Tag Archives: crowdfunding

Indiegogo, Alphaworks, TDBank flex meaning of fundraising

Indiegogo's Jerry Needel
Indiegogo’s Jerry Needel

By Dennis Clemente

DUMBO, Brooklyn is far from all the tech meetups happening in New York City, but it makes sense to hold an event here. After all, it’s where many startups hold office.

This makes perfect sense for Digital DUMBO, which produces live events, conferences, content and custom experiences, like it did last June 26 when it hosted a meetup featuring Alphaworks, Indiegogo and even TDBank. Crowdfunding meets Bank—an unusual partnership but one that should make sense. Every startup needs funding no matter where it’s coming from, even from a bank like TDBank.

So other than angel investors and VCs, startups have more choices. Crowdfunding, for instance, is gaining immense popularity, especially those who have tech hardware in or wearable in mind. Crowdfunding sites are magnets for any physical device, because it’s easier for people to invest in something they can physically grasp, literally.

The Pebble Watch’s success was the turning point. Now, people easily identify with physical devices pitched on a crowdfunding site like Indiegogo. Jerry Needel, Head of Growth at Indiegogo, told us the story of how the founder of Bug a Salt, a gun-like fly swatter, invested 300,000 of his own money and maxed out on his credit cards with almost no hope of recouping his investment until he posted his idea on Indiegogo and people responded in kind (read: money).

Milton Berle once said, “If opportunity doesn’t knock build a door.”

Even when poked at, one can’t discount how Bug a Salt became a huge success. It’s on Amazon for $39.95.

So ask yourself if you really need the money, because Indiegogo thinks you can bring out an idea much sooner with them. Needel said you need to test your market,
find out your market validation, build buzz, capture data and raise capital.

“Crowdfunding is a proving ground for startups,” he said as he talked about the success stories in Indiegogo like Misfit Shine which raised $846,000 or Knix, which raised $60,000 in 30 days – success is how much money you need to raise.

But what if you want to be a co-owner of a startup? You can do that with Alphaworks.

Nick Barr, VP Product of Alphaworks, said the company’s mission is to empower passionate communities to become owners in the companies they love. Founded by Betaworks, it represents a new kind of ownership, a world in which companies are likely to be owned by a community of people

Alphaworks, founded by Betaworks, represents a new kind of ownership – a world in which companies are as likely to be owned by a community of people as they are by just a few individuals. Our thesis is that over time, this new kind of community owned business will lead to more profitable and lasting organizations.

If you want to invest, Barr recommends Giphy, See me and Quibb.

It was easy to tell who came from TDBank last Thursday. Brandon Williams of TDBank’s Head of US Wealth, even kidded about it. “We’re the ones in suits.”

To express his commitment to startups, he said, “We want to be partners with you. No company is too small,” he said.

If you’re interested in learning more about TD Bank and how they can help you or your company, contact Peter Izzo, VP Commerical Banking, at (212) 918-4186 or Tarryn Kone, TD Private Client Group, at (212) 897 2658, or visit www.tdbank.com.

Digital DUMBO started in 2009 as a social gathering for innovative companies in the DUMBO neighborhood of Brooklyn, a six-block area with over 100 media and technology companies. If you’re In the neighborhood, there’s no excuse if you don’t what it means. It’s Down Under the Manhattan Bridge Overpass.

How to crowdfund your business idea successfully

By Dennis Clemente

You have the idea, but you don’t have the money? You might want to try crowdfunding. Last April 15 at the Microsoft office, John Vaskis, Indiegogo’s Gaming Vertical Lead, presented how you can crowdfund your business successfully, whether it’s a game or your dream of publishing your own book: Do a video pitch.

Vaskis said a video pitch gives you twice the chance of getting funds. “Campaigns with videos raise 114% more than campaigns without. Do a three-minute video and make it personal, but also offer unique perks.”

Citing one successful pitch, Vaskis said Angry Video Game Nerd got 6,700 people to create a feature film based on his YouTube personality. “The Nerd sent over 2,500 autographed photos with custom message for his most ardent supporters.”

Vaskis also said updates every five days are important to keep the communication going with your audience. “It has been our experience that this doubles expected funding. “The higher number of updates…the greater the funding success.”

What is crowdfunding? It’s the pooling of funds, from the people who have passion about your idea. It’s as old as the pooling of funds for the Statue of Liberty stand in Ellis Island. Back then, it was the New York Times that served as the platform for New York to raise over $100,000 in funds. Average contribution the paper received: 89 cents.

Crowdfunding is about raising money and connecting with funders online. But where other ways of funding can be merely static collection, crowdfunding is about the shared enthusiasm between the fund-seeker with the funder.

How does one choose a platform these days? There’s the hugely popular kickstarter.com, and the fairly new seedinvest.com, which may still be free of charges.

