It seems that every day I have a different conversation with an entrepreneur about our platform, the real time analytics, and what financial transparency really means. The public showing of our product at our December 3rd Event in NYC is sure to turn some heads, but more importantly provide both investors and entrepreneurs a thorough understanding of our goals, focus, and offering. While event attendees will have a first look at our platform in person, I wanted to give everyone a better understanding of why real time analytics is important and what they mean for both investors and entrepreneurs.
The truth of the matter is that the majority of rewards and equity platforms provide little guidance on how to successfully raise the funding you need for your business. Over the years I have heard many investors say Friends and Family or the FF round is the first place to go. Well the average entrepreneur with a potential great idea does neither have that rich uncle nor are they “well connected”. Yet most current successful crowdfunding raises come from friends and family, with strangers only contributing on average after a good portion of the funding goal has already been achieved. So are the people that do not have family or friends with significant capital out of luck? This then begs the question, how do we really get the ecosystem for unaccredited crowdfunding started?
Georgia and Kansas are the two states that have already approved crowdfunding, yet not many people know about it. Both states have expressed interest in using our platform and we are excited to push forward in the states crowdfunding initiatives. North Carolina is right behind Georgia as well as New Mexico, Wisconsin, and Texas for passing similar legislation.
Currently we are speaking with unaccredited investors and entrepreneurs in Georgia who want to be among the first on our platform to raise a successful and unaccredited financed deal in the United States using our patented technology. By doing the first deal in a state that is friendly towards entrepreneurship and crowdfunding, other states will continue to follow. We believe that the majority of Americans still feel better about investing in their local communities rather than someone half way across the continent. That local community may be their town, state or region. Doing business in NYC is not the same as doing business in CA, which is not the same as doing business in North Carolina or Texas. An organization that does not respect this fact will lose.
This ultimately means that each state will have different rules and different monetary amounts that crowdfunders can donate to a campaign. Additionally, the states that are not friendly to crowdfunding or are late to the game (I can already surmise which states those will be) will lose out on the revenue and tax benefits that the new crowdfunding entrepreneurial ecosystem will provide. Some will see the light, and some will stay in the dark – that is just the way of the world.
REAL TIME FINANCIALS
The big question about our real time financials has been an interesting conversation for the last year, primarily because not many seem to entirely understand what we are offering. Let’s look at an example. If my colleagues and friends were to write an entrepreneur, who we didn’t know well but liked their business idea, a check today for $100,000 through a crowdfunding site, we would want to know exactly how they are spending the money. Why you ask? Don’t you trust the entrepreneur you say? Of course we do, but like Horatio (David Caruso) in CSI Miami used to say, “TRUST, BUT VERIFY”. That is exactly what we are seeking to accomplish. I have been around financial and accounting firms long enough to know that there are 20 legal ways to showcase your financials, some of which border on being sketchy.
Secondly, my colleagues and friends are there to help the entrepreneur succeed. After all, we don’t make a great return if the entrepreneur fails. Case in point, when seeing that a company of 20 people is spending $10,000/month on office space, we say to ourselves, do we know anybody in the city who owns real estate and would be able to give that business a greater discount or perhaps offer office space for free. Entrepreneurs are not always great at asking for help when they need it most. These financials give immediate insight into the businesses performance and the entrepreneurs decision making ability, and also help me decide if I want to give the entrepreneur more money or cut my loses. I highly respect entrepreneurs that use every penny (yes penny) of an investors’ capital to grow the business.
Let’s get one thing clear, investors on our platform are in this business – the business of investing – to make money and lots of it. Anything else is just noise. Investors have three options:
#1) Invest Early (First Investor) and sell shares on our second market (to late investors at a premium)
#2) Invest Early and wait for the company to get acquired (not the best strategy but possible)
#3) Invest early and wait for dividends from profits (our deal terms incentivize entrepreneurs to get to profitability quickly)
Are there people who like to donate? Yes, we all do for worthwhile causes. Should they be considered investments? Absolutely not. Are there people who love receiving rewards for their purchases? Yes. There are also people like myself who would have loved to invest in games like the original Playstation title ‘Assassins Creed” or “Grand Theft Auto” for you game enthusiast out there. But don’t get me wrong, if those games were listed on a crowdfunding platform, I wouldn’t have been donating because I thought it was cool.
Granted I am sure the original investors in those games feel pretty cool about their bank account today, but the point still remains, they were investing to make a return.
We all know some businesses will fail and some will succeed, but ultimately the thought process of what unaccredited investing is and what is needed to get there may need some adjusting.
Until then, I look forward to seeing you at our Shark Event on December 3.