Advertisements
Archive | Incubators RSS feed for this section

Wells Fargo Announces Four-Point Plan to Expand Credit Coaching Programs and Offer $75 Million in Investments, Grants and Micro-Lending for Small Businesses in the U.S.

21 May

To help business owners learn how to obtain credit, as well as better understand the reasons for a decline and learn how to prepare to reapply, Wells Fargo has launched a new Credit Coaching program

  By Robert Hoskins

San Francisco, California – To gain more insight into the experiences of diverse business owners in the areas of lending and operating their businesses, Wells Fargo commissioned Gallup to conduct a national study of small business owners. Today, as Gallup releases the findings (on Gallup.com), Wells Fargo is announcing a four-point plan to address needs identified in the study. The plan will help more diverse small businesses become credit-ready and gain access to credit. The Gallup survey included findings of business owners in six segments – African American, Asian American, Hispanic, LGBT (Lesbian, Gay, Bisexual and Transgender), military veteran, and women.

Please click on this banner to vote yes for Crowdfunding PR's business plan to open up Crowdfunding Training Facilities Nationwide

Please click on this banner to vote yes for Crowdfunding PR’s business plan to open up Crowdfunding Training Facilities nationwide in tandem with co-working spaces, incubators and accelerators

“Serving diverse communities has long been a focus area and priority for Wells Fargo, yet we know there’s more work to be done, and it starts with gaining a deeper understanding of the experiences of diverse small business owners working with financial institutions,” said Lisa Stevens, head of Small Business for Wells Fargo. “For this reason, we commissioned the Gallup study, which gave us new insight into the perceptions and experiences of diverse business owners working with banks, and how we can improve as a company and as an industry.”

Overall, the national study revealed there are more similarities than differences between small business owners in all diverse segments and those in the general population. It also shows specific areas in which the financial services industry can provide more support for diverse business owners.

Credit Coaching Program

In the Gallup survey, diverse-owned small businesses were more likely to respond that they have been declined for business credit – about one in five African American, Asian and Hispanic business owners said they faced a credit decline in the past (14 percent of general market respondents said they faced a decline). After being declined, a higher percentage of African American business owners (64 percent) said they did not apply for credit again than their peers in the general small business population (47 percent). African American (14 percent) and LGBT (15 percent) business owners also reported greater personal credit challenges than the general market (5 percent).

To help business owners learn how to obtain credit, as well as better understand the reasons for a decline and learn how to prepare to reapply, Wells Fargo has launched an enhanced Credit Coaching program. It offers expanded support to business owners who have been declined business credit. The phone-based program has been rolled out to small business owners who apply for Wells Fargo Business Direct credit products (primarily credit products under $100,000 sold through its retail banking stores). Business owners who use the program will be connected with a credit specialist who will review the business’ credit profile, explain why the business was declined credit, and share resources that can help the business strengthen its credit profile and improve the likelihood of being approved for business credit in the future.

In addition, while the majority of business owners surveyed across all segments said they did not feel a perception of discrimination from a financial institution impacted their chances of obtaining business credit, 22 percent of African American and 11 percent of LGBT business owners reported that perceived discrimination impacted their chances of obtaining credit for their business, compared to 5 percent of the general small business owner population. The Credit Coaching initiative will be one way Wells Fargo will further increase transparency of credit decisions and facilitate conversations that build trust with all customers.

“We take pride in the fact that diversity and inclusion has long been one of our core values in every aspect of our business, and at every level of our organization,” said Stevens. “We want to make sure all customers feel welcome, respected, understood, valued and appreciated. The actions we’re introducing today are the next steps for Wells Fargo to better serve and connect with diverse-segment business owners.”

Community Development Financial Institutions Investments, Grants

Another key finding in the Gallup study is that African American, Asian and Hispanic small business owners are more likely to be in the start-up and growing stages of their business, compared to the small business population in general, and as a result may not qualify for many conventional bank loan products. In addition, 49 percent of African American-, 47 percent of women- and 45 percent of LGBT-owned businesses in the survey reported annual business revenue of less than $50,000, compared to 36 percent of small business owners in general.

To help newer, smaller and start-up businesses access the appropriate business financing and support they need, Wells Fargo will extend $50 million in investments and $25 million in grants to organizations called Community Development Financial Institutions (CDFIs) that serve small businesses and entrepreneurs. The investments and grants will be directed to CDFIs that help small businesses get started and established by providing flexible capital and technical assistance. Wells Fargo will work with existing and new CDFI customers in diverse communities across the country to deploy this capital and measure its impact.

