Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street
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What are the differences between an Angel and Series A round of funding?

What are the differences between an Angel and Series A round of funding? | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it

A major chunk of investments in startups is done either by Venture capitalist firms or by Angel investors. Therefore, it becomes essential for entrepreneurs to understand the difference between them. To read more click on image or title.



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Via Marc Kneepkens
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Marc Kneepkens's curator insight, September 21, 2015 8:51 AM

It is essential to know the difference between angel investors and venture capital. Angel investors are individuals working with their own money, venture capital works with investment funds. However, there are other ways to raise capital now thanks to the Job Act. Check out what this VC company is doing, very hopeful and empowering for startups who have always struggled with the issue of raising funds. Take a look at what CCA has created, you can either work with them directly or learn how to do the whole process yourself. http://bit.ly/1Lr9RrI


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Here's How Startups Actually Start Up

Here's How Startups Actually Start Up | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it
Explained in plain English

There’s a sucker born every day — or so they say. But the way startup fever has been spreading across the land, it almost feels more like there’s a Zuckerberg being born every day. And that feeling is real. According to data from the Kauffman Foundation, 2015 has marked the first year startup activity has been on the rise since the Great Recession. In fact, it’s soaring — the numbers show we’re living through the biggest upswing in new companies, products, business deals, and jobs in the past twenty years.


Via Marc Kneepkens
Richard Platt's insight:

According to data from the Kauffman Foundation, 2015 has marked the first year startup activity has been on the rise since the Great Recession. In fact, it’s soaring — the numbers show we’re living through the biggest upswing in new companies, products, business deals, and jobs in the past twenty years.  That makes it sound like now is the perfect time to bring your million dollar idea to market — but how is that even done?   -  1st off, begin by casting aside any fears that you can’t make a dent in the tech universe with little computer prowess.“We’re seeing more and more people enter the tech space because the definition of tech continues to grow,” says Michele Markey, vice president of Kauffman FastTrac, a global network of advisors helping entrepreneurs launch and grow companies. She’s seen everything from medical devices to mobile apps launch from Main Street as much as Silicon Valley, and that’s a trend many expect to continue.    1. Eying the competition:  It may not sound as exciting as a weekend-long hackathon or a giving a flashy presentation to a bunch of investors, but the reality is that most startups live and die based on early research. Scoping out the competition is vital to understanding where there’s an opportunity to make a move. This can involve everything from dissecting competing products to improve upon their designs or simply mapping out their locations to find a new way to reach underserved customers.   2. Finding and defining customers:  Markey says startup founders also conduct research by hitting the bricks and talking to would-be customers about their ideas. “A smart entrepreneur needs to figure out where their sweet spot in the marketplace is,” she says. “Who is that customer that’s going to use the product, pay the money, and maybe be the repeat user?  

3. Shoring up intellectual property:   Padlocking your product or service with an array of patents, trademarks, or copyrights can sound terribly dull, but the truth is it’s one of the most important steps to ensuring a budding company’s success. Without these protections, a competitor can swoop in and copy an idea without having to pay a dime for all the hard work done until this point.  And finally, startups are also wise to copyright their reproducible works. Whether it’s an paperback, and e-book, or even an image, if it can be duplicated, it should be protected. That may sound like a publishing industry problem rather than a startup issue, but as TechCrunch noted last year, it only took four hours for copyright law to crush one particular startup’s dreams.

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Marc Kneepkens's curator insight, August 29, 2015 9:13 AM

A great down-to-earth outline of what it takes to #startup your own #venture.

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New Rules Allow Early Adopters to Become Early Investors

New Rules Allow Early Adopters to Become Early Investors | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it
Were you one of the first to identify Uber as a game changer?  What about being one of the first to use Amazon or Google in the early days? If you had..

Were you one of the first to identify Uber as a game changer?  What about being one of the first to use Amazon or Google in the early days?

If you had invested in Uber (now valued at $40B) in 2011, you would currently be sitting on a 600x return. Unfortunately, unless you were already very wealthy, securities laws would have prevented you from being able to invest in the these companies.

Early adopters have historically been prevented from crossing the threshold from customer to investor. However, a fundamental shift in the relationship between consumers and companies has been set in motion by new SEC regulations set to go into effect on June 19th.

