Setting Up a New College – University Equity Investment Crowdfunding Site to Take Advantage of the Growing U.S. Investor Network Suffering from a Lack of Deal Flow

Schools that Launch Equity Crowdfunding Sites Now Will Learn How to Market Investment Opportunities to Accredited Investors and Get a Head Start on the Vast Amount of Money that Will Flood the U.S. when the SEC Finally Approves Title III Crowdfunding Guidelines

By Robert Hoskins

Investor Surplus, Deal Flow Shortage

Believe it or not, there is a growing surplus of angel investors, accredited investors and venture capitalists that have the money to invest in new startups, but cannot find enough good deals being circulated by entrepreneurs and startups that need investment startup capital.  

A recent member of the San Francisco Angel Group member recently said that there many startups in San Francisco currently receiving seed investment that really are not worthy of seed investment capital, but are getting lucky because there is a surplus of money and a shortage of good deals. 

The good news is that college and universities can now take advantage of a new rule passed as a part of the JOBS Act, which approved something known as General Solicitation. For the past 80 years it has been illegal to advertise or market private equity deals to the general public, but that ban has been lifted. 

In November 2014, a new SEC rule was passed that makes it possible to advertise private placement memorandums (PPMs) to approximately 8.7 million accredited investors throughout the United States and abroad.  This is great news because only about 3% of all accredited investors are active angel investors. This means that 97%  of this group has never been approached by startups seeking investment capital. 

This means that any school can setup an equity crowdfunding platform and start marketing their local community’s entrepreneur and startup business plans to a nationwide or global network of accredited investors.  Once a platform is setup, investors with the right credentials can search through the platform’s online equity investment opportunities on a 24x 7 basis.

And then, hopefully in October 2015, the SEC also will pass the final rules that open up Title III equity crowdfunding to every adult in the United States who is 18 years or older. When that happens, the same equity crowdfunding site will have the ability market deals to every adult in America or approximately 180 million new investors.  Take that with a grain of salt because the new Title III rules are three years overdue, but if they do make it to the Federal Registry there will be flood of money seeking great business plans and startups who need startup capital.

In order to leverage the growing pool of accredited investors now, colleges and universities should begin the process of setting up a streamlined equity crowdfunding ecosystem as soon as possible. It will open up schools to a nationwide and/or global network of angel investors now and help them get a head start on the vast amount of money that will flood the marketplace when the SEC finally approves the Title III crowdfunding guidelines.

Learn more about crowdfunding:

• Building a Rewards-based and/or Equity-based Crowdfunding Ecosystem;
• Providing Easy Access to Seed Investment Capital with Crowdfunding;
• Generating More Revenue to Support Co-Working Spaces and Startups;
• Using Equity Crowdfunding Sites to Finance Incubators and Accelerators;
• Taking Advantage of Investor Syndicates that are Seeking Better Deal Flow;
• Splitting Revenue from Incubator and Accelerator Mentors Consulting Fees;
• Streamlining Technology Transfer Offices (TTOs);
• Cross-Pollinating College Education with Real World Startups; and
• Learning to Build Better Alumni and Local Community Relationships

 

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Paid Mentorship Management Consulting Fees Can Help Fund College University Incubator and Accelerator Programs

Allowing Mentors to Earn Revenue while Colleges/Universities Collect a Commission for Facilitating the Knowledge Transfer is Great Way to Bring Leading Expertise to Remote Areas

By Robert Hoskins

Paid Mentor Management Consulting Fees

Another option for schools to generate funding is to create a management consulting practice in tandem with college and university incubators and accelerators. Many sources of mentorship can be attracted by allowing the subject matter experts to generate revenue by providing mentoring services for a consulting fee. 

Incubators/accelerators could take a 15% commission out of the consulting fee to add monthly recurring revenue to their incubator and accelerator programs. Payments for services can be paid in cash and/or might include an option to purchase equity shares in the first class of equity shares being offered during the seed fundraising round.

Using this strategy, schools with video conferencing capabilities can tap into talent on a worldwide basis. Using teleconferencing and distance learning applications schools can access the world’s leading entrepreneurs, venture capitalists, and private equity investors, even in remote locations.

A single community college might not able to afford a speaking engagement with Guy Kawasaki, Elon Musk or Richard Branson, but working with numerous community colleges in any given state they could launch a rewards-based crowdfunding campaign to solicit enough cash to pay for an event that could be broadcast to a network of participating schools.  These single session tutorials, mentoring sessions or consulting engagements could be setup in a very similar manner to the very popular TedX talks.

Other sources of revenue can be earned by hosting conferences, trade shows, pitching competitions and/or training classes.

Learn more about crowdfunding:

• Building a Rewards-based and/or Equity-based Crowdfunding Ecosystem;
• Providing Easy Access to Seed Investment Capital with Crowdfunding;
• Generating More Revenue to Support Co-Working Spaces and Startups;
• Using Equity Crowdfunding Sites to Finance Incubators and Accelerators;
• Taking Advantage of Investor Syndicates that are Seeking Better Deal Flow;
• Splitting Revenue from Incubator and Accelerator Mentors Consulting Fees;
• Streamlining Technology Transfer Offices (TTOs);
• Cross-Pollinating College Education with Real World Startups; and
• Learning to Build Better Alumni and Local Community Relationships

 

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Want to learn more about setting up a college/university crowdfunding ecosystem?

Please fill out this form to get started:

Name(required)

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Email

Submit

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What is Crowdfunding?

Crowdfunding sites and platforms are a great way for Universities and Colleges to generate extra revenue and market their school’s brand name on a global basis

By Robert Hoskins

What is Crowdfunding?

Crowdfunding is not a new concept. It has been used for thousands of years to collect small sums of money from the masses to pay for some of the most well known works in the world such as the Statue of Liberty.

The JOBS Act made it legal to use e-commerce sites to build crowdfunding profiles to collect money online from investors and utilize general solicitation  (advertising/marketing/PR) to raise money from the masses for the first time in 80 years. Funding that can be used provide seed investment capital to startups and help existing businesses expand their operations.

What States Have Legalized Equity Crowdfunding?

At the federal level, the final Title III equity crowdfunding rules guidelines have been stalled by the SEC, but at the state level Texas, Michigan, Georgia and 13 other states have passed Intrastate Crowdfunding Exemption rules that allow startups and businesses to raise money by selling equity shares online to raise seed investment capital. Other large states including California, Illinois, and Pennsylvania have proposed legislation, which is working its way through the legislative process.

Map of U.S. States that have approved Intrastate Equity Crowdfunding Exemptions

                                                Source: CrowdfundingLegalHub.com

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