“We know that in order to address the range of financial needs within all of our communities, we need to support and work with the ecosystem of organizations that serve small businesses,” said Jon Campbell, executive vice president, government and community relations for Wells Fargo. “Through this increased investment and connections with community lending organizations, we are making meaningful strides toward increasing access to capital for small businesses, as well as helping more business owners get the coaching and educational resources they need to succeed financially long-term.”

Nationwide Referral Network

In the Gallup study, more African American, Asian and Hispanic business owners reported they were unable to obtain all the credit they needed in the past year than the general business owner population, yet the majority of small business owners in all diverse segments said they did not need credit in the last year. At the same time, nearly one in four African American, Hispanic and Asian business owners plans to apply for credit in the next 12 months, higher than the general small business owner population planning to pursue credit (15 percent). Businesses in the startup and growing phases in general expressed more intentions to apply for new credit.

To ensure business owners are aware of and accessing the full range of financing options available to them, Wells Fargo recently established referral relationships with more than 20 nonprofits and other lenders in cities across the country that are participating in the U.S. Small Business Administration’s (SBA) Community Advantage program. Participants in the SBA’s program specialize in providing hands-on guidance to small businesses and offering credit to qualifying businesses in underserved markets. Wells Fargo, the nation’s No. 1 SBA lender 7(a) in dollar volume for six consecutive years (U.S. SBA data, federal fiscal years 2009-2014), established these relationships with the intent of providing small business owners with an additional financing solution that may better meet their lending needs.

Chamber Training Institute

On the topic of business education, the Gallup study showed that African American, Asian and Hispanic business owners were more likely than business owners in the general population to be extremely or very interested in learning how to build a strong business credit application, choose a credit product, and develop a business plan. To meet this demand, Wells Fargo is supporting a Chamber Training Institute that trains leaders of diverse-segment chambers of commerce on key business and leadership topics for their members, such as how to access business credit and craft strong business plans. This cross-chamber initiative builds on Wells Fargo’s strong working relationships with chambers nationwide that specifically serve and represent African American, Hispanic, Asian American and LGBT business owner interests.

“There’s no single answer to the challenges reflected in the study, just as the challenges facing all diverse-owned businesses are broader than any one financial institution can address,” Stevens said. “As America’s leading small business lender, we have a responsibility to do more. We believe the steps we’re taking will make a difference, help us foster more lifelong relationships, and move us closer to our goal of helping every business we serve succeed financially. We want to contribute to a national conversation, involving the public and private sector, industry stakeholders and small business owners, about how to better support small businesses in every community.”

Additional Gallup study findings

Other key findings in Gallup’s industry study included:

  • Only about half of small business owners say they have ever borrowed money for their business, including the general population of small business owners (50 percent), Asian (53 percent) and Hispanic (51 percent) segments, while the percentage of African American business owners who have used credit (42 percent) is somewhat lower.
  • African American (21 percent) and Hispanic (18 percent) business owners were more likely than their counterparts in the general population (10 percent) to be in the startup phase.
  • Nearly half of Asian-owned business owners (49 percent) said they were in the growing phase of their business, a higher percentage than the general population of small business owners (37 percent). Also, 38 percent of Asian-owned businesses reported annual revenue of $250,000 or more, compared to 22 percent of businesses overall.
  • A higher proportion of veteran-owned businesses (24 percent) reported being in the winding down phase – preparing to retire, sell or transition their businesses – than small business owners in general (15 percent).
  • Just 9 percent of women business owners reported plans to apply for new credit in the next 12 months, compared with 20 percent of men surveyed.

# # #

Advertisements

Why Every University and College Should Develop a Rewards-based or Equity-Based Crowdfunding Ecosystem

18 Mar

Crowdfunding platforms can be used to support research & development, transfer technology, protect IP, build co-working spaces and finance incubators and accelerators to launch new startups

 By Robert Hoskins

 Austin, Texas – The purpose of this equity crowdfunding article is to encourage universities and colleges to begin thinking about how schools and students might benefit from:

The Need to Build a Crowdfunding Ecosystem

There is a new generation of “Millennials” that do not want to go to college due to the poor economy and because they do not want to start their life as young adults by incurring $50,000 or more in college loan debt. And there is a growing concern for many students that there may not be a job waiting for them when they finally graduate. 

