December 15, 2013 at 9:39 PM
Imagine a world where ideas find their muse, money changes hands, entrepreneurs are paraded in the business media like Oscar contenders and fortunes are frequently made at a ridiculous multiple—one that is rarely accessible in the stock market (i.e, the public markets where everyone can play.) That is the world of startup financing 1.0—the experience of the past 80 years. Beginning in September of this year, the SEC began enacting the regulations behind The JOBS Act of 2012 and, voila, new business financing 2.0 began. This momentous change now allows emerging companies to advertise their fundraising to wealthy investors and early in 2014 to all Americans in their social network.
If you have never raised money among wealthy individuals or institutions—heretofore your only option--you can’t appreciate the closed door, club like, elite and male dynamic that has dominated the world of startup capital. According to a white paper by Illuminate Ventures, a California based venture capital firm, a mere 6.8% of VC funding goes to female-led companies despite the fact that female-led companies have lower failure rates, achieve venture-level returns and are more capital efficient. Metrics for minority led are even harder to come by.
Enter Angelist in 2010, the leading online platform for matchmaking between startups and investors with the goal of expanding opportunity for both by curating the choices. Phenomenal idea and great leaders in my estimation. But a glance at the “selected investments” on their current website suggests we are still operating by the old rules. Four of the nine featured investments highlight the team’s alma mater as Stanford, Wharton, Brown or Williams. Another has Andreessen Horowitz as a lead investor and two teams started at leading companies, Salesforce and Accenture.
What is an entrepreneur to do? How do you navigate the fundraising waters without a map that charts the options and in a sailfish captained by one who trained at Noname Pond?
Introducing Crowdnetic, a startup piloted by a woman that is attempting to create transparency in world of 75 foot sailboats competing in a regatta at the Bitter End Yacht Club.
Here’s how it works and why it is so exciting for startups. Their new technology which can be found on their site and on the Wall Street Journal’s MarketWatch page has begun to aggregate and dissect the fundraising going on among wealthy investors. This is transformative because entrepreneurs now have data from which they can better assess the amount to fundraise, the terms, valuation, choice of security, etc—all material influences to a successful fundraising round, but previously culled from a black box of hidden data.
For example, their technology platform shows fundraising by online platform (four companies and growing), sector, size of raise, type of security, and geography. They also show what is trending at any given moment. You can drill down to an individual campaign to analyze the factors influencing success like terms, video presentation, team, etc.
This is very transparent and highly democratic. As CareerFuel previously reported in an analysis that summarized fundraising rounds completed on EquityNet, the amounts being raised are lower than many entrepreneurs might think and on reasonable terms.
All of this is good news for the capital strapped entrepreneur who is trying to stay afloat. And early next year when the rules for Title III of The JOBS Act are finalized and young companies can offer ownership in their firms to everyone in the network, the possibilities are limitless.
The course for startups is entering new, more open waters thanks to the work of many. The chances of winning have never been greater for those who take advantage of the latest technology and are prepared.
For complete guidance on crowdfunding, CareerFuel has the most comprehensive entrepreneurial education available today and it is found here.
Photo by Elvis Kennedy
AnnMarie Quintaglie McIlwain is a former marketing executive with Procter & Gamble and Johnson & Johnson and consultant to several Fortune 100 companies. Now, as Founder and CEO of CareerFuel.net, she is a social entrepreneur who connects people with the information and inspiration they need in order to get jobs and start businesses. CareerFuel is the only site that gives people what they need to know to find jobs or start businesses plus blogs and short films about real people who made it happen.
A recipient of numerous civic and leadership awards, AnnMarie is a Board member of CFIRA.org, was a participant in the first White House Entrepreneurial Session, the recent WeOwnIt Summit, and the first Alley to the Valley Event. She is also a member of 85Broads and Startup America.
The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.