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You Too Can Now Invest in Startups! What Could Go Wrong?

You Too Can Now Invest in Startups! What Could Go Wrong? | Pitch it! | Scoop.it
The SEC has finally approved rules to allow anyone to buy equity in a company–so-called equity crowdfunding. Here’s what you need to know.

You, your mom, or that random guy down your block will all soon be able to join the ranks of startup investors.

The Securities and Exchange Commission voted this past week to approve so-called equity crowdfunding rules for investors, an effort spawned by the passage of the JOBS Act way back in 2012. What that means is that startups or small businesses looking for investors can go through brokers or online platforms to find them—and those investors can now be, well, anyone.

This is a pretty big deal. It marks a shift in the kinds of capital that startups and small businesses can raise. Startups today often turn to venture capitalists, angel investors, bankers, and other accredited investors, but access can require the right connections, which are often hard to come by outside major financial hubs like New York, San Francisco, and Boston.

'Even if you're truly invested in investing in a startup, the odds are against you.'

Now, entrepreneurs can turn to the crowd. And if you’ve part of the crowd that’s always wanted to invest in a startup, you may soon be able to in ways that you couldn’t before. But there are some things you need to know. Since the passage of the JOBS Act, experts have worried about putting safeguards in place to protect unsophisticated investors, as well as protections for startups to minimize fraud. The SEC is hoping that its new rules will address those concerns. Here’s what you need to know. Read more: click image or title.

Learn more about funding, find great funding sources, get a free business plan template, post your funding request for free, and more:


Marc Kneepkens's insight:

A new way for small companies to raise #capital. Not only for #startups but also for any small or medium size company. #Crowdfunding is legal now, but with certain restrictions. Good information in this article, bot for #investors and #entrepreneurs.

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Rescooped by Marc Kneepkens from Crowdfunding Startups

What businesses should consider with equity crowdfunding

What businesses should consider with equity crowdfunding | Pitch it! | Scoop.it

Crowdfunding websites raised more than $5 billion in 2013. That said, there are some complications with crowdfunding that businesses should consider.

When it comes to getting funding for your latest business venture, crowdfunding may seem like a no-brainer. Crowdfunding websites raised more than $5 billion in 2013, and to get a piece of that wealth, all you have to do is set up an online profile and watch the dollars roll, right? Not so fast. While crowdfunding can be a viable way for entrepreneurs to raise capital, it’s more complicated than many people realize, and it might not be right for every business.

Equity crowdfunding could help some entrepreneurs, but it comes with rules and costs, and it won’t be appropriate for every business. A few things to keep in mind:
To read the full article, click on the title or image.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

Marc Kneepkens's curator insight, July 13, 2014 7:46 AM

Equity crowdfunding is a whole different deal than 'rewards' or charity crowdfunding. The rules are tight and expensive. Take a look at this article, it summarizes the situation.

Kishor Kafle's curator insight, July 29, 2014 11:30 AM

dear sir

 I am the Broker legal representative of Fernando Valle Pons the Principal of the HOLDING project... please read below
 My name is Fernando Valle Pons, (Nando Pons) Spanish nationality with actual residence in Eastbourne, England. (Just moved from Guangzhou, China where I spent my last 10 years). During my entire professional life I have enjoyed the freedom to work "my way" and develop the business model needed for great success at any given time and the results have been outstanding overpass sing not only sales budget but expectations. Today after having lots of successes under my belt, I have a MEGA project and as always I have designed the business model in order that is easy for everybody to join and have a JOB and a BUSINESS and never look back. The project needs 100 million Euros funding. (Euros due that the $US Dollars has devaluation and I cannot be short of budget) The businesses will have a lot of income and will fold every month during first 3 years (producing over $6 billion US Dollars profits ) (For such reason, I may consider to take 50 million Euros funding... the difference, we will build our own Intelligent premises with few months delay upon generating income from shares sells) therefore I can take as a LOAN or as a JOINT VENTURE or as PARTNERSHIP with Investor/s. The project is: 1. An Offshore main Company as a HOLDING and owner of all other companies. 2. An Offshore BANK as a payments and collections solutions to our own ACR (Affiliates Clients Referrals) + High Yield investment programs (PPP's etc.) 3. An Import / Export TRADE company in China mainland as the supplier of daily consumable products working for small profit just to maintain infrastructure in China and with a strategy to repatriate all investment (intelligent premises, inventories etc.) out of China  mainland. 4. A total of 30 E-commerce online B2C companies that are sold to the ACR as their own investment (they agree according to the research and the Affiliate program and willing to invest) I become my own competitor before anyone tries to copy and paste my own business model (did the same in 1995/6 with great success 5. In a later stage a Private Club 6. An a Gaming Company. The only Gaming Company that does not use debit / credit cards therefore has NO CHARGES BACK (Only talented people can design such Gaming business with ZERO RISK).  The people who will run such MEGA project: CHESS88 team, ITWEB team, PID team, ADMIN two teams. As you can see, I have surrounded myself with people that pose talent attitudes like me. 1.             This HOLDING businesses is feasible due my (Nando) talents, skills, experience, contacts in the Chinese Government and because I have done a massive Market Research, conducted interviews, surveys, studied the unemploymentph     phenomena, l learned how to profit from the social networks like Facebook, LinkedIn etc. In the next 5 years I, Nando, want to accomplish:

ü         30 million people network in my businesses in the next 5 years

ü         $8 billion US Dollars profits in 3 years

ü         Ensure earnings of $2 Billion US Dollars per year every year and growing

A   And spend my wealth by building a FOUNDATION (NGO) and dedicate to Children's programs to provide Food, Shelter, Health, Scholarship, etc.