Read more:  What is Crowdfunding?

But what if there was a way to attract more students by convincing them that they could work their way through college by researching, planning and then launching their own business while earning their college degree? This would allow some certainty about their career path and teach students how to put a lot more money in their pockets than working for a large corporation that will stick them in a cubicle for the rest of their life.

Entrepreneurship Centers

For this reason, “Entrepreneurship Centers” are becoming a huge draw for students who do not want to work for a living, but instead want to live for working. That means learning how to build new startups from the ground up.  Entrepreneurship Centers usually start with a co-working space, then adds a business incubator with mentors to guide students through the startup process and when budget permits, accelerators are created to help students raise money from angel investors, accredited investors and sometimes venture capitalists.

Co-Working Spaces for Startup Companies

The biggest challenge for incubators and accelerators are the costs associated with building a 25,000 sq. ft. co-working space, paying mentors salaries and finding experienced executives with great track records that are willing to share their wisdom and industry experience with students. There is also resistance from departing from the “old school” way of transferring technology from a university Research & Development laboratory, protecting the intellectual property and then utilizing a licensing or royalty revenue model to realize short-term deals to provide a revenue for the college or university. 

JOBS Act: Nationwide Equity Crowdfunding

Enter the 2012 JOBS Act, General Solicitation and a new Equity Crowdfunding alternative financing tool that can help startups raise seed investment capital to startup new businesses. While the SEC and NASAA seems hell bent on preventing the national guidelines from ever being released (they are three years past the official deadline mandated by President and the United States Congress), approximately 14 states such as Texas, Michigan, and Georgia have passed their own Intrastate Equity Crowdfunding Exemptions. Add to that another 15 states have a Crowdfunding Exemption in progress.

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

Map of United States that have approved Intrastate Equity Crowdfunding Exemptions

Source: CrowdfundingLegalHub.com

Intrastate Equity Crowdfunding Exemption

In states where intrastate equity crowdfunding is legal, any trade school, college or university can build an equity crowdfunding platform and use it to begin fundraising campaigns to raise money, not only from Angel Investors and Accredited Investors, but also from the general public who are non-accredited investors.

Read more: What is an Intrastate Equity Crowdfunding Exemption?

This means anyone can take a brilliant idea, create a business plan and investor deck to support the business case, build an online equity crowdfunding profile and then use marketing campaigns to advertise the deal to millions of potential investors. Like any e-commerce site, Investors can then visit the equity crowdfunding sites to shop for deals by minimum investment amount, by products or services or by vertical business segment to find deals they want to invest in.

This means that a college or university can build an equity crowdfunding site and use it to raise money for every one of its R&D programs and streamline the entire technology transfer process so that promising technology can be transformed into startups businesses. The school collects a certain percentage from each crowdfunding campaign called a platform commission fee. For a $1 million raise and 10% platform commission fee, a college could collect a $100,000 fee from each campaign. This money could be used to fund co-working spaces, incubators, accelerators and Entrepreneurship Centers.

Creating Equity Crowdfunding Investment Syndicates

By the SEC’s securities law, a crowdfunding platform’s management team or employees cannot invest in equity campaign hosted on its own site unless they are registered broker dealer with the SEC. But a popular trend that is growing is building a college or university equity crowdfunding investment syndicate. An investment syndicate is usually led by one or more Super Angel Investors, who are seasoned veterans that have been investing in startups for 20 to 30 years and completely understanding the process of vetting deals with due diligence and understand the real risks of investing in startup companies.

Novice accredited investors with little investment experience join the investment syndicate so that they can follow or invest along side the Super Angel Investors. In addition, where it is legal, investment syndicates will pool a large pool of non-accredited investors together, who make small investments, into a single LLC and then invest the group’s money similar to how a venture capitalist invests money on the behalf of others.

Adopting an Equity Crowdfunding Ecosystem

For colleges and universities that adopt an equity crowdfunding business model might, it might completely change the way a school recruits, raises money, builds relationships with alumni and earns revenue by seeking long-term equity stakes in their students startups versus short-term licensing and royalty agreements.

