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MenuCan a new startup raise its first 50K financing round via crowdfunding platform w/o a VC backing? What are the best deal incentives for the investor?
Assuming there is a functional product built, intial traction, paid customers & team in place. This is a software technology startup and as such please refrain from examples from any irrelevant platforms such as Kickstarter/Indiegogo.
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You are asking one question and inferring another. Do you want to know if it is possible to raise that amount on a crowdsourced site or are you asking for the best crowdsourcing site for your fundraising?
In short, yes. It is entirely possible to raise that level of funding without a VC and on crowdsourced platforms.
You obviously need to know the differences between "general public" crowdsourced audiences and professional VCs; they are looking for different returns. The casual crowdfunder is generally looking for something tangible (that is why sites like Kickstarter work so well) as well as a financial incentive.
VCs are looking for a return on their investment.
The casual crowdfunder is more likely to be sold on the idea of getting in on the ground floor and being part of something bigger than their usual life.
If you can clearly identify what problem your product is solving, and who will benefit, you can build your incentives around complementary frustrations and painpoints.
If your product is an accounting application for small business, for example, find partner services that also help small businesses.
If you have other questions, or I wasn't specific enough in some areas, please book a call with a couple of times that work for you and we can dig deeper.
To your succes,
-Shaun
First of all let's specify there are different kinds/models of crowdfunding platforms for business. There are reward based ones like Kickstarter/Indiegogo, and these are usually used as sort of pre-selling platforms; it seems it's not at all your case! There are, instead, equity crowdfunding platforms, that probably match with what you need. Some examples are EarlyShares, Crowdcube, Fundable or maybe Angelist too can fit very well for your startup, even though it's not exactly a crowdfunding platform, but I'd say better a crowdsourcing platform. In each case, still, you'll have to deal with VCs and investors, and satisfy their questions and requirements. What changes, mostly, is that you can get a higher audience. If, instead, you're looking for revenue shares platforms, I reviewed about 400 international platforms, and I looked a lot for one like this, but no one is really working with real revenue shares model (and probably it's not at all easy to do!). In case you need to dig in more, I'd be glad to set a quick call. All the best!
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Looking for guidance for where I can find investors for my app?
As Ken suggested, there is a wide breadth of mobile offerings and although there are some great "mobile only" funds, each investor / fund has their own thesis that makes them interested in some but disinterested in others. Also, if your revenue generating, you should seriously consider bootstrapping further. Revenue is treated very strangely in early-stage investing and *might* work against you. AngelList is a great way to research investors but not effective in actually connecting with them. Find investors who you are confident will be passionate about what you're doing based on prior job experience or what you know they are investing in. Happy to talk in a call to help explain this further if you need more clarity.TW
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Is fundable.com a successful tool to help raise an equity seed round for a pre-launch startup?
We have used Fundable.com successfully for two rounds of financing both oversubscribed. Here is what I can tell you. Basic info: Fundable.com's platform connects accredited investors to startups seeking investment capital. Startups have a public facing profile that includes general information about the companies product, team, press accolade, etc. If you are raising funds claiming SEC Reg D 506(b) the public profile has no information about your securities offering. If an interested investor wants to view more information about your startup and or your offering, he/she would request access to your full profile. The investor must self accredit on the Fundable site before they are allowed to view your non-public profile. The startup is notified and you have the opportunity to conduct some due diligence on the investor (LinkedIn) and elect to invite them into your deal. Your private page includes the offering (terms). All communication from this point is done outside of the platform, meaning you have the investors email address ( a good thing to have). Fundable charges startups a flat monthly fee to post a profile on the site. In addition you can opt for additional services (help) with your campaign. For a flat fee, Fundable will assign resources to help build your profile, consult with you on your raise, and assist with PR or Marketing. This includes a blast to their investor base of over 40K if my memory serves me correctly. I am sure it is higher today. Our experience: For our first round on Fundable, we elected to use the premium service. Fundable did a great job in helping with our profile. We received 50+ views per day (quite often 100+) and on days we were included in their newsletter we received 200+ views. 10 - 20% of views requested access to our full profile. and 10-20% of those responded to my request for a call. Our close rate was very high. Both of our rounds were oversubscribed in less than 4 months taking averaging $50K per investor. These are high quality investors that have not created additional work (outside of normal investor updates). Many of our investors regularly share news and information about our industry. Several have re-invested in subsequent rounds. Disclaimer: Our startup is in the consumer hardware space which I believe tends to attract high net worth individuals. Obviously results may vary, thus I cannot speak to how well a SaaS play would do crowdfunding in general. Fundable.com's premium services offering may have changed since our campaign. I am not affiliated with Fundable.com. In fact we have been successful on other crowdfunding sites as well. In Closing: I am a proponent of crowdfunding in general. It is disrupting angel investing, providing investors with greater deal flow and exposing startups to an exponentially larger audience, increasing their chances to get in front of investors who understand and appreciate that company's solution and opportunity. Most importantly it is moving capital and driving innovation! Keep in mind, securities laws have changed and continue to change due to the Jobs act of 2012. Before you offer any securities to local investors or choose to try crowdfunding, you should consult with an attorney, and take the time to learn and understand what regulations apply to your circumstances.UB
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Launching a startup with no job and no savings. Should I get a job or find investors?
