- Customers have more money than VCs.
- 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.
- 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 minutes before the race starts doesn’t mean you're going to win it, muchless complete it. Why? Well because there is a lot of truth in those 26.2 miles. The truth those miles speak is whether or not you prepared and trained for the marathon. Raising capital is no different. If someone promises you a short cut and an easy journey, you should probably check your floatation devices cause you’re most likely on the dinner menu in a shark tank.
So to be clear, raising capital is extremely hard. And while there is no 100% guaranteed method of success here is how crowdfunding and specifically Going Public is changing the capital formation game.
- Your customers do actually have more money than Venture Capitalists. VCs use you to extract wealth from your customers for them. Let me repeat what until recently was the “circle of life” for Founders looking to raise capital. VCs invest in you, so you can engage customers; thereby Customers give you their hard earned money, so you can pay the Sharks back in multiples of 100s. That is the thing about raised money, it's not earned. You’ve got to pay it back. But what happens when your current, future and potential customers invest directly into the business they’re already fans/customers of? When your customers can invest directly into your business, Founders win. Founders not only make money but can retain greater control of their business. Turns out crowdfunding is a great way of removing your equity from the menu and putting Sharks on a diet.
- Raising capital on your terms. For the 1% of Founders, who after 30+ months of trying are successful in raising capital from Sharks, over 60% of that 1% find themselves diluted down to “employee status”. Meaning even though you’re the Founder of the company that has raised $10M, $20M, $50M you have a new boss, “Mr. Shark”. The following is a big reason why Founders are choosing crowdfunding in general. Founders set the terms. Historically, Founders had some idea of terms and Sharks would sharpen their teeth on term sheets shredding them to the point where Founders found themselves in what turned out to be very one-sided employment agreements. If you’re a Founder and don’t want to find your equity and startup baby on the wrong side of Shark’s dinner menu, consider crowdfunding. Whether you need to raise $100k, $5M, $50M, $75M or more, crowdfunding provides you the option to at least try and not be eaten alive by Sharks.
- Going Public. Going Public is the process by which a private business solicits investments from everyone, typically on the NYSE or NASDAQ, through an Initial Public Offering (IPO). Sharks love, love, love! IPOs. Why? That is how Sharks make a 10,000x return. This is where you hear these stories of how so and so turned a $20k pre-seed investment into a $100M return (after but a short 10 years of waiting for that company to become a unicorn). The real irony of IPOs and how much Sharks love them, is that IPOs are crowdfunding at its highest evolution. The NYSE and NASDAQ are crowdfunding platforms by any other name, with slightly different rules for raising capital from everyone. This is important for you to be aware of. Just in case a Shark ever hints that crowdfunding is what “weak” businesses who aren’t worthy of VC money do. Meanwhile, GoingPublic, the show, enables businesses to do a “Baby IPO”. Turning 20k, 30k, 50k plus customers into Investomers. What happens when you have an army of 50k Investomers on your captable and then Go Public on the NYSE? Stay tuned, as we can expect to hear a lot more stories of how a Customer invested $1K into their favorite product (Startup) and turned that $1K into a lifetime of customer loyalty, sales and revenue.
Now there are a lot of more reasons why Going Public will fundamentally change the capital formation game forever. Too, there are a lot more reasons why Sharks will also flock to companies featured on Going Public. But as Lavar Burton would say, “You don’t have to take my word for it.” Tune into Entrepreneur.com and see what happens when Customers, Sharks, Angels and Institutions are all given the opportunity to all invest, on the same terms, at the same time, in privately held businesses.
Oh, last note about Going Public itself. If you’re an investor wondering why anyone would invest in Going Public, here is something for you to consider:
Unlike traditional capital markets operators, Going Public doesn’t need to make money, raising money. Going Public will generate revenue for itself just like any TV / Stream media does. For instance, how does Married at First Site or The Real House Wives of Shark Tank generate revenue? The same way Going Public does. Think about that and good luck! May the odds and the algorithms forever be in your favor.
Samson Williams is Co-Founder of Milky Way Economy, a DC based think tank who specializes in the economics of Space and alternative finance. Together with his partner, George Pullen, Milky Way Economy is investor #17ish into Going Public’s seed round. So please take his fanboying with a hefty dose of skepticism as he and George believe in the power of crowdfunding and Going Public’s mission so much that they put their money where their mouths are.
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Good posting, Samson. I think Darren Marble and his team are on to something here.
For others just tuning in, you can learn more about the Going Public series here: https://goingpublic.com/
Big question in my mind -- will the companies get fully subscribed while the shows are live on air? If so, then it will be a feeding frenzy even though no sharks are present.