Read More:  Top 100 Crowdfunding Sites in the United States

Launching an equity crowdfunding platform would not just increase a school’s earning potential, but they might dramatically change the manner in which that Millennials are taught. Instead of just course work, students would be taught at an early age to begin to engage with the world around them and plot a course for their own future destiny rather than relying on fate. Some Millennials might reject the idea of going to college, but the lure of becoming a successful entrepreneur and launching their own business while earning a college education has the potential to create one of the most vibrant and thriving economies the world has ever seen.

Even students that do not start up their own companies have an outstanding chance to benefit from the equity crowdfunding business model. All students seek a way to get some type of real world work experience usually by working as free or highly underpaid interns. Imagine the learning benefits that student would receive when applying their desired major’s education such as business administration, finance, legal or marketing to the intense equity crowdfunding process of launching a startup company.

Instead of adding a bullet point for working a menial job as a small cog in the corporate machine as an intern, students just might be fortunate enough to work on several successful crowdfunding campaigns that would highlight their professional expertise such as business planning, structuring equity finance deals marketing, PR, video production, and/or copy writing. And if the sweat equity pays off in equity crowdfunding shares, they might become extremely wealthy when that startup goes public a couple of years after they graduate. This is how many, many Silicon Valley millionaires got their start. They just did not have a term for the process, which is now branded as equity crowdfunding today.

# # #

Need help setting up a college/university crowdfunding sites?

Please fill out this form to get started:

Understanding the Best Type of Crowdfunding Site to Support a College or University Campus

16 Mar

What’s the Best Type of Crowdfunding Platform to Serve a College or University Entrepreneurship Center, Co-Working Space, Incubator or Accelerator Program?

By Robert Hoskins

Understanding the Crowdfunding Funding Process

The first step in building a crowdfunding business model is to understand the various forms of crowdfunding and at what step of the business creation process each should be used.

This crowdfunding infographic is a good representation on each step of the business creation process from the business idea, generating revenue, validating marketplace demand, expanding operations and maturing into a fortune 500 company.  It also shows what type of crowdfunding is usually best to fund startups and each step of the business’ evolution.

The Crowdfunding Escalator by CrowdSuite  Shows the  Different Types of Crowdfunding

The Crowdfunding Escalator by Crowdfund Suite Shows the Different Types of Crowdfunding

Source: CrowdfundSuite.com


Donation-based Crowdfunding
– At kitchen tables, dinner parties, happy hours and dorm rooms around the world many brilliant ideas are born and discussed for the very first time. Once an idea has been pitched and vetted among friends and family and it begins to gain momentum toward the first step of crowdfunding, Donation-based Crowdfunding, which is used to scrape enough money together to begin building a business plan to figure out how much it will cost to bring a business idea to fruition and/or develop at one or more prototypes. Donation crowdfunding sites make it easy to collect money for new creative ideas as well as expand the crowdfunding campaign’s reach from just family and friends to a global audience of potential supporters.

Most donation-based crowdfunding sites are usually built to provide fundraising activities for campaigns that do not offer any rewards or perks.  They are also used to support non-profit causes.  Donations to 501(3)(c) are tax deductible and can be written off at the end of the year.  

Most universities will only build donation-based crowdfunding sites that can be used by students and faculty to collect money by students and faculty for a wide variety of projects including college educations, scholarships, research and development, campus improvements and all kinds of not-for-profit endeavors. Crowdfunding can be used for very small fundraising efforts to raising millions of dollars from alumni, foundations, institutional investors and corporate sponsors.

Donation-based crowdfunding sites will make it easy for anyone to search for, discover, research and fund their favorite pet projects on their alma mater’s campus.

Rewards-based Crowdfunding – Surprisingly enough 90% of people in the world still are not familiar with the term crowdfunding. Mention Kickstarter or IndieGoGo and most people do recognize the brand name and know its purpose and have heard of popular crowdfunding campaigns such as Oculus, Star Citizen, Coolest Cooler and the return of the Pebble Time SmartWatch.

Rewards-based campaigns are used to take ideas, concepts and prototypes to the next level. They are used in a similar fashion to how typical marketing campaigns are used to support product/service launches and rollouts with an added twist.

People with ideas build a crowdfunding profile, shoot a crowdfunding pitch video and build a list of up to 20 perks or rewards that are pre-sold to raise enough money to develop a prototype or pay for the very first manufacturing production run.  Not only do rewards-based crowdfunding campaigns validate industry demand, but they allow businesses to test market various product versions, colors and price points to gauge public interest. More importantly, they help startups generate their first revenue by pre-selling their products and services in order to raise enough money to get the business started. Gaining this type of market traction is very important to angel investors because it shows that there is an audience of people who are willing to pay for the company’s products and services. 

