are concerned that so much time has passed without action. 
The law provides a new financial market for entrepreneurs and startup companies to raise capital, while ensuring investors are protected. We respect and support the SEC’s rulemaking role in structuring this new financial market. Done right and with input from entrepreneurs and investors, the SEC can create a marketplace that is trustworthy and achieves the goals of the crowdfunding provisions of the JOBS Act.  In particular, we have heard from entrepreneurs who have created crowdfunding platforms and those who want to raise capital via this new mechanism, both of whom have been hurt by the delay. 
The new marketplace is designed to provide a mechanism for small and new businesses to access capital crucial to job creation and growing our economy, while providing investors with opportunities to participate thoughtfully in these endeavors.  We urge you to move quickly to propose rules on crowdfunding and thank you in advance for your prompt attention to this matter.
Senator Jeff Merkley (D-OR)
Senators Jerry Moran (R-KS)
Michael Bennet (D-CO)
Mark Warner (D-VA)
Kelly Ayotte (R-NH)
Jon Tester (D-MT)
Pat Toomey (R-PA)
Mary Landrieu (D-LA)

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Sunday, August 11, 2013

Nas Launches the Best Crowdfunding Campaign EVER!

Cover of "Illmatic (Aniv)"
Cover of Illmatic (Aniv)
We note with interest the crowdfunding campaign by Nas, (formal name: Nasir bin Olu Dara Jones.) According to Wikipedia, "his debut album Illmatic, released in 1994, received universal acclaim from both critics and the hip hop community. It is frequently ranked as..the greatest hip hop album of all time.."

His crowdfunding campaign is unique, actually brilliant. No other celebrity of his stature has launched a crowdfunding campaign that has been as personal and targeted. Rather than focusing on a record, a product or a film (in contrast to, say, Spike Lee or Zach Braff) or self aggrandisement, Nas chose to focus on the needs of a single human family. Outstanding. THIS is what crowdfunding can do and may be the template for future crowdfunding campaigns by similarly situated performers.

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Friday, August 2, 2013

How To Crowdfund: 5 Crowdfunding Tips

With crowdfunding gaining traction, I thought I would revisit and update our crowdfunding tips.

1. Review other crowdfunding campaigns for best practices

As one blogger noted, "Before you start your crowdfunding campaign, study others who have done it well." There will be many examples of how to do crowdfunding right. Watch our Twitter feed (@Blackcrowdfund) 

2. Hustle

Develop a "strategic approach." Who are you trying to get support from? Why would they support you? What are the long term benefits to your supporters? Are you going to hit them up again? How many times?  Create a media list. Get "ambassadors," people who will speak on your behalf. "Plan ahead as much as possible. This means contacting your supporters before you launch to firm up their promotion and participation, and also developing a thorough marketing plan." Above all, get going!

3. Adapt quickly

As one crowdfunder put it, things may not go as planned. You will need to adapt, quickly. "It was extremely difficult to let go of our preconceived notions and admit that we had launched incorrectly. But that is part of the beauty of crowdfunding. Listen to your customers, as it could prevent you from making costly mistakes later on." 

4. Create your own rules

While it's key to study best practices, it's also important to seek out your own rules, as crowdfunding is a relatively new space and many best practices are still being defined."

5. "Get tactical and practical"

Start your campaign on Monday and end your campaign on a Friday. It will help you to maintain your momentum. Set your goal below the actual amount you want to reach." Also, the tone of the campaign is important. As Numa Perrier said, when discussing her successful campaign to raise $100,000, "Don't use begging words (please help us, etc." Make it fun. Invite people to join you. Invite them to participate.
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Saturday, June 15, 2013

Successful Crowdfunding

From a recent article, 7 Key Elements of a Successful Crowdfunding Campaign. My comments are in bold text below:

1. "Tell your story. As the old adage goes: facts tell, stories sell. When it comes to eliciting customer engagement, a campaign with a good story is an unparalleled strategy. Did you experience some kind of obstacle on your path to entrepreneurship? Did a major life event influence your career choice or business decisions? Tell your story in your crowdfunding pitch to make a connection with backers and encourage engagement.If you don’t have a personal story to share with your audience, share facts and highlights about your startup, product or vision instead. Describe the problem (and severity of the problem) your product will solve, or discuss the vision for your startup. Keep your tone and messaging personal to make backers feel closely connected to you and your project."

Agree wholeheartedly. Telling your story is key

2. "Provide value for value. Crowdfunding campaigns hinge on reciprocity. If your startup offers fantastic products, rewards or opportunities, you’ve created a huge incentive for backers to pledge to your campaign. When choosing your reward tiers, reflect on whether the incentives would appeal to you if you were the consumer; ask friends, family members and business acquaintances for their honest opinions as well."

