Online Finance and Crowd Funding: April 17, 2013
Nine days from now on the evening on Wednesday, April 17, 2013 at 6pm, I will serve as moderator for the IEEE Boston Entrepreneurs’ Network (ENET) presentation I organized, both a networking night and also a panel of three speakers on “Online Financing and Crowd Funding”, at a new location for ENET in the Seaport / Innovation district of Boston, at the Boston conference center of Foley Hoag, Seaport West, 155 Seaport Blvd, 13th Floor, Boston, MA.
Early stage entrepreneurs face long odds when seeking funding from angels or VCs. In the past year, there has been increasing interest in new methods of online financing and “crowdfundng” as a means to bridge the funding gap.
What is crowdfunding? It’s a means of raising capital through numerous small donors from the public, often online, rather than working privately to raise large amounts from a small number of wealthy donors. ENET’s networking meeting on April 17 will explore crowd funding from two separate approaches.
The first approach to crowdfinding is donation or “rewards based”. It utilizes recently developed websites that raise money online. These include Kickstarter, Indiegogo and RocketHub. From these online platforms, companies, artists and entrepreneurs seek online donations or sale of pre-release products, generally offering rewards for donations but no debt or equity. Such fundraising campaigns have the added benefit of helping to build a fan base, customer base, and demand for the participant’s product or service. In May 2012, the Pebble E-Paper Watch set a crowdfunding record, raising over $10 million on Kickstarter.
The second approach to crowdfunding is “securities based”. This approach was authorized in the U.S. by the Jumpstart Our Business Startups Act (the JOBS Act) signed into law by President Obama in April 2012. The law would allow entrepreneurs to raise up to $1 million from small investors through registered broker dealers or newly authorized “investor portals”. The contributors would receive either equity or debt securities for their investments, with the money refundable if the fundraising target is not met. However, this second approach, widely used in Europe, is not yet legal in the U.S. and awaits regulations from the SEC which are not expected until the 3rd or 4th quarter of this year.
Research firm Massolution estimates the crowdfunding industry worldwide (equity + donation + lending + reward crowdfunding) grew from $1.5 billion in 2011 to $2.8 billion in 2012.
- Jed Cohen, a Founder and Chief Operating Officer of RocketHub (www.RocketHub.com), and author of two white papers on securities based crowdfunding. (RocketHub plans to be a portal for securities-based crowd funding when it becomes legal in the US later this year)
- Nelson de Witt, veteran of two successful kickstarter campaigns and author of “A Kickstarter’s Guide to Kickstarter” (www.KickstarterGuide.com)
- Halley Suitt Tucker, founder and CEO of BoOkBoX. An entrepreneur who recently completed a fully funded Kickstarter campaign — to write a novel about startup accelerators.
All three speakers will address the audience. Then we will break into two groups for Q&A, one focused on rewards based crowdfunding and the other securities based crowdfunding. It will be a great night to learn, network and enjoy some snacks. We hope to see you at the Foley Hoag Boston Conference Center in the Boston Seaport/Innovation District on April 17!
For more information or to register for this meeting, go to http://www.boston-enet.org/meetings/networking-evening-online-financing-and-crowdfunding
(Includes links to the two white papers mentioned on securities based crowdfunding.)
Hopefully, this meeting will be helpful to entrepreneurs in small and early stage companies I represent.
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I remain active in ENET, a Waltham-based group that aids entrepreneurs, small and early stage companies, and people who invest or work in those companies. I have been on the ENET Board for the last eleven years, and the past four years and continuing as ENET’s Chairman.
Besides my work as Chairman, earlier in our current 2012-13 program year, I moderated two of our meetings in Waltham:
- “Seed and Angel Financing” on October 2, 2012 where I moderated for three speakers including James Geshwiler, Managing Director of Common Angels. For more information, including speaker slides, see – http://www.boston-enet.org/meetings/seed-and-angel-financing-0 ;
- “Bootstrapping 101: Alternative Ways to fund a Startup without an Angel or VC”, on November 13 where I moderated for another 3 person panel of CEOs or former CEOs who built their companies by bootstrapping including Karl Buttner, chief Mentorship Officer of Mass Challenge. For more information, including speaker slides, see – http://www.boston-enet.org/meetings/bootstrapping-101-alternative-ways-fund-startup-without-angel-or-vc
Additionally, in prior years, I’ve moderated and/or spoken at a number of ENET panel presentations, including presentations on the following subjects:
- “Transforming Your Idea into a Successful Company”, September 6, 2011 (speaker and moderator),
- “Get Going! Launching a Successful Business”, September 7, 2010 (moderator),
- “Licensing Technology”, February 2, 2010 (moderator),
- “Getting Initial Money to go from Nothing to Something”, October 2, 2007 (speaker and moderator)
- “How to Select and Retain Management for your Startup Company”, February 8, 2008 (speaker and moderator)
- “Strategic Alliances and Partnerships: to build, finance, and develop early stage companies”, November 7, 2006 (speaker and moderator)
- “Building Boards of Advisors and Boards of Directors”, March 7, 2006 (moderator)
- “Protecting Your Intellectual Property”, January 3. 2006 (speaker)
For each of the above presentations, my slides and those of the other speakers on my panel are also available at the ENET web site at this link – http://www.boston-enet.org/meetings/meeting-archives . I hope this information is helpful to you in your business. Again, if you would like more information on our group, go to www.boston-enet.org