The best way for universities and colleges to cut their teeth on the crowdfunding business model is to launch a rewards-based crowdfunding site, which usually collects a 5% commission on the crowdfunding campaign’s total amount raised. That may not sound like much but since 2009, Kickstarter alone has raised $1.6 billion, which at 5% means $80 million over 5 years in gross revenue or an average of $16 million per year that could be used to fund a wide variety of college/university projects.

Not only are crowdfunding platforms a good source of revenue, but with the right marketing resources crowdfunding campaigns have the potential to raise a huge amount of marketplace awareness for the university’s projects, business development goals, research and development labs and technology transfer programs. All at no cost to the university because the crowdfunding campaign managers are the ones that spend money to market their crowdfunding campaign to the world.

The other reason to consider launching a rewards-based crowdfunding program is that they are easy and do not fall under the jurisdiction of the SEC or state securities board regulators because no securities are being sold. For new startups it also means that raising money does not involve selling any equity shares or giving up any control of the company’s administration.

Rewards-based crowdfunding campaign commissions can also be used by colleges/universities to establish co-working spaces and to fund college incubator and accelerator programs. Co-working spaces with at least 25,000 sq. ft. can generate millions of dollars per year in additional revenue from rent and mentorship programs.

It is important to note that rewards-based commissions combined with co-working space revenue can provide millions of dollars in seed investment capital to begin funding the next step in the process, equity-based crowdfunding sites, where schools, students, faculty and alumni can become equity investors in new startups.

Equity-based Crowdfunding – Setting up equity-based crowdfunding websites will allow schools to play the role usually enjoyed by Angel Investors, Venture Capitalists and/or Broker-Dealers. They will allow students to raise money for startups by selling debt, such as convertible notes, or selling equity shares for a certain percentage of the company to raise enough seed investment capital to produce prototypes, fund early manufacturing runs, setup distribution agreements and hire manufacturer representatives. 

Other types of equity crowdfunding involve sharing 20% of the gross profits with investors or making royalty payments on a per item sold basis until the investors receive a 3x to 5x payback on their initial investment.

Investing in startups is a risky business, but with the right education and building a small group of experienced Super Angel investors to follow, a large group of novice accredited investors can invest smaller amounts of money along side seasoned experts with a proven 25-30 year track record.

In states like Texas, Michigan, Georgia and 11 others non-accredited investors can also pool their money together to purchase equity shares of stock. This is something that has been illegal for the past 80 years, but intrastate crowdfunding exemption laws are now allowing average people to begin investing in startups just like angel investors and venture capitalists.

The aggregation of novice accredited and non-accredited investors are known as Investment Syndicates, which is the process of following expert investors.  This allows students, faculty members and the general public to learn the equity investment business and enjoy the benefits of being an insider when a great business idea is transformed from a startup company to an Initial Public Offering (IPO).

For example, a $300 investment for a single share of stock and pair of Oculus virtual reality goggles would have paid investors a return on investment of $45,000 when Facebook bought the company for $2 billion dollars.

Equity-based crowdfunding is much more complicated than rewards-based crowdfunding due to the stringent requirements needed to meet the SEC and state securities board regulatory requirements.

Unlike rewards-based crowdfunding, equity crowdfunding provides a great opportunity for business administration, legal and finance students to get hands-on experience writing business plans, structuring deals, protecting intellectual property (IP) and planning real world product/service launches that are part of every single equity crowdfunding campaign.

Working alongside experienced angel investors and venture capitalists is also a great way for students and faculty to learn the finance industry from the inside out.

Learn more about crowdfunding:

# # #

Want to learn more about crowdfunding campaigns or how to setup a crowdfunding platform?

Please fill out this form to get started:

Equity Crowdfunding Provides Colleges and Universities with Easy Access to Early Stage, Seed Round Investment Capital

15 Mar

How Colleges / Universities Can Provide Easy Access to Seed Investment Capital with Equity Crowdfunding Platforms

By Robert Hoskins

Providing Easy Access to Investment Capital 

Providing easy access to seed investment capital is a great way to encourage the creative thinking of young innovators. When money is hard to get, there isn’t much point in trying to be creative. But when students realize that there is a better than average chance of putting together a good business plan and actually being able to raise money to fund their ingenious ideas, Equity crowdfunding will serve as the catalyst that stimulates economic development.