SOME campaigns hinge on this. Some don't. A key factor is social return: what you are doing for the community. Look at the "Karen the Bus Monitor" campaign on Indiegogo for an example of a purely social campaign.

3. "Introduce scarcity. A basic law of economics dictates that scarce supply inherently creates greater demand. Create greater demand for your startup by limiting one or more of the higher level rewards to just a few — this will inflate demand for those rewards and result in higher pledge amounts for your crowdfunding campaign!"

Don't agree here. This is a holdover from the greed-induced financial crisis.

4. "Create a marketing event. People love to feel like they are part of something bigger than themselves. Try to build a feeling of excitement and rally others around your crowdfunding campaign by tying the launch to a large, well known event. You can connect your product to a holiday, sporting event, or season to increase the momentum surrounding your launch. You can leverage the emotional connection surrounding these events to get people excited about your product and engage them in discussions.This is especially useful for connecting with backers through social channels, capitalizing on trending topics and popular hashtags to get more eyes on your fundraise!"

These seem to work.

5. "Highlight examples of social proof. Going back to the human desire to feel like a part of something bigger than themselves, most people don’t want to be the first or only supporter of a crowdfunding campaign — they want to see other influential advocates joining in. Do you have someone notable as an adviser, backer or endorser of your startup? Share your list of partners and patrons to give confidence to new backers and let them know that they won’t be the only one at your party."


6. "Build credibility and legitimacy. Many backers will believe it when they see it. In other words, they require some kind of evidence that your startup is legitimate and picking up steam before deciding to back your crowdfunding campaign. Show your backers what they’ll be supporting in detail — how it works, how you came up with the idea, and even pictures or videos if you have a prototype. Remember that you will likely never meet your backers, so the more proof you can provide that your startup is legitimate the better.
We call this Crowdfunding Authenticity and Validity. 

7. "Interact with your supporters. Don’t leave your backers in the dark for weeks after they’ve supported your project. Interact with your audience through frequent updates, thank-you emails or social media outreach, and responses to their questions and feedback.You can build anticipation and increase engagement in many ways. Post updates counting down to a big surprise regarding your project, conduct a product giveaway, or even host a contest involving your crowdfunding campaign. The opportunities here are endless and can be tailored for your specific startup.When interacting with your backers, always encourage an open dialogue and engagement. In general, people would rather talk than listen. Treat your updates and outreach as a conversation rather than a one-sided message."


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Twitter: @CreativeInv
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My new book: The JOBS Act: Crowdfunding for Small Businesses and Startups

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Wednesday, May 22, 2013

African American buying power

"African American buying power will increase 73 percent between 2000 and 2012, which not only overtakes the 60 percent increase in Caucasian buying power, but also the 67 percent rise in total buying power of all races combined. Two factors contributing to the gains include a 61 percent increase in black-owned businesses in the five-year period between 2002 and 2007 and 84 percent of blacks over 25 years of age completing high school or college – a sharp increase from 66 percent in 1990." 

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Saturday, May 11, 2013

Martin Luther King on Crowdfunding

Martin Luther King Memorial, Washington, DC
Photo by William Michael Cunningham
Copyright, WMC, 2012.

"Evil is not driven out, but crowded out...through the expulsive power of something good. " MLK

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Friday, May 10, 2013

Top 10 Things Black Folks Need to Know About Crowdfunding

A short video describing the top 10 things black folks (and others) need to know about crowdfunding. A plug for

Sunday, May 5, 2013

FREE Webinar on Crowdfunding!

U.S. Crowdfunding Market Size Estimate: $3.9 billion

The University of California, Berkeley's Fung Institute for Engineering Leadership has conservatively estimated the size of the equity and debt based crowdfunding market to be at least $3.98B. 

Professor Lee Fleming, Faculty Director of the Fung Institute, Academic Director of the Program and contributing author said, “While estimating the size of the future and currently non-existent market is a hazardous endeavor at best, we have presented a set of data, assumptions, and estimations that may prove useful. From the lenses of Angels, VCs and Small business lending we believe a market as large as $3.98B per year could rapidly evolve.”

“While Venture Capitalist Fred Wilson added credibility to the concept of crowdfund investing by predicting crowdfund investing could amount to a $300B market, we believe that the market size may be much small yet equally impactful” said Sherwood Neiss, co-founder of the Program for Innovation in Entrepreneurial and Social Finance and co-author of the size of market report. “The potential is not only measured in dollars funded but also in the numbers of business started and jobs created.”

We think the $300 billion estimate optimistic, to say the least. The $3.98 billion estimate may be closer tto the mark for 2013, but we'll stick to the $2.7 billion 2012 estimate we noted earlier.  
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