Most early adopters interested in supporting private companies have been limited to rewards-based crowdfunding. This type of crowdfunding has proven to be a poor substitute for true early stage investing. Rewards-based crowdfunding websites such as Kickstarter allow individuals to pre-order products or donate towards something that they want to exist in the world. These “backers” do not get shares or equity in the company. Although these backers take on significant risk, they do not get any significant upside.

The story of Oculus VR is apt. Nearly two years after its celebrated rewards-based crowdfunding raise, Oculus was acquired by Facebook for $2B. Oculus’ early Kickstarter backers felt angered and betrayed. Though they had a sense of ownership in the company, they reaped no benefits from the transaction. Meanwhile, the institutional and accredited investors who invested in Oculus after the Kickstarter campaign (and in large part because of the Kickstarter campaign) made a large amount of money in a short period of time. $300 in equity in Oculus at the time of the Kickstarter campaign would have been worth approximately $45,000, a 145x return.

Successful technology startups owe it to their early adopters to let them participate in the company’s financial success.  These are the people who realized the company’s potential before the public and provided the momentum to turn that potential into a reality. Read more: click on image or title.


Via Marc Kneepkens
Richard Platt's insight:

Here are some of the key takeaways:

  • EMV cards are being rolled out with an embedded microchip for added security. The microchip carries out real-time risk assessments on a person’s card purchase activity based on the card user’s profile. The chip also generates dynamic cryptograms when the card is inserted into a payment terminal. Because these cryptograms change with every purchase, it makes it difficult for fraudsters to make counterfeit cards that can be used for in-store transactions.
  • To bolster security throughout the payments chain encryption of payments data is being widely implemented. Encryption degrades valuable data by using an algorithm to translate card numbers into new values. This makes it difficult for fraudsters to harvest the payments data for use in future transactions.
  • Point-to-point encryption is the most tightly defined form of payments encryption. In this scheme, sensitive payment data is encrypted from the point of capture at the payments terminal all the way through to the gateway or acquirer. This makes it much more difficult for fraudsters to harvest usable data from transactions in stores and online. 
  • Tokenization increases the security of transactions made online and in stores. Tokenization schemes assign a random value to payment data, making it effectively impossible for hackers to access the sensitive data from the token itself. Tokens are often “multiuse,” meaning merchants don’t have to force consumers to re-enter their payment details. Apple Pay uses an emerging form of tokenization. 
  • 3D Secure is an imperfect answer to user authentication online. One difficulty in fighting online fraud is that it is hard to tell whether the person using card data is actually the cardholder. 3D Secure adds a level of user authentication by requiring the customer to enter a passcode or biometric data in addition to payment data to complete a transaction online. Merchants who implement 3D Secure risk higher shopping-cart abandonment.
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Marc Kneepkens's curator insight, June 21, 2015 11:24 AM

Early adopters are part of the success of a startup and should be rewarded for their input and commitment. This article digests the new opportunities.

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The rise of crowdfunding: 10 things to know

The rise of crowdfunding: 10 things to know | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it
Crowdfunding platforms are changing the way we finance projects and services, but the laws surrounding them are still ambiguous. Here are 10 facts to get you up to speed.

Crowdfunding is a tool that allows anyone -- be it startup founders, musicians, artists, students, children, or even someone in a developing country who lacks basic electricity -- to attract a pool of people via the internet to invest in their business idea. A funding target is established, and rewards to backers are offered.This new type of startup business model has the opportunity to disrupt industries and change the way we determine success and let the best ideas flourish, rather than the best access to capital. It's exciting, because the venture capital model that powers Silicon Valley and the global startup scene is inherently biased based on geography and connections. According to the Small Business Administration, about 600,000 new businesses are started in the US every year. The number of startups funded by VCs? 300. That means 99.95% of entrepreneurs won't get funded.To affect real change, we have to understand the basics: what defines crowdfunding, how it works best, and how the current laws shape what's possible. We also need to look at the ways the law is changing and what it means for the future of crowdfunding.Here is a list of the 10 most important things to know about this important new buzzword.

To read the full article, click on the title or image.



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Marc Kneepkens's curator insight, April 30, 2014 8:44 AM

Startup or small business looking for funding? Here is a great introduction to crowdfunding, with links to funding platforms and a good overview of how crowdfunding works.

