CROWDFUNDING 101

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					FINANCIAL RESOURCES FOR LAUNCHING
AND SUSTAINING YOUR BUSINESS:
FROM MICROFINANCE TO CROWDFUNDING
Bob Cohen
Braintree Business Development Center
For rural businesses in Northeast Ohio
We provide:
 • Term loans of $1,000-$35,000
 • Current interest rate of 7.25%, other terms
   vary based on specific needs
 • Loan uses include: equipment, inventory,
   business debt restructuring, and project
   based working capital
For rural businesses in Northeast Ohio
Basic requirements:
 • Collateral
 • Personal guarantees
 • Demonstrated revenue sufficient for loan
   payments
CROWDSOURCING
ACCORDING TO SOHA EL BORNO


• Sharing collective knowledge
• Microvolunteering
• Crowd creation
• Crowd voting
• Crowd funding
CROWDFUNDING TYPES
BY MARTY ZWILLING


• Good cause crowdfunding
• Rewards-based crowdfunding
• Pre-order crowdfunding
• Debt-based crowdfunding
• Start-up equity crowdfunding

-Marty Zwilling
Will the Real Crowdfunding Model Please Stand Up?
EMPOWER PEOPLE AROUND THE WORLD WITH A $25 LOAN

Total Amount of all loans made through Kiva   $356,256,700
Number of Kiva Users:                         1,270,453
Number of countries with Kiva Users           221
Number of borrowers through Kiva:             872,349
Number of loans funded through Kiva:          476,537
Current repayment rate (all partners):        98.98%
Average loan size                             $398.69
Provides a list of fundable categories
Deducts 5% from every donation along with 2.9% for using
PayPal
According to them:
Launched on May 10, 2010, GoFundMe is a do-it-yourself online
fundraising service that has helped thousands of people raise
millions of dollars for the fundraising ideas that matter to them most.
From exciting life events like weddings & graduations to challenging
circumstances like accidents & illnesses, the GoFundMe remains
one of the best ways to raise money online.
www.gofundme.com
Blueberry Picking Farm
Rock the Post has supported more than 200 projects
Charges a 5% fee
Now takes an “all-or-nothing approach”
Project creators develop a video to promote their fundraising
http://www.rockthepost.com/
SoMoLend, as its name implies, uses debt crowdfunding
According to them:
SoMoLend gives entrepreneurs the tools and financing they need
and lenders the opportunity to invest in the things, ideas and people
they care about most, all the while earning higher than average
returns on their investments
SoMoLend allows investors to choose which businesses to support
based on geographic location, industry, and risk level, using a GPS
location tracking system so investors can find business borrowers
in their community.

http://www.somolend.com
Offers rewards-based and pre-order crowdfunding
Calls itself “CROWDFUNDING FOR STARTUP COMPANIES”
Is adding equity-based crowdfunding components as the
SEC rules take shape
Fundable also takes an all-or-nothing approach
http://www.fundable.com
LapKeyBoard
KickStarter has raised more than 311 million dollars for
30,000 projects
It has hundreds of projects going on at once and has
geographic filtering available
KickStarter is large enough to attract contributors
It is another all or none platform
http://www.kickstarter.com
Surf Easy
Heritage-breed-poultry
Goldie Blox
THE JOBS ACT
(JUMP-START OUR BUSINESS STARTUPS ACT)

Legislation passed Congress with bi-partisan
support and was signed into law by the president
in the Spring of 2012.
According to its proponents it would remove
regulatory hurdles for small businesses and allow
fast growing start-up companies to raise capital
from private investors and in public markets.
The Securities and Exchange Commission would
draft the specific guidelines.
THE JOBS ACT
(JUMP-START OUR BUSINESS STARTUPS ACT)

Specifically the legislation would….
Remove the restrictions on advertising or
soliciting investments
Change who could qualify as an accredited
investor
Loosen the reporting requirements of the SEC,
including provisions of the Sarbanes-Oxley Act
THE JOBS ACT
(JUMP-START OUR BUSINESS STARTUPS ACT)
The going has been slow….
The SEC missed a couple of deadlines
   THE JOBS ACT
Now, entrepreneurs can crowdfund, but only by
offering products or services in exchange for
contributions. That’s due to an SEC rule that
forbids the marketing of “private securities.”
The SEC has proposed amending that rule,
which will allow sites to publicly offer and solicit
the sale of actual shares in companies in
exchange for investments.
But one thing that still blocks most Americans
from funding startups: accreditation. All
investors who buy equity in a startup through a
crowdfunding site must still be accredited
investors.

http://venturebeat.com/2012/08/29/crowdfunding-investors-sec-change/#Oq3HDZ0KkUXFFeRM.99
August 29, 2012
THE ‘CHALLENGES’ OF CROWDFUNDING
-BILL CLERICO

 Fraudulent entrepreneurs with a slick video can dupe
 thousands into investing in a ghost company or nonexistent
 product
 Incompetent entrepreneurs can fail to deliver on their
 promises and waste millions of dollars of other people’s
 money
 Unsatisfied investors can dispute their transactions and
 amass huge liabilities for the platforms and payment
 processors
 Insecure platforms can risk credit card data, misappropriate
 funds or violate federal or state statutes
KICKSTARTER CHANGES
THE RULES
Due to recurrent problems and disappointments,
Kickstarter made changes in project requirements
• It added a new section to the project called
  “risks and challenges”
•   It requires submission of graphics, sketches, or
    drawings
• It prohibits the use of multiple quantities at any
  reward level
HOW TO MAKE THE BEST
CROWDFUNDING PITCH
-MOHANA RAVINDRANATH

1. Your story should be authentic, clear, and
   precise
2. Don’t assume your audience are experts in your
   field or even in investments
3. Choose your audience
4. Show the investor what you already have
5. Choose the investment platform carefully
THE BRAINTREE TEAM
        Bob Cohen, CEO
        Technology commercialization
        Agribusiness and cooperatives
        International trade
        Crowdfunding
        Presentation skills

        Bob Leach, Director of Operations
        Information technology
        Energy technologies
        Social media
        Facility design and management
        MicroSoft BizSpark TM

        Barrett Thomas, Microfinance Administrator
        Appleseed Microfinance Loan Program
        Tech SproutGrant Program
        Business Analysis
THE KENT STATE UNIVERSITY TEAM
         Bob Cohen, Program Coordinator
         Cooperative development
         Crowdfunding
         Presentation skills




         Roy Messing, OEOC Interim Director
         Cooperative finance
         Exit planning
         Common Wealth Revolving Loan Fund



         Chris Cooper, Program Coordinator
         Cooperative development
         Exit planning
         Communication technology

				
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