The payoff for students, faculty and universities can be tremendous. It only takes a couple of home run investments to generate a billion dollars in revenue when one of their startups is purchased or takes their company public.  

If you look at the current crop of Angel investors, the large majority got their start by working for a company that went public. Once entrepreneurs strike it rich, they want more.  They don’t cash out and retire.  They reinvest the $10 million they earned into a new pool of startups to help them achieve the same success.  This is what most people mean by mentors.

Successful entrepreneurs love to share their success stories with the next generation. The most important step is to create the first wave of entrepreneurs even if it means a small town in nowhere Texas has to pay Angel Investors and Venture Capitalists from California and New York for their consulting services to get the ball rolling.  All it takes is a small college, smart professors, a few successful investors, a Rewards or Equity-based crowdfunding platform and a team of marketing experts that understand advertising, email marketing, PR and social media.

One company that creates a 1,000 millionaires has the capability to investment up to a billion dollars back into the next round of startups. This is precisely how Silicon Valley was built. For colleges/universities that decide to add an Equity-based Crowdfunding ecosystem, it has the potential to start a huge investment domino effect that will result in a wide-spread, long-term return-on-investment for universities, its faculty, their students and the community around them.

Learn more about crowdfunding:

 

# # #

Using Equity Crowdfunding Sites to Finance Incubators and Accelerators at Leading U.S. Colleges and Universities

15 Mar

Launching an Equity Crowdfunding Ecosystem to Fund College / University Incubator and Accelerator Programs

By Robert Hoskins

Financing Incubators & Accelerators

Most large colleges and universities in the United States have an Entrepreneurship Center or something similar, but schools in smaller population centers lack the presence of well-staffed Incubators and/or Accelerator programs that are necessary to provide students with access to professional, seasoned business, finance, investment and marketing mentors. The value of providing wisdom gained over 20 to 30 years of real world experience from subject matter experts is a critical part of the startup mentoring process.

And even with the right team of mentors in place, these incubator and accelerator programs will need their own investment syndicate to a yield sufficient pool of investors to amass enough investment seed capital to fund startups that advance from an incubator to an accelerator program.

The benefits of providing investment capital are clear to everyone but sometimes the biggest challenge for smaller communities is aggregating the first million dollars to get started and maybe another 4 million dollars to keep the program funded until startups progress far enough to be purchased by a larger company or go through an Initial Public Offering (IPO).

The minimum startup capital needed to finance 10 startups per year at $100,000 each will require at least a million dollars. Sometimes there simply are not enough local resources to achieve this goal.  This challenge showcases the value of equity crowdfunding sites and how marketing equity crowdfunding sites on the internet can make it possible for remote angel investors and venture capitalists to shop for potential investment opportunities at your school from anywhere in the world.

SBIR/SBTT Technology Transfer Programs

Colleges and universities can also tap into federal funding via Small Business Innovation Research (SBIR) or Small Business Technology Transfer (SBTT) programs that offer up to $2 billion per year of funding for university incubators and accelerator programs.  Competition is fierce for this funding, but with right application it is possible to obtain funding.

Learn more about crowdfunding:

 

# # #

Want to learn more about equity crowdfunding?

Please fill out this form to get started:

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

14 Mar

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:

 

# # #

Want to learn more about setting up an equity crowdfunding platform?

Please fill out this form to get start:

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

14 Mar

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:

 

# # #

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

Please fill out this form to get started:

 

Equity Crowdfunding Platform Commission Revenue Can Fund College & University Incubators and Accelerators

13 Mar

How to Launch an Equity Crowdfunding Site to Provide Sufficient Revenue to Fund Successful College and University Incubator and Accelerator Programs

By Robert Hoskins

Equity Crowdfunding Platform Commission Fees

As deals receive funding, equity crowdfunding sites usually collect a 5% to 10% commission fee.  This funding can be used to setup incubator co-working spaces, which can then start charging monthly rent to begin generating monthly recurring revenue. Once an incubator has been setup, the crowdfunding commission fees can be used to begin building a pool of investment capital to fund a school’s accelerator program.

Most states, however, will not let a equity crowdfunding sites invest in crowdfunding campaigns hosted on their own site unless they are a registered broker dealer with the SEC. 

Schools can, however, setup a separate LLC and begin investing money in startups via the separate entity.