Any interested INVESTOR/S. please send me your funding proposal and PLEASE if your proposal includes any up front FEE or sort of EXPENSES before providing the funding, SAVE YOUR TIME. (Any Bond insurance or any other sort of legal expense once I have the funding).
Meanwhile I will send you a set of files as Summary and Business Strategic Plan therefore you get to know who the teams are, the ACR's and how the businesses provide MILLIONS OF JOBS AND WEALTH TO ALL ASSOCIATES. You will also find copy of my (Nando) Resume CV and a draft of PARTNER AGREEMENT with my best offering as PARTNER AHHHH! for the ones that ask how much SKIN I have in the project, the answer is very simple $5 million me and my CHESS88 team have spent in Market Research, Surveys, Contacts, (including politicians from local Government) and test all Teams that will join. Kind Regards Nando Pons, CEO & Consultantchess88@chess88.comSkype: tradebiz Guangzhou, Chinawww.chess88.com
Rescooped by Marc Kneepkens from Crowdfunding Startups

Law Opens Financing of Start-Ups to Crowds

Law Opens Financing of Start-Ups to Crowds | Pitch it! | Scoop.it

Entrepreneurs looking to the crowd to finance their big ideas just got a little extra help from the government.

On Monday, federal legislation goes into effect to allow small start-ups to ask for equity investments publicly without having to register the shares for public trading.

Business owners will now be able to raise up to $1 million a year this way.

The legislation is part of the 2012 “Jumpstart Our Business Start-ups Act,” or JOBS Act, meant to encourage the growth of new businesses. Entrepreneurs say it will address a central problem they face: that raising significant capital often depends on having personal connections to investors. Under prior rules, this had to be done privately until a business was ready to enter the public markets.

“How many entrepreneurs are there across the U.S., even in the Midwest, who have these great ideas but no way to tap into that capital?” said Todd Dipaola, an entrepreneur in Venice, Calif. His start-up, ForeFund Capital, is a would-be platform to let real estate entrepreneurs raise money from potential investors.

But others, including noted tech investors like Fred Wilson and Rick Webb, are less optimistic. They warn that by deregulating the raising of equity investment — at least in part — the legislation has the potential to unleash a cascade of abuses by luring investors to what may be risky and untenable business ventures. And some critics have questioned whether it will even help entrepreneurs, because if a company raises more than $500,000 it will have to produce audited financial records — a significant expense for a young business.

To read the full article, click on the title.

Get your Free Business Plan Template here:

'Crowdfunding formula' a presentation by Growthink's CEO
Marc Kneepkens's curator insight, September 23, 2013 9:36 AM

Different opinions, but new options for Startups. Good article, summarizing the new regulations.

Get some more exposure for your campaign here, with a FREE listing: http://www.business-funding-insider.com/crowdfunding-campaign.html

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JOBS Act green light unlikely until fall

JOBS Act green light unlikely until fall | Pitch it! | Scoop.it
Signed into law in April of 2012, the JOBS Act has created much buzz within the start-up industry. The act lays out provisions meant to help businesses raise money directly through ordinary investo...

On the SEC's timing, and the aspect of FRAUD in Crowdfunding!

Marc Kneepkens's insight:

Excellent information!

New to Crowdfunding:? Here is an article with some of the basics: http://www.business-funding-insider.com/crowdfunding.html

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Financial Architect ® - Interview with Timothy D. Hogan

Financial Architect ® - Interview with Timothy D. Hogan | Pitch it! | Scoop.it

Is Raising Capital with Financial Architect® a game changer for Startups?

Financial Architect ®, a huge shift in funding success ratio?

MK: It is a well know fact that only 1-2% of start-ups will ever get funded. Teaching them the way to raise their own capital is giving them a powerful tool to use. It would allow great ideas to take off and find more real chances to move forward and to realize those ideas. What is your guess as to the % of companies that could get funded using the 'Financial Architect ®' program, how would it affect that success ratio up from only 1-2%? What is the potential?

Timothy D. Hogan: “ If we realize our vision for the entrepreneur, the concept of raising capital through selling securities, which started with the ancient Egyptians by the way, will be a mainstay undergrad college course in every major and respected university in the US and abroad, and the first approach every entrepreneur attempts. The current problem is, 1-2% get funded because 98% don’t understand the entire capitalization process. We hope to reverse that percentage, so that 98% of legitimate start-ups get funded to the degree they need.” Read more: click on image or title.