Wow, lots of questions here. Let me try to hit them in order: "Should I get a job or find investors?" IF you have access to enough investor capital (not debt and not your savings) and you can get to MVP and still maintain ownership of a sizable majority of the business then do it. IF that means debt financing then only use the debt lines the cost of which can be carried by returns generated by the use of funds. I would prefer to offer a convertible note to prospective investors that can be easily extended throughout both friends and family and seed rounds (up to $2M to $3M) to get to proof in the market. If you can get to revenue and earnings fast enough then you can avoid equity dilution all together. IF you cannot secure that find of funding AND you cannot produce enough revenue from your business to deliver sufficient earnings for you to live on, then by all means, you should find a way to make the money you need and not burn all your savings or mortgage your home If that means short term contract work that's great. Particularly if you can find log term work that is relevant to the business you're building. If that means taking a job then do that. IF you do that, then yes, be transparent with your employer and let them know you're working on your own business also. Hope this helps....SL
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Any opinions on raising money on Indiegogo for an app?
Apps are difficult to fund on IndieGoGo as few are successful, and we rarely take them on as clients. Websites like http://appsfunder.com/ are made for that very reason, but again, difficult to build enough of a following willing to pay top dollar for an app that could very well be free, already existing in the marketplace. A site that is gaining more traction you may want to look into would be http://appsplit.com/. Again, Appsplit Is Crowdfunding For Apps specifically.RM
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How do you get exposure on AngelList to attract angel investors?
What of the following things does your startup have? > Founders who have graduated from prestigious universities / previously exited companies to known acquirers / worked for a known companies (with known being a brand-name company such as Google, Amazon, Facebook etc) > Three or more months of statistically meaningful growth (e.g. for easy sake, double digit growth of a number in the thousands) > At least one investor who is active on AngelList (defined in the ideal state by at least one investment in a company who raised their round through AngelList and ideally whose social graph is connected to "high signal" members of the AngelList network) If you have none of these things, then at least, have advisors and referrers who have a strong AngelList profile. And another option is to seek out the AngelList scouts and pitch them directly. They are more open to this than anyone else and I've seen companies with very little traction and very little social proof get featured because a scout believes in the founder and/or the story. Without any or most of the above, it will be difficult to stand out or build relationships via AngelList, in my opinion. I assume now AngelList operates on a concept similar to the LinkedIn "degrees of connection" model, whereby an entrepreneur can now send unsolicited messages to investors so long as there is a degree of connection between the investor and the company. I get a few unsolicited emails a week from companies whose advisers or investors aren't people I follow but that because of the way they determine "connection strength", these unsolicited emails still gain my attention. I assume this is the case for all investors. So the more that you can build your list of advisers and referrers, the more connections you can solicit. That said, AngelList's inbound email system is almost entirely ineffective for "cold" emails to really high-profile investors. Happy to share with you what I think to be your best options for raising profile for your company.TW
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