Tag Archives: entrepreneurs

Startups Finance – How to Present Financials at a Pitch Event

By Antonio A Arias

past present futureAt angel investor forums, it is quite common for entrepreneurs to make the mistake of over selling its projections with little discussion of its past and present financial status. Therefore, the story does not flow and only begs questions distracting us from the value proposition.

Remember: financial investors (unlike strategic investors) are interested mainly on how they will get a return on their capital and when. For a short ten minute pitch, hit the bullet points fast.

Past

How much was invested by the founders and other shareholders? Where did the money go? What were the results or milestones?

Present

What is the status of the business? Sales funnel? Sales traction?

Future

How much funds are needed to move forward? Use of proceeds? Expected results?

The key is to earn the investors’ confidence fast. There is no sense talking about the projections without a quick recount of the past performance and present realities. Unless the business has proven its marketing strategy, reporting on the customer development status is the more meaningful information. Defending a 3 to 5 year financial forecast and valuation is a total waste of time.

Establish instant credibility. Always show a financial forecast starting with the past and the present.

http://www.healthycrowdfunder.com

 

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Equity Crowdfunding Wakes Up Goliath

TMX-PM-logo-b-EN-300x126

crowdfunding-secondary-marketLast year on June 19, 2013, we hosted our first crowdfunding meetup called  “Crowdfunding Reinvents the Old Stock Exchange” and late adopters ignored the equity crowdfunding word. Not this past week.

You know crowdfunding is going mainstream when the:

  1.  TMX Group, Canada’s most senior stock exchange recognizes crowdfunding as competition in its latest Management Discussion and Analysis (MD&A) for fiscal year 2013.
  2.  TMX Group  has announced they are operating a private marketplace following  NASDAQ OMX announcement on March 6th.
  3.  US SEC and FINRA are finally processing the public comments for the JOBS Act Title III which will effectively legalize crowd investing by non-accredited investors to virtually all kinds of private businesses through the internet.
  4.  Ontario Securities Commission  and other provincial securities regulator  joined the stampede this past week inviting the public to comment on their proposed crowdfunding rules until June 18, 2014.
  5.  Venture capitalists have injected more capital into equity funding platforms CircleUp $14 million   and Realty Mogul $9 million.

 

Furthermore, the US JOBS Act will facilitate a pipeline of companies remaining private until mature enough to go public

 

  1. Title II (after 80 years) finally allows businesses to solicit or advertise fund raising to accredited investors using various social media and traditional marketing channels.
  2.  Title IV Regulation A+ will allow companies raise up to $50 million “ lite IPO” or mini registration  and Title V will increase shareholder count from 500 to 2,000 before becoming a reporting issuer. See earlier blog Crowdfunding Is Better Than You Think

 

So what do all these news mean to you?

If you are an Investor

 Accredited or non-accredited, angels, other high net worth (HNW), or institutional investor, start looking for funding platforms that:

  • conducts a comprehensive due diligence and vetting of businesses using its platform
  • places a high priority on investor protection at optimal costs
  • recruits proven management with appropriate skill sets to partner with issuers
  • facilitates liquidity paths for investors prior to the bigger exit
  • experienced in best practices in corporate governance and investor relations with publicly listed companies
  • managed by people aligned with investors’ interest through co-investment

If you are a startup or early revenue stage business

While making your company investor ready, start looking for funding platforms that:

  • places a high priority on educating the non-accredited investors on the various risks associated with a particular business before investing
  • works with your management like partners from funding to exit
  • encourages global syndication or collaboration with other platforms so you succeed in raising capital faster
  • prepares your company to graduate to more senior capital exchanges

At Healthy Crowdfunder we are committed to the highest standards and best practices applied in the public capital markets at optimal costs.

 

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Filed under For Entrepreneurs, For Investors, healthycrowdfunder general, Securities law change campaign

Crowdfunding Course 101 in British Columbia?

By Antonio A Arias and Joy Case

KnowledgeSince the announcement of the JOBS Act in April 2012, we have hosted speaking events,  crowdfunding meetups and webinars focused on the why and what of crowdfunding.  After months of discussions with a recognized institution in British Columbia, we are now drafting a course outline.

Crowdfunding/ crowdsourcing is definitely going main stream.  On October 23, 2013, the US SEC regulators tabled the JOBS Act Title III proposed crowdfunding rules for public comment. In Canada each provincial securities regulators are jockeying up for the leadership position while awaiting a national holistic solution. Saskatchewan was first off the gate yesterday (Dec.6, 2013) when it legalized crowdfunding to non-accredited investors.