Marc Kneepkens's insight:

Creating and marketing your own #securities is a daunting task. The Financial Architect ® product was created to put #funding in the hands of the entrepreneur.

Keeping control of the company and #dilution of shares under control, having funds available when needed, and not to go begging around and sell out to #VC's or #investors. Change the game, take power of the funding process, do it in #compliance. There are way too many problems with #crowdfunding to properly capitalize a #startup.

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Rescooped by Marc Kneepkens from Angel Investors Funding

How To Avoid Investment Scams In The Startup World

How To Avoid Investment Scams In The Startup World | Pitch it! | Scoop.it

After you have heard a few startup success stories, like Google, Facebook, and Microsoft, you may be tempted to invest some money yourself, maybe by pooling your funds with other investors who claim to have a great track record. My advice is to leave the investing in startups to the professionals (or friends and fools).

First of all, despite a few visible blowout successes, the odds of a payback from investing in startups is very low (that’s why VCs look for 10X returns to cover failures). Most investors agree the odds are better buying traditional public stocks, or even commodities. Even the hot new “crowdsourcing” companies springing up have yet to show any significant returns to investors.

Secondly, there are many scammers out there who look and act just like Bernie Madoff, even though he is safely tucked away in prison for the next 150 years. Most frauds are not on the scale set by Bernie, but even a few thousand dollars lost would hurt you and me as much as a few million did for some of his victims.

So what can you do, and what are the “red flags” to look for as you do your due diligence before pooling your money with other investors, or accepting money for your startup from investors? Here are some common sense tips:

  1. Get financial statements and verify. Every reputable investment firm is registered with FINRA and files regular reports with the SEC. Look for these and investigate thoroughly to check the truth of every statement about the company. Ask for references, and call or visit previous “successes” of the company to verify experience and satisfaction.

  2. Avoid “insider deals.” The Internet has just made it easier and faster for vultures to feed on entrepreneurs tempted by the possibility of an “inside deal.” Someone you don’t know promises you an “inside” deal. Why would a stranger pick you out to make rich? Does that make any sense?

  3. Listen for “unnamed sources.” Run away if all current investments are with “sensitive” clients, who are unnamed or unable to be contacted. Remember the old newspaper publishing rule of “All facts must be verified by two independent sources.” People claiming to be unbiased may actually be paid promoters or company insiders.

  4. Any mention of “offshore.” Watch out if someone has a complex plan involving offshore bank financing or gemstones or oil leases in Iran to make you rich. Why get involved in a complicated scheme you don’t understand, when there are plenty of opportunities that are legal and you can understand?

  5. Sounds too good to be true. The age-old wisdom here is that if it sounds too good to be true, it’s probably not true. I continue to be amazed at the fact that the Secret Service still gets 100 calls per day from victims of the Nigerian unclaimed cash scam alone. What are these people thinking?

Here are a few questions you should ask that might allay any remaining qualms, or convince you to run immediately:

  • How much am I paying in commission or fees?
  • Has your source been involved in any arbitration cases or lawsuits?
  • How do they get paid? By commission? Amount of assets managed? Another method?
  • Has the firm ever been disciplined by the SEC or a state regulator?

Unfortunately, in the startup and investment business, we are trained to rely on networking, connections, and professional integrity for many decisions. Remember that people who run scams may be highly polished and sophisticated, and can wrap their con games in such an air of legitimacy it may be hard to see the truth.

Don’t assume you are safe now that Bernie is out of the picture. If you have evidence of fraud, don’t be too embarrassed to contact the Securities and Exchange Commission. If others had done this sooner, his clones wouldn’t be out there today looking to help you out (of your money).

Get your Free Business Plan Template here:


Angel Investing Formula: this video explains how to find and reach them:


Marc Kneepkens's curator insight, September 27, 2013 10:57 AM

Good information, down-to-earth.

How to find real Angel Investors? Take a look here: http://www.business-funding-insider.com/find-angel-investors.html

Fyodor Chesnakov's comment, September 27, 2013 11:02 AM
Lori Wilk's curator insight, December 15, 2013 11:48 AM

In the excitement and the demands of entrepreneurs to find capital to launch or growth their businesses it is important to recognize legitimate offers from scams.In fact, avoiding scams at any time is the goal.


Rescooped by Marc Kneepkens from Venture Capital Stories

A VC: Maximizing Runway Can Minimize Success

A VC: Maximizing Runway Can Minimize Success | Pitch it! | Scoop.it

Less Money for Lean Startups is the Way to Success, according to Fred Wilson.

Runway is the amount of time you have until you run out of cash. Or until you raise another round. Or until you can get the business self sustaining/profitable. Runway is survival. And so everyone in the startup world is...

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

Get your Free Business Plan Template here:

Marc Kneepkens's curator insight, September 20, 2013 1:25 PM

I must agree with that. Once you can prove that managing less money and better results is what you do, you will have a better chance at success. The avalanche of money that some startups get from some VC's is ridiculous. Less for more.

Take a look at the DEAL FLOW page on my site. List yours for free, no gimmicks. http://www.business-funding-insider.com/deal-flow-listing.html