Rules vary by state, so check with a local securities attorney to make sure you understand what the legal guidelines are in your state.

The main point is to note that with the right marketing programs in place, any college or university in the United States can begin build up their own equity crowdfunding investment syndicates and crowdfunding platforms to help fund co-working spaces, incubators and accelerator programs.

# # #

Want to setup an college/university equity crowdfunding platform?

Please fill out this form to get started:

 

MicroVentures Opens “500 Startups Fund III” Equity Investment Opportunity to Fund 4-Month Startup Accelerator Programs

27 Feb

Equity Crowdfunding Site Now Seeking Investors to Invest up to $10,000 in Multiple e-commerce, cloud services, mobile, education, digital health, payments and Internet startup companies

By Robert Hoskins

Austin, Texas – MicroVentures, an online equity crowdfunding portal based in Mountain View, California and offices in Austin, Mexico City and San Francisco, announced the launch of a new equity crowdfunding investment fund called “500 Startups Fund III,” which is seeking to sign up accredited equity investors to invest a minimum of $10,000 or more in early stage capital investments. The 500 Startups Fund III makes investments across multiple industry verticals, including e-commerce, cloud services, mobile, education, digital health, payments and Internet among others.

MicroVentures Equity Investment Network of 25,000 Global Investors to Date Have Invested $125 Million in Approximately 900 Startup Companies

MicroVentures Equity Investment Network Has Invested   $125 Million in Approximately 900 Startup Companies

Founded by Bill Clark in 2009, MicroVentures recruited Tim Sullivan, Garrett Paul and Jaclyn Strife from SharesPost in 2012, which is renowned for taking Facebook through its Initial Public Offering (IPO) and went on to found Oceanic Partners. The firm runs something commonly referred to an investment syndicate, where accredited investors who are new to the Angel and Venture Capital investment process follow seasoned, experienced lead investors.

“Over the years, MicroVentures has built a platform that gives investors the ability to diversify investments in early to late stage opportunities. Our level of due diligence and customer support are unique resources angel investors previously did not have access to,” stated Bill Clark, Founder and CEO of MicroVentures. “Investors are increasingly seeking diversification and international exposure. MicroVentures through the 500 Startups Fund III provides both, while reinforcing its long-standing commitment of supporting investor demand for diversified opportunities.”

Using this growth strategy MicroVentures had amassed more than 4,000 investors by the end of 2012 and over the past three years it has grown 625% to a very large pool of more than 25,000 global investors who have invested approximately $125 million in 900 companies.

Unlike typical broker dealers, which only solicit investments ranging from $50,000 to $100,000 and up, the MicroVenture site allows accredited as well as non-accredited investors to invest in a wide variety of funds that range from investments of $1,000, $3,000, and $10,000 and up. This allows investors to diversify their portfolio and spread their eggs across multiple startup baskets, which reduces risk and increases the chance of being able to discover and participate in the next Facebook, Oculus, or Pebble Time Watch at a very early stage.

The 500 Startups runs a four-month Accelerator Program for Startups that culminates in a private, invite-only Demo Day where each startup presents to a group of select investors in an effort to attract additional seed funding. About 30 companies participate in each four-month program offered at its various locations.  Batch 12 began January 2015 in San Francisco.

In addition to investing through its accelerator program, 500 Startups invests globally in early-stage companies through various seed-stage investment funds.

Across numerous funds, 500 Startups has committed approximately $125 million to over 900 portfolio companies.

The inaugural investment fund, Fund I, was formed in July 2010 and achieved an ultimate fund size of $29 million. As of September 30, 2014, the internal rate of return for Fund I stood at 18% with investment exits worth approximately $13 million.

Fund II was formed in April 2012 raising almost $45 million. Fund II has achieved $2 million in exits and a net internal rate of return of 27% as of September 30, 2014.

While Fund I and Fund II are closed to new investments, the 500 Startups is the fundraising process for four other funds: Fund III, Annex Fund, 500 Luchadores and 500 Durians.

Under its status as a FINRA-registered broker-dealer, MicroVentures offers both primary and secondary investment opportunities through their user-friendly, online equity crowdfunding platform. Series 7 licensed brokers develop personal relationships with Accredited and Sophisticated Investors to provide high-touch customer service, and support investment in startups with confidence.