Why do people give money for altruistic reasons when he could get a return on his investment somewhere else? That’s been a question for some people, but not for people who sincerely want to help another person fulfill his or her dream.

At Indiegogo, crowdfunding takes these steps to fruition: post a campaign, build virality, collect money, fulfill perks, and get started.

Getting started is just the beginning. You will need to generate interest and momentum for your campaign and that includes knowing how to motivate people to contribute to you. Vaskis said the keys to creating a good pitch are honesty, transparency and authenticity. “Make sure you know what you are raising money for, when your project will take place; why you are raising funds and how you can get people involved.”

It’s also vital that you develop a social media/PR strategy and discuss updates with your audience, as you push your goal and offer perks to your fundraising campaign. It could be a combination of any of the following: offer early access to products/services or discounts or coupons; throw a party for funders; teach a class or host a tour; offer unique, limited edition items; give personal thank you notes; share insider secrets; join the conversation and most important perhaps, communicate early and often.

But where do you even begin? That’s what may intimidate you at first, but it turns out that family and friends can be counted on to be your no. 1 cheerleaders, as Vaskis pointed out how 30 to 40 percent of funding came from them. This creates validation.

If anything, crowdfunding is fanbase building but with some money attached to it. Your network is your “fans” who may contribute $70, the average contribution at Indiegogo.

But what makes Indiegogo unique? It has been doing this on an international scale since 2008, ahead of Kickstarter, which has also proven to be very successful in the U.S. Indiegogo claims to have over 120,000 campaigns from 196 countries.

For more information, visit indiegogo.com, kickstarter.com and seedinvest.com

New crowdfunding platform offers no fees for a start

By Dennis Clemente

“We have a broken financial system,” says Ryan Feit, the outspoken co-founder and CEO of seedinvest.com, a new equity-based crowdfunding platform, explaining how small entrepreneurs are hampered by a 10-year low in bank lending and challenged by the fact most of our savings and output go to FORTUNE 500 companies.

In setting a serious, take-no-prisoners’ tone approach in his presentation, “Crowdfunding: Raising Startup Capital for the 99%,” Feit made his point across loud and clear, recommending what is fast becoming the way to go to seek funding: go crowdfunding.

Crowdfunding has taken off following the passing of the JOBS (Jumpstart Our Business Startups) Act by President Obama in April 2012. This was in support of entrepreneurship and small business growth. The JOBS Act is designed to encourage small business and startup funding by easing federal regulations and allowing individuals to become investors.

As a result, crowdfunding platforms like kickstarter.com and indiegogo.com have helped fund startups, creative projects, non-profits and all types of small businesses. Kickstarter.com operates on a rewards system where a donation to a startup is just that—a donation that may result in a reward from a fundraiser, except no claim of ownership.

How successful have this been? One successful startup in Kickstarter called Pebble Watch initially requested for $10,000 but collected more than $10 million in pledges. For the most funded projects in Kickstarter can be found here: http://www.kickstarter.com/discover/most-funded?ref=sidebar

Fiet outlines why crowdfunding is a game changer: you can get more funding to launch your business; customers can become investors; you can generate a following; spend less time fundraising and get market research from the crowd, which saves you time thinking if your business idea is viable.

Under the JOBS Act, you are now able to do the following:
• Advertise your fundraiser: Either on the wall of your store or online
• Let anyone invest: Now anyone can invest, tapping into millions of people as potential investors
• Allow no limits in shareholders. It means lots of people can invest small amounts

But how can one be held accountable or deemed trustworthy in a system where you don’t even meet the fundraiser personally? Feit cites the fact that in the Internet era, news travels fast, citing one case where a fraudulent fundraiser was caught having pulled images online to pitch his supposed project to the world before things got out of hand.

Some regulations have also been put in place as part of a controlling mechanism. As a backer or supporter, there is a yearly limit on the amount you may invest in a project. This is based on your net worth or yearly income. The limit ranges from 2% of people earning (or worth) up to $40,000, up to a cap of $10,000 for people earning (or worth) $100,000 or more.

But once the fundraisers get the requested funds, who’s going to make sure they keep their word and start their business? It’s a legitimate question but everyone knows people are inherently trusting, generous and supportive of another person’s dreams. Feit calls it the “wisdom of crowds” at work.

What if the amount of money targeted to be raised was not met, where does the money go? Depending on the crowdfunding site, money is supposedly returned to the investor. For investors, it is important for them to ask the site if they can get their money back before the deal closes.

Feit ended his presentation by going to his site, seedinvest.com, and said he is not charging any fee yet. With the reported backlog in other sites, it’s probably better to the 1% in all of us to have as many platforms as we can find, for the business(es) in the back of our minds.