Tuesday, November 3, 2015

unConference 2015 Session: Crowdfunding for Startups

By Patrick Rafter (Principal and Co-Founder, Rafter Communications, and longtime MassTLC Ambassador, Blogger, @prafter
Benjamin Cavallari (white shirt) shares his crowdfunding tips

Surprisingly, the “Crowdfunding for Startups” unConference15 session was convened by someone who isn’t your typical startup CEO. In fact, Jay Donohue, President of Boston-based Global Office Link launched his company more than 21 years ago to assist companies with their real estate needs. In that time, Jay and his partner Ralph Maffe have completed well over $1 billion in real estate transactions. Beyond the duo’s 50+ yrs. of relevant experience, they’ve also developed and patented some very powerful online tools that help clients get the most from the Web and save millions of dollars.

As Jay’s exploring how crowdfunding might fit into real estate, Jay hosted a session of circa 25 participants, who had varying knowledge of/experience with crowdfunding.

Many of the session members were startup execs interested in learning if/how crowdfunding can be an effective funding alternative to maxing out their credit cards, tapping friends and family (what I call the MCI round), incubators, angel investors, or god forbid--- venture capital.

The session was highly interactive, informative and the participants: surprisingly honest. Once again, the unConference proved itself a unique gathering where attendees are open and giving, not secretive, nor overt self-promoters.

The early conversation centered on how crowdfunding became a more viable funding choice following the passage of the 2012 Jumpstart Our Business Startups (JOBS) Act --- bipartisan legislation intended to relax securities/other regulations restricting how startups raise money and which set federal guidelines for equity crowdfunding.

As people in the session hailed from across New England and other countries, there was also some discussion of whether/how individual states are friendly to startups and supportive of crowdfunding. With most of the audience from the Bay State, there was a discussion of the Massachusetts Crowdfunding Exemption, through which Mass-based business entities may raise up to $1 million in a twelve-month period, and up to $2 million if the company has audited financial statements.

While our gathering was comprised of lots of smart and successful professionals, three stood out for me:

Benjamin’s a producer at Cambridge-based Skreens Technology; a startup that’s building technology that “enables users to composite and blend their various HDMI inputs to create more useful layouts for both work and for play.”

My translation of Skreens’ techy-sounding value prop description: “Lets you watch, game, browse, Tweet, and more ALL at the same time on a single computer screen.” Through an insight-full description of how they’re doing it, Benjamin detailed how Skreens is running a Kickstarter campaign right now (which launched on September 22, 2015).

Five of Cavallari’s Kickstarter Tips:
1.       Build up an installed base of prospective customers before launching your campaign
Skreens spent a year exhibiting at conferences including the PAX events, Streaming Media East, NAB/Vegas and TwitchCON, which helped them gather a database of 5,000 names.
2.       Set an artificially low public goal that can be reached in 24 hours
Skreens’ Kickstarter first showed a $25,000 goal – far less than what they really wanted or needed to raise. As of this writing, with 3 days to go till the close of their campaign, Skreens has raised almost $402,000 through the support of more than 1100 backers.
3.       Have an internal staffer who is dedicated full-time to managing the Kickstarter campaign
Crowdfunding compresses lots of effort into a very short time. Success requires someone who eats, sleeps and breathes the campaign.
4.       Hire a creative PR resource to pitch your story to media and bloggers
As a reformed PR guy myself, Benjamin was preachin’ to the choir!
5.       Produce and Post a Killer Video
If a picture’s worth a thousand words, what’s the value of a well done online video? Whether you watch it on their Kickstarter page or on YouTube, Skreens put together an effective video that gives complete overview in 2:41 minutes, with a tagline of “Skreens: Everything you want on one display.”

When Benjamin said Skreens was “just plug, play, and play” – he got this ADD-crazed multi-tasker chomping at the bit!
A self-dubbed creative “Brain for Hire” through her company MESLIN Innovation Consulting, Marie Breslin is a newly arrived Program Manager at The Capital Network (TCN), which has played a vital role in Boston’s innovation ecosystem, by delivering educational programs that help entrepreneurs raise funds for their early stage startups. @TCNupdate has curated a network connecting New England's premier entrepreneurs, angels, VCs, corporate/strategic investors, government agencies, educational institutions, and area-expert service providers. 

At the #unConf15 crowdfunding session, Marie described some of TCN’s 40+ programs a year, which include events like breakfast roundtables, deep-dive topic lunches, mentoring and networking receptions.

Confused about valuations? Cap tables? Dilution? —The TCN’s 4-month Accelerated Education Program is a great way to come up to speed on the fundamentals of all things funding.

So if you’re with a startup seeking between $50K and $4M in seed, angel or venture capital investment, be sure to check out The Capital Network at http://www.thecapitalnetwork.org

Andy Singleton is founder and CEO of Assembla, a hot Waltham SaaS company that provides workspaces for distributed software teams.

Andy shared his personal story of turning down
$10,000 from an investor in the early days @assembla, thinking (at the time): “Why would I want to take that?”

At the 2015 unConference, Andy said he’d love to get $10,000 from that investor today… The investor? None other than Paul Graham (aka @paulg), co-founder of Y Combinator-- the massively successful startup incubator that’s funded over 800 startups, including Dropbox, Airbnb, Stripe, and Reddit.

Andy’s story brought to mind Bessemer Venture Partners’ fascinating “Anti-Portfolio” – a summary of investments that Bessemer passed on (including Apple, eBay, Facebook, and Google to name a few). This webpage includes excerpts from partners’ comments made at the time they declined. It also includes this honest yet amusing line: “if we had invested in any of these companies, we might not still be working.”

If Kickstarter or Indiegogo aren’t a fit, you’ll find a helpful round-up in “Crowdfunding for Startups: 10 Kickstarter Alternatives,” an August 2015 BusinessNewsDaily article written by Nicole Fallon (@nicolefallon90).

Ultimately, whether a tech entrepreneur gets cash for their startup through crowdfunding, angels, incubators or venture capital firms, remember Rafter’s Rule: It’s not how much you take in, it’s how much you keep!

1 comment:

Unknown said...

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