To offer courses, the challenge is who to please first. Our objective is to educate three principal audiences with respect to time savings and financial gains:

  1. small and medium size businesses (SMEs),
  2. investors, and
  3. professional service providers.

With technology advances, we can do more with less time, save money, and gain more revenues.

What is it about technology that changes everything?

Answer: It is all in the proprietary technology, which we will cover during the course. For those innovative early adopters, you are already experiencing it. We would like you to be our special guests too.

Our introductory course will be focused on the how to of  presales and equity crowdfunding.

We are targeting the following audience for these reasons:

Target Audience Reasons
Entrepreneurs contemplating on test marketing or preselling their prototypes. Portals are a good starting point to test market your minimum viable product (MVP) at lower investment costs.
Entrepreneurs contemplating equity crowdfunding Equity financing involves all business school disciplines: marketing (IR/PR, social/traditional media), finance/accounting, securities law, human resources, psychology/sociology, arts and science, among others.
Investors – speculators, strategic, angels, venture capitalists, private equity funds,  institutional Financing ecosystem will converge from angel, VC, PE, secondary trading, all the way to liquidity events by M&A or going public.Information technology has created a flatter world. If we break down silos or information gatekeepers dividing investor groups, we can all profit more efficiently.
Securities regulators, securities lawyers Technology replaces archaic systems and still provides protective measures to investors while facilitating capital flow.
Professional  service providers (finance/analysts/ accountants, marketing IR/PR social media, securities lawyers) Understand how technology has made our jobs so much easier and how you can provide more value added services to clients.
Traditionalists Technology does not replace everything but enhances our productivity.  Find out how it complements your current practices.

Call to Action:

Here are our draft Learning Outcomes (Duration: Two six hour Saturday sessions)

  1. Understand the 4 types of crowdfunding; historical and current practices
  2. Understand how technology has enhanced financing and marketing practices
  3. Identify and analyse best practices for successful crowdfunding campaigns
  4. Gain experience producing and marketing video for investment pitches
  5. Research and analyse social media marketing and public relations for campaigns
  6. Understand how crowdfunding and crowdsourcing  are used as market research and predictive analytics
  7. Integrating online and offline finance and marketing practices

We plan to host a series of courses and your inputs will allow us to deliver a better service.  If you identify yourself as one of the above audiences, what would you like to learn from our introductory crowdfunding course?

Your comments or inquiries are valuable to us. Please contact us through this blog or via our Twitter handles; @HealthVCFunder for Antonio and @FundItTV for Joy.

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Curated by Antonio Ariston Arias, CEO & Co-Founder Healthy Crowdfunder Corp

Wharton Study Finds Crowdfunders Act Similar to VCs

Join us tackle healthcare issues - one of top 8 priorities of AnIdeaNation

Join us tackle healthcare issues – one of top 8 priorities of AnIdeaNation

On the eve of September 23, 2013, a historic day for all of us waiting for this 80 year old Securities Act of 1930s,  it is timely to reprint a study by Wharton professor Ethan Mollick who found that the sophisticated crowd can be as competent and even less biased than the traditional venture capitalists. For the uninformed, tomorrow is a milestone day when the US Securities Exchange Commission lifts the ban on general solicitation to accredited investors only. Welcome to the flat world of finance and marketing. As entrepreneurs, we envision better times ahead.

Highlights of  his findings:

1. Entrepreneurs who demonstrate a history of successful projects or ventures are more likely to be crowdfunded.

2. Entrepreneurs who demonstrate third party endorsements are more likely to be crowdfunded – social proof.

Comments: We have to start with our innermost circle of friends and influence. If the people who know us intimately cannot even support us, we have lots of work to do, before even reaching out to total strangers.

3. It is partially true that entrepreneurs who demonstrate preparedness are more likely to be crowdfunded.

Comments: We emphasize the importance of premarketing, investor relations, and/or public relations work prior to the actual fund raising event. Winning customers or investors is a relationship building exercise. It starts long before we ask for other people’s money either to buy our products or invest in our ventures. It is about building trust and credibility that we will deliver as we say we will.

4. Selected projects are less geographically concentrated in crowdfunding than in venture capital. VC-funded project typically happens in start-up clusters at 70 miles average distance to VCs.

Comments: Hello Silicon Valley, you now have competition with beautiful Vancouver, the land