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How to Attract Investors via Equity Crowdfunding

How to Attract Investors via Equity Crowdfunding | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it

Equity crowdfunding investors are not like other crowdfunding contributors. They are not looking to support a particular item or to get a physical trinket for their support. Investors who you want to attract via equity crowdfunding are interested in long-term rewards, innovation, and growth. Attracting these investors should not mirror the other types of crowdfunding available. The goal is to attract serious investors in a non-traditional, high risk form of investment, also known as your start-up. Of course, the greater the risk, the greater the reward. In order to attract these investors, the issuer must let potential investors see the clarity and strength of the investment and future enterprise.



Via Marc Kneepkens
Richard Platt's insight:

Good clean report,  practical and to the point. It teaches a few basic skills when crowdfunding equity for your startup.

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Marc Kneepkens's curator insight, February 28, 2014 3:33 PM

Clear, concise, direct.

Great article, very practical and to the point. It teaches a few basic skills when crowdfunding equity for your startup.

Not the same as 'rewards' crowdfunding.

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Scrutiny of Security Start-Ups May Signal Shift in Venture Funding

Scrutiny of Security Start-Ups May Signal Shift in Venture Funding | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it

Cybersecurity companies have had an easy time raising money in Silicon Valley over the last few years. But investors are starting to ask about profit and sustainability.

SAN FRANCISCO — A funny thing happened to Orion Hindawi while he was raising $120 million for his cybersecurity start-up last month: Investors asked him about profits.

A year ago, Mr. Hindawi raised $90 million, followed by an additional $52 million this year from the Silicon Valley venture firm Andreessen Horowitz. Investors were willing to place a $900 million valuation on his company, called Tanium, without so much as a glance at revenue or profit margin.

This time, not so. As he made the rounds with investors like Institutional Venture Partners and T. Rowe Price, Mr. Hindawi said, he was asked to show sales and profit margins. “A lot of the funders we spoke with are starting to get really scared,” he said. “This time the questions were, ‘Is this a sustainable business? Do you guys actually make money?’ ”


Via Marc Kneepkens
Richard Platt's insight:

Cybersecurity companies have had an easy time raising money in Silicon Valley over the last few years. But investors are starting to ask about profit and sustainability.    A funny thing happened to Orion Hindawi while he was raising $120 million for his cybersecurity start-up last month: Investors asked him about profits.  A year ago, Mr. Hindawi raised $90 million, followed by an additional $52 million this year from the Silicon Valley venture firm Andreessen Horowitz. Investors were willing to place a $900 million valuation on his company, called Tanium, without so much as a glance at revenue or profit margin.   This time, not so. As he made the rounds with investors like Institutional Venture Partners and T. Rowe Price, Mr. Hindawi said, he was asked to show sales and profit margins. “A lot of the funders we spoke with are starting to get really scared,” he said. “This time the questions were, ‘Is this a sustainable business? Do you guys actually make money?’ ”

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Marc Kneepkens's curator insight, September 3, 2015 10:43 AM

#VC firms are slowing down and start asking questions about revenues. Money flow is getting tighter.

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As More Tech Start-Ups Stay Private, So Does the Money - NY Times

As More Tech Start-Ups Stay Private, So Does the Money - NY Times | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it

By Farhad Manjoo.


Fledgling companies are increasingly delaying initial public offerings of stock, which can keep the risks — and rewards — limited to venture capitalists and hedge funds.

Not long ago, if you were a young, brash technologist with a world-conquering start-up idea, there was a good chance you spent much of your waking life working toward a single business milestone: taking your company public.Though luminaries of the tech industry have always expressed skepticism and even hostility toward the finance industry, tech’s dirty secret was that it looked to Wall Street and the ritual of a public offering for affirmation — not to mention wealth.But something strange has happened in the last couple of years: The initial public offering of stock has become déclassé. For start-up entrepreneurs and their employees across Silicon Valley, an initial public offering is no longer a main goal. Instead, many founders talk about going public as a necessary evil to be postponed as long as possible because it comes with more problems than benefits. Read more, click image or title.


Via Marc Kneepkens
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Silicon Valley’s sudden distaste for the I.P.O. — rooted in part in Wall Street’s skepticism of new tech stocks — may be the single most important psychological shift underlying the current tech boom. Staying private affords start-up executives the luxury of not worrying what outsiders think and helps them avoid the quarterly earnings treadmill.  -  It also means Wall Street is doing what it failed to do in the last tech boom: using traditional metrics like growth and profitability to price companies. Investors have been tough on Twitter, for example, because its user growth has slowed. They have been tough on Box, the cloud-storage company that went public last year, because it remains unprofitable. And the e-commerce company Zulily, which went public last year, was likewise punished when it cut its guidance for future sales.