The crowdfunding portal provides access to a flow of curated, vetted startup investment opportunities and allows novice investors to review due diligence, disclosures and speak with experienced licensed financial professionals prior to making an investment.

# # #

MichiganFunders.com Launches 1st Equity Crowdfunding Site in Detroit for Non-Accredited Investors and Entrepreneurs

25 Feb

Under the Michigan Invests Locally Exemption (MILE) Act, New Rule Allows Non-Accredited Investors to Invest Alongside Angel Investors for 1st Time in 80 Years

By Robert Hoskins

Detroit, MI – MichiganFunders.com announced that it launched the 1st equity crowdfunding site in Detroit to connect Michigan-resident investors and Michigan-based businesses that are seeking growth funding. The equity crowdfunding site is  the first portal based in Michigan to allow investors to participate in private equity investments in exciting local startups, expanding businesses, and real estate. All investors, regardless of income, are able to participate in funding the future. Investing in exciting local Michigan businesses has never been easier. 

MichiganFunders Equity Crowdfunding Site for Non-Accredited and Angel Investors

MichiganFunders Equity Crowdfunding Site for Non-Accredited and Angel Investors

Following the passage of Public Act 264, co-founders David Tessler, local attorney Jeffery Freeman, and Niles Heron partnered to build the platform, which will for the first time, open up investment opportunities to Michigan-based non-accredited investors. The site launched in February 2015 and will be open to both prospective investors and entrepreneurs. 

According to a leading research report, How Accelerators Kickstart Startup Ecosystems by TechCocktail, “In 2013, over $120 million in venture capital was invested in 40 Michigan companies, the most deals done in a single year in the past decade. The state now boasts 33 venture capital firms (50% more than 2008), $1.6 billion of capital under management, and over 90 investors (84% more than 2008). Its Q2 investments in 2014 landed it #11 among US states.”

In 2014, Google recognized the huge potential for growth in Detroit and launched Grand Circus Tech Hub located inside M@dison Block to provide financial support and resources for entrepreneurs.  The investment is a sign that even Internet Moguls do not forget their roots. Google co-founder Larry Page was born in East Lansing, less than 100 miles from Detroit, and graduated from the University of Michigan.

Equity Crowdfunding will augment Michigan’s ability to provide additional seed investment capital to their growing network of entrepreneur and startups organizations such as:

Michigan is the 10th most populated state in America, and growing yearly, with almost 10 Million residents. The state contribute’s in excess of $400 billion to the national GDP, which is more than Thailand, Austria, and a host of other countries produce for themselves yearly. Detroit was recently ranked a top-city for entrepreneurship and startups by Forbes.

The Michigan Invests Locally Exemption (MILE) opens up small business securities investments to all Michigan residents in a way not available nationally, or in the majority of other states. We’re from here, based here, and committed to working with local investors and small businesses to bridge the gaps.

“Michigan Funders firmly believes that the pursuit of dreams is an inalienable right, and should not be denied or deferred because of access or wealth. Within that is our belief that investors should be allowed access to investments, and businesses should be allowed access to capital – both within a truly democratic market,” said Niles Heron, Chief Business Development Officer at Michigan Funders.

Built on the CrowdEngine crowdfunding platform, state residents can now invest up to $10,000 per investment, per year, in startups, existing businesses, and real estate via crowdfunding platforms.

“CrowdEngine is proud to have been part of many crowdfunding ‘firsts’, and this is another key milestone in bringing equity crowdfunding to the world. This is the same technology trusted by investors and entrepreneurs around the world, but now we’re enabling a new investment experience for intrastate crowdfunding portals that is accessible, efficient, and secure,” said Jim Borzilleri, President.

Accelerators and Incubators can use CrowdEngine’s software to launch their own equity crowdfunding site that features:

  • User-Friendly Tools  – That simplify the creation, promotion and securing of new investments for small businesses.
  • Align Investors to Investments – With access to a broader range of locally based investments not limited by federal requirements of existing personal relationships, “accredited” investor status, or other federal compliance requirements.
  • Streamlined due diligence  – A new population of investors and entrepreneurs can focus more on fundraising instead of paperwork, with digitized templates, automation and e-signing during the checkout processes. 
  • Increased Convenience –  Michigan residents can now browse investments anytime, from anywhere, on any device.
  • Investor Management – Once investments are complete, companies and entrepreneurs have one simple tool for investor communication, payouts, dividends, and quarterly updates.

# # #

%d bloggers like this: