William McGuire is the founder and CEO of Incolo, a venture accelerator designed to help entrepreneurs find capital right in their backyard, often via investment crowdfunding. He envisions a world where everyone in the community is invested in its businesses, thereby participating in the upside collectively.
So Easy a Child Can Understand
An intriguing part of our conversation revolved around helping ordinary people understand and value the opportunity to invest in local businesses. To prove that even kids can understand the basics of investing via crowdfunding, Incolo hosted some sessions with “little investors,” some not having even celebrated two-digit birthdays.
Will says, “We just want to see how our kids interact.”
After identifying several companies that would naturally appeal to children, including an app, a film and other opportunities, they held the session with a handful of children. This list also included some boring fare, like an assisted living project.
“We asked all the kids, ‘What’s interesting to you?’”
The response of a ten-year-old was notable.
“That company was cool, and the film company was cool, but Livewell Assisted Living was my favorite offering.” She added, “They were my favorite because the way the business owners talk about the business, I felt like they were going to take care of grandma. And grandma is aging.”
Investing in private companies via crowdfunding is risky. I’m not writing this as investment advice. Will was careful to say he’s not offering investment advice. Investing with the crowd, however, provides an opportunity to share the burden of due diligence and to take investment risk in small bites.
“Most of the companies in this [startup/small business] world, especially private market, are going to fail,” Will says, noting that he and his wife have invested in 80 businesses, “the same thing that an angel or VC would do.”
Because most will fail to provide a good financial return, if you invest in only a few, statistically speaking, you are most likely to lose money. Because one in a bunch will increase in value dramatically, a rare winner can offset losses in your portfolio—meaning that you need a diverse portfolio.
For Will, the primary goal isn’t the financial return on investment but the community benefit. “To us, it’s more of the intention of how things are built than any type of financial IRR that can be attached to it. It’s more like ROX, where X is defined as impact.”
He says, “I’m always asking people, ‘What’s your X? Is it the amount of lives saved? Is it money returned and reinvested? Is it the number of people you touch? Is the amount that can go back?”
“It all has to be defined around the X for the individual with some intentionality around it,” Will says.
Will will conduct a special session at SuperCrowd22 for founders. If you're a founder who wants to learn how to build a successful investment crowdfunding campaign, Incolo's team will be helping founders prepare campaigns as an optional part of SuperCrowd22. Registered conference participants are eligible for this free support.
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