To crowdfund or not to crowdfund?

The biggest paradigm shift in capital formation, post pandemic, is that every level of Investor and Founder has pivoted head on into #crowdfunding.

COVID19 forced Angels, VCs and Institutions online, ushering in a new era of FinTech adoption within capital formation. What was that fintech adoption? Platforms.

While the platforms have different regulatory requirements depending on the type of Crowd they're pursuing, they've all moved to digital platforms to facilitate funding.

GPs crowdfund for Funds from LPs on social media and private platforms, very similar to how Founders crowdfund for startup funds on social media using RegCF funding portals.

As Founders this is important for you to be aware of because regardless of The Crowd you're pursuing (VC, Angels, or Retail Investors) you'll be doing that online. So! If you have to pitch and pitch on online platforms, don't just pitch to a small audience. Pitch to the largest crowd you can get!

And that is t...more

TL;DR 

1. Customers have more money than VCs.
2. Going Public empowers Founders to raise up to $75M via RegA+ crowdfunding while setting the investing terms for VCs, Sharks, Whales, Institutions and Customers alike.
3. Nothing shows “traction” to Wall Street investors like raising money from 20,000 or 30,000 investomers. 

First we should state the obvious thing. If you’re a Founder pitching to Sharks one at a time is the most inefficient way of raising capital. However, before JOBS Act Investment Crowdfunding you didn’t have a choice but to hustle around trying to find so-called “angels” and self-identified sharks and beg them for the opportunity to pitch. Now though, you don’t have to beg. Instead, through investment crowdfunding you have the opportunity to create an investment frenzy specifically for your business. No, this doesn’t make raising capital any easier. Raising capital is very similar to running a marathon. Even if you randomly find yourself at the starting line five mi...more

Hello Beautiful People and in particular Founders. Today we’re going to discuss the obvious and the elusive of investment crowdfunding. The obvious things being why WeFunder, StartEngine and Republic have the most “successful” crowdfunding campaigns and then the elusive definition of “successful” when it comes to what that means to you as a Founder. You can read more about their success to date in this KingsCrowd article: https://kingscrowd.com/chart-of-the-week-which-platforms-have-most-successful-deals/ 

First some quick, obvious, maybe even a little dirty things that you should be aware of: 

1. It takes money to make money and even more to raise money.
2. If you’re considering launching a “successful” crowdfunding campaign you should be planning to spend a minimum of 6 months and $150k planning, launching, and nurturing your “successful” campaign to success.
3. Raised money isn’t earned. You’ve got to pay it back. So while your “successful” crowdfunding campaign is definitely some

A bit ago I was on a webinar for Financial Poise, where I said that startups can expect to have a sunk cost of ~$46k in travel expenses alone and expect to take on average 21 months to raise money using the Reg D exception. On the webinar was “Mark”, the archetypical securities lawyer, who in typical lawyer fashion disagreed vehemently with these figures. So, what follows is a simple breakdown of typical expenses incurred in raising money via not only via Reg D but also JOBS ACT Reg CF and Reg A/A+ crowdfunding. Because it turns out that it still takes money to make money. 

The Sunk Costs of Raising Capital  

“A sunk cost is a cost that has already been incurred and cannot be recovered.” 

There are numerous sunk costs in raising capital. For the entrepreneurs out there who will actually cut the checks here are the cold hard facts. 

Reg D 

Raising money via Reg D is the easiest and cheapest way to raise money if:

1. You have an established business that is current

What to Know Before You Take the Plunge

The investment crowdfunding marketplace is growing faster than ever before, and is projected to grow by $196.36 billion from 2021 to 2025.

Unfortunately, industry watchers have observed an alarming level of non-compliance with the most basic rules of Regulation Crowdfunding by both companies raising capital and the platforms hosting the campaigns.

Non-compliance can result in regulatory enforcement action and/or investor lawsuits.  So if you’re considering dipping a toe into the crowdfunding world, compliance should be at the top of your list.

In 2016, the SEC completed its rulemaking process for Regulation Crowdfunding.  It suddenly became possible for a business to list an investment offering on a platform, and anyone in the United States could invest in the offering.  But before doing that, the business, as well as the platform, must comply with some basic rules of the road.

According to a recent analysis, only a small minority ...more

Crowdfunding doesn't actually raise you money, marketing does. Gotta market your deal. 

Every Founder is looking for the same thing a) Customers b) "the right investor". You achieve both through marketing. Because at the end of the day its up to YOU to let the world know your business exist, what your vision for it is and how they're going to benefit from supporting you as either a customer, an investor or as an #Investomer.

To be clear, #crowdfunding doesn't HELP you raise money. It ENABLES you to raise capital from all levels of investors from VCs, Institutions, Angels and Retail Investors. It is still up YOU to market your deal, regardless of which type of investor you're looking for.

Hence another reason George Pullen and I are so pumped about GoingPublic.com as it is a marketing (and Distribution) engine for startups.

So, if you want to increase your odds of success for your funding campaign (RegCF, RegA or RegD) remember to be ready to tell your story and market your ass off...more

Question from Aaron:

Happy Sunday Samson! I’m definitely enjoying and appreciating all your posts and article on the power of crowdfunding and crowdinvesting to help gain market share and loyal customers for the long haul. I had a question about the best place to launch a crowdinvesting product on a platform to gain the most views from future customers/investors, as I’ve been working on a project for the last year that revolves community development. I’d love to get your feedback and opinions on this at your best convenience if would be that great of a human! Thanks and happy Sunday! 😊

Answer from Samson
TODAYSamson Williams sent the following message at 8:52 AMView Samson’s profile Samson Williams  8:52 AM
 
 
Morning Aaron!

You have 3 options:  

1. Book time on my calendar so for $500 an hour an I explain why it doesn't matter which platform you select here: https://www.milkywayeconomy.com/schedule-a-call
2. Just take my word for it. 
3. Stop believing platform