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Tag Archives: Crowdfunding Ecosystem

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.

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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:

 

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Starting a University Equity Crowdfunding Ecosystem to Build Better Alumni and Local Community Relationships

12 Mar

Crowdfunding Sites Provide Alumni with a Personal Way to Begin Investing in their Alma Maters’ Promising Startups and Reap the Benefit of Making a Lot of Money if They Invest in the Right Projects

By Robert Hoskins

Stimulating Alumni and Local Community Engagement

Establishing an Equity Crowdfunding Ecosystem is a great way for colleges and universities to reconnect alumni with their alma maters and engage them to begin investing in the school’s future.  

Unlike giving donations to a school with no idea of how the money is going to be spent, investing directly in equity crowdfunding campaigns not only gives alumni a way to give back to the university that that helped launch their careers, but also provides them with a personal way to begin investing in creative projects that are near and dear to their hearts as well as reap the benefit of making a lot of money if they invest in the right projects.

Building an Equity Crowdfunding site to market college and university projects to alumni and the rest of the world can help:

  • Build Better Relationships with Alumni;
  • Migrate Alumni from Blind Donations to Targeted Equity Investments;
  • Generate Substantially More Revenue to Finance School Programs;
  • Increase Long-Term Return on Investment; and
  • Produce Much Better  Global University Marketing Opportunities.

Equity Crowdfunding Sites are Great Marketing Tools

Not only do crowdfunding campaigns provide a great opportunity for students to raise money for their startup companies, but the marketing that is done to drive investors to their crowdfunding profiles is a great way for colleges and universities to market their school’s brand name and recruit new students in a similar manner to running TV advertisements during college football and basketball games.

The difference, however, is that instead of producing a bland 10,000 ft. overview of a college’s academics, research and development facilities and a fly over of the university campus, each equity crowdfunding campaign has the opportunity of demonstrate exactly what is actually going on inside their R&D departments, computer science data centers and bio-tech wet labs. It is a new way to streamline the Technology Transfer process.  

Equity Crowdfunding is a much more cost-effective way to bring new technology and businesses to market and can earn schools substantially more money via equity investments than licensing agreements or royalty deals. 

Entrepreneurship Centers, Incubators and Accelerators

In addition, crowdfunding sites allow schools to promote the fact that they are now offering entrepreneurship centers, co-working spaces, incubators with mentorship programs and accelerators that can help raise money to fund new startups.  Equity crowdfunding ecosystems and alumni angel networks will make is possible to attract more millennials, smarter entrepreneurs and aggressive startup high-tech and bio-tech companies seeking a fertile environment in which to launch their business ideas.

For example, look at the successful marketing campaigns that the Coolest Cooler or the Pebble Time SmartWatch crowdfunding campaigns are generating for Kickstarter.  Not only are they transforming Kickstarter into a global brand, but with 18 days left to go the Pebble Time SmartWatch has raised over $17 million. These marketing, PR and social media campaigns have generated massive amounts of free, positive and credible publicity. The same type of exposure can be generated for any college that has startups marketing their university’s equity crowdfunding campaigns via the internet and social media networks.  

Equity Crowdfunding Generates Nice Revenue Streams

Not only is the free, positive publicity great for promoting a school’s brand name, but collecting a fee similar to Kickstarter’s five-percent crowdfunding site commission fee is also a great way to make money to fund the school’s incubator and accelerator programs.

For example, the Pebble Time SmartWatch crowdfunding campaign’s site commission fee will deposit more than $1,000,000 into Kickstarter’s bank account for doing little more than setting up an e-commerce site. A simple task for any computer science college. 

College and university crowdfunding sites will start slow at first like Kickstarter did but given the strength of the university’s mass communication department, it could be much quicker.  Regardless, over a five-year period, a school’s crowdfunding site has the same opportunity to create a massive crowdfunding ecosystem like Kickstarter’s which to date has collected almost ~$2 billion in investment seed capital over the past 5 years.  

It you are a school administrator, what would injecting $2 billion into your Technology Transfer Office do for your college or university?  And that is straight rewards-based crowdfunding.  What would the same $2 billion return if just 10% percent of your startup companies went public and raised $100 million each? Once the first several dominos fall the financial returns would sufficient enough to continue growing a stronger pool of wealth with each generation of graduates. This method is precisely how Palo Alto, San Jose and San Francisco built the Silicon Valley in California into a global angel investor and venture capital powerhouse.

Alumni, Mentors and Future Students

Future students, leading mentors and disconnected alumni will suddenly have a purview into exciting projects and developments that are percolating behind the scenes in a very similar manner to Kickstarter. Crowdfunding will make it possible for the local community and general public to see the huge innovations that are going on behind the scenes, which will create the desire to get involved in the process so they too can strike it rich. Suddenly, alumni will be very motivated to keep in touch and invest often. 

Conclusion:

The crowdfunding industry is clearly fueling a new generation of makers that realize that it is more possible now than ever to bring their creative ideas to life with other people’s money, not just on the east and west coasts, but anywhere in America.

Learn more about crowdfunding:

 

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Want to setup an Equity Crowdfunding Ecosystem for your college?

Please fill out this form to get started:

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