Generally it is assumed that the options for startups and businesses to pursue financing are as follows:
- Option A - VCs
- Option B - Angels
- Option C - Broker Dealers / PE / Hedge Funds
- Option D - Crowdfunding
In truth the options are:
- Option A - Crowdfunding / Angels / VCs / BDs / PE/ Hedge Funds
- Option B - Bootstrap then crowdfund
The reason that Crowdfunding is every startup’s first option is simple:
- Crowdfunding enables Founders to set investment terms
- With these universal crowdfunding terms, Founders can solicit investments from investors at all levels (accredited, non-accredited, institutional)
- Currently, Founders and Entrepreneurs exhaust themselves pitching to ONLY 4% of the accredited investor population; which is well known to have a 99% failure rate.
- Less than 1% of Startups receive VC funding.
- Crowdfunding enables Founders and Entrepreneurs to take the same pitch deck, due diligence, financials and disclosures and literally cast a wider net for investors.
But crowdfunding costs more!?
Unless you already have a high-networth network, on average Founders spend 36 months and $250k before giving up on getting “traditional” funding. While no one knows why less than 1% of Startups receive VC funding, consider using JOBS Act Investment Crowdfunding to increase your odds of accessing startup capital from the very people who have all the money to begin with...your potential and future customers.
How Do I Get Started
To start organizing your Startup’s financing needs for crowdfunding email firstname.lastname@example.org and be sure you have a budget, slightly less than you’d spend on doing a “traditional” roadshow.
Ps - Customers have more money than VCs.
About the Author
Samson Williams is a serial entrepreneur and accidental investor. When not starting business with his enemies (“Entrepreneurship is hard. I only recommend it to my enemies.”), Samson is an Adjunct Professor at Columbia University in NYC and University of New Hampshire School of Law where he teaches on blockchain, cryptocurrencies and the Space Economy. Samson is also President of the Crowdfunding Professional Association and investor into two investment crowdfunding platforms Brite.us - Crowdfunding Done Brite and GoingPublic.com. For more information on Samson visit www.SamsonWilliams.com and follow him on social @HustleFundBaby.