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Start With Family, Incubators and Crowdfunding Sites

By Kevin Colleran

One of the very first hurdles that a new entrepreneur faces is how to find the initial capital necessary to fund the process of building a company. Most entrepreneurs begin using their own money for the initial costs. Eventually, however, the time comes that it no longer makes sense (or is no longer possible) to continue doing this. At this point, entrepreneurs need to figure out a strategy to raise the funds necessary while minimizing disruption of day-to-day business operations. If done incorrectly, fundraising can be incredibly distracting and difficult for the entrepreneur, and can slow any initial momentum that the business has attained. The best options for finding initial angel and seed investors are friends and family, incubators, professional investors and crowdfunding.

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5 Key Points To Know About Equity Crowdfunding

By Tanya Prive for Forbes

In April 2012, President Obama signed the JOBS (Jumpstart Our Business Startups) Act, aiming to revitalize opportunities for entrepreneurs, startups, and small businesses; e.g. America’s main job creators. Briefly, main benefits of the JOBS Act as it is now are as follows.

The JOBS Act will enable entrepreneurs, start-ups, and small businesses to raise funds and gather investors through equity crowdfunding. It will reopen American Capital Markets to Emerging Growth Companies (Companies with total annual gross revenues of less than $1 billion). It also lifts the ban on general solicitation/advertising; allowing entrepreneurs, start-ups, and small businesses to advertise for new investors, and assures that these businesses will have the necessary time and flexibility needed to grow.

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Platform Review: FundaGeek

Summary: FundaGeekis a crowdfunding platform focusing on technical innovation, such as commercial projects based on technology, scientific research projects at universities and research institutions, education, and more. The site focuses on seven to 90-day commercial technology or tech research projects.

Best Feature: When users submit a project, it undergoes a review to ensure it’s creative, unique, and appealing to a variety of people. FundaGeek also allows the user to make a project private so donors have to log in to see the full project details.

What To Consider: The site can be a bit difficult to browse and could use a categorical feature for searching for projects. Also, because FundaGeek screens projects before adding them to the site, not every interested patron has the chance to use its services.

Ideal User: Individuals looking to fund research or projects in the technology and science sector will find FundaGeek to be a good option.

Cost: There is no charge to create a project on FundaGeek, but if a project is successfully funded, the site charges 5 to 9% depending on which marketing option you choose.

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Watchmaker Pebble: From Crowdfunding Hype to Product Launch

Upstart watchmaker Pebble announced at CES this week it would ship its smartwatch on January 23.

The smartwatch connects to a smartphone. “The idea is that instead of having to constantly pull out your smartphone, you can just glance down and see the key portion of the message right there,” said Pebble CEO Eric Migicovsky on CNBC’s “Squawk on the Street” Thursday. If you want to ignore the call, you simply shake your wrist. “If it’s someone you can brush off, you can just cancel it right there,” he said.

Fun features aside, Pebble’s arrival to market hasn’t been smooth. After becoming a darling on crowdfunding site Kickstarter last year, the startup ran into trouble when demand far outpaced supply, and the upstart wasn’t able to deliver by September 2012 as promised.

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Five tips to help you succeed at crowdfunding.

by Elizabeth Gerber for www.marketplace.org
 

Today there are more than 50 crowdfunding sites in the U.S. and countless projects asking for your donations. If you’re looking to successfully fund your project, here are some useful tips:

1.  Build beyond your network — The people who are most likely to give are a part of your close social network. After that, it’s friends of friends. For some people, the biggest challenge is breaking beyond their close social network. But that’s something you must do in order to succeed. One strategy: pre-work. Put effort into building your network before you launch.

2. Know when to outsource — These days, there are services popping up that deal with everything from marketing your project to the distribution of products/rewards. Some examples of this include: a video producer creating an ad for the product, a copy editor coming up with text for the website, someone handling communication/social media use during the campaign, and hiring someone to distribute the product if your campaign is a success. When you can’t do it all — and do it well — know when to seek help.

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Crowdfunding Campaigns and Sites are Popping Up Everywhere

Interview and Article by Erick Mott,

Since the JOBS Act was signed into law in April 2012, crowdfunding campaigns and platforms have been growing like wildflowers. There are many choices for businesses, entrepreneurs and marketing consultants but also some equity-based crowdfunding uncertainties with pending Securities and Exchange Commission rules. I recently sat down in San Francisco with Rory Eakin, co-founder at CircleUp, to talk about crowdfunding models, funding strategies, and congressional developments on the horizon with the S.E.C. working on new rules that will likely change fundraising and investing forever.

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Kick-Start Your Business With Crowdfunding

By Natalie Burg For Forbes

If you’re familiar with the concept of crowdfunding, there’s a good chance that it first came across your radar as the way in which your nephew’s band raised money to record a new album, or your coworker’s daughter funded her recent documentary film. In exchange for donations to help get those projects off the ground, those artists likely used Kickstarter or Indiegogo to offer incentives, such as a free download of the finished project or tickets to a live concert.

What does the funding of those projects have to do with your small business or startup idea? Thanks to the recent JOBS Act (short for Jumpstart Our Business Startups), it could have everything to do with the way you raise capital in the future.

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2012: The Year Crowdfunding Was Kickstarted Into The Mainstream

By Matt Burns for Techcrunch.com

There we were, circled around a bachelor party campfire and drunk on keg beer, discussing the viability of using Kickstarter to fund a sex toy startup. My buddy Derk (he goes by Dangerous D at karaoke) had designed and handmade a compact speed controller for small vibrators (pic below). He was selling them at $75 a pop and apparently – I have yet to see or try one – they were getting rave reviews. Dangerous D’s Magic Box, he called it. Another friend and I were passionately trying to convince him to quit his job as a store manager and start a sex toy startup. We were positive, and a bit drunk, that all he needed was a successful Kickstarter campaign. The video would obviously be key.

It was then I knew that 2012 was the year of crowdfunding. It’s a household term now. This year saw the birth of the Pebble Smartwatch, iPhone-powered gTar, OUYA gaming system, and literally tens of thousands of arts, media, and design projects. And those were just on Kickstarter. Other projects turned to Indiegogo, RockThePost, and Quirky. Some startups like Lockitron even went at it alone, conducting their own crowdfunding campaign themselves.

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Platform Review: Razoo

Summary: Razoo has helped nearly one million officially registered nonprofit organizations to crowdfund. The site allows nonprofits to accept donations on their own website or on their Facebook page. Fundraising causes are organized into categories like animals, arts, cancer, disaster relief, environmental, and more. Charities can also post their fundraising events, including memorials and walkathons.

Best Feature: Razoo allows charities to create a profile for their cause, complete with video and photos. The site offers detailed examples of fundraising ideas for nonprofits to get started, and hosts “giving days,” which are 24-hour online fundraising competitions. The site also offers an iPhone app and donation widget for the organization’s website or Facebook page, which makes receiving and tracking donations a breeze. Tech-savvy individuals will like Razoo’s iPhone app, which allows users to receive notifications when someone donates, and includes an option to thank each donor individually.

What To Consider: You must be an officially recognized nonprofit to use this service. Razoo includes a list of approved charities, but if yours isn’t on the list, you can email your letter of determination from the IRS directly to Razoo so they can include it. You can learn more about this here.

Ideal User: Razoo is a good choice for nonprofits looking for an easy way to manage and encourage donations via web and social media.

Cost: The site charges a flat rate of 2.9% on all donations to cover credit card processing costs. Users can set up a fundraiser for any charity with no setup fees or monthly subscription fees.