Scott Kupor, the managing partner at the venture capital firm Andreessen Horowitz, and his colleagues said in a recent report that despite all the attention start-ups have received in recent years, tech stocks are not seeing unusually high valuations. In fact, their share of the overall market has remained stable for 14 years, and far off the peak of the late 1990s.  -  That unwillingness to cut much slack to young tech companies limits risk for regular investors. If the bubble pops, the unwashed masses, if that’s what we are, aren’t as likely to get washed out.

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Crowdfunding Phenom: Kickstarter CEO Yancey Strickler on Success, Copycats, and 'Broken Promises'

Crowdfunding Phenom:  Kickstarter CEO Yancey Strickler on Success, Copycats, and 'Broken Promises' | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it

The crowdfunding model is now a mini-cottage industry, thanks to Kickstarter, and yes, he's been spoofed by 'South Park.'

Excerpts:

...When did the concept of crowdfunding first click for you?

In 2005. I had these artist and musician friends with day jobs that they hated, but they couldn’t afford to just do art or music. There’s a widespread assumption that creative things just magically happen, and they don’t. Creation requires funding.

    

....(order changed)  Today, millions of people use the site each day, adding up to a daily average of $1 million in pledges (some 70,000 campaigns have launched on the site). 

      

...Are there plans to grow the staff?

Actually, no. I think we’ll get to 100 people, but not much beyond that in the near future. Being a small company [means we are] light on costs, and I like the scrappiness of trying to accomplish a lot with a little. There’s far more shared ownership with a small team.
     
...Are you threatened by ...copycat competitors?

I’ve always known others would copy our idea, but to be honest, we’ve always been the strongest product. ....and for most of our measurements -- dollars pledged, site visitors, project supporters -- there’s a huge gulf between us and the rest of the field.

 


Via Deb Nystrom, REVELN
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Deb Nystrom, REVELN's curator insight, October 16, 2014 1:55 PM

FOR THE WIN:  Spot on great ideas, carried to full implementation and sustained in good faith, with some bumps in the road. Overall good ideas, good will and smart business practices will win the day, says I.   As an consultant, there's a lot to like about Kickstarter, including my favorite value in the work world, "choice."  We have a lot that is industrial age about our still new, burgeoning information age.  Fortunately, Kickstarter the concept, and the reality, is not one of them.

I've also included crowdfunding and crowdsourcing as a community building, ownership trend that field of Organization Development (OD), among others, is ignoring in a digital chapter on its way to publication for Wiley for Practicing OD, 2015 edition.

 

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This Site Lets You Get Backers for Your Crowdfunding Project Before It Launches

This Site Lets You Get Backers for Your Crowdfunding Project Before It Launches | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it

Kickstarter says only 44 percent of its crowdfunding campaigns are successful. Provo, Utah-based startup Prefundia claims it can boost that success rate to 71 percent for anyone who uses its web platform to test out their idea for several weeks before formally committing to a Kickstarter posting. How? By drumming up buzz.

"It's specifically designed to help Kickstarter projects acquire a mass following," says Prefundia co-founder Jeff Schwarting, "so when they do launch there, they can come in with momentum and rake it in on the first day."





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Marc Kneepkens's curator insight, April 10, 2014 6:56 PM

One important detail I noticed on the site: All Prefundia services are free.

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How Venture Capitalists Make Investment Choices

How Venture Capitalists Make Investment Choices | Crowd Funding, Micro-funding, New Approach for Investors - Alternatives to Wall Street | Scoop.it
In order to increase your odds for receiving funding, here are some criteria considered by venture capitalists.

It's easy to dislike angel and venture capitalist investors. For entrepreneurs looking to raise capital for their start-up businesses, these early-stage investors can be awfully hard to find, and when you do find them, it's even tougher to get investment dollars out of them.

But, think again: angels and venture capitalists (VCs) are taking on serious risk. New ventures frequently have little or no sales; the founders may have only the faintest real-life management experience, and the business plan may be based on nothing more than a concept or a simple prototype. There are good reasons why VCs are tight with their investment dollars.

To read the full article, click on the title.

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Via Marc Kneepkens
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In order to increase your odds for receiving funding, here are some criteria considered by venture capitalists

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Marc Kneepkens's curator insight, January 25, 2014 7:31 PM

Excellent article explaining VC funding and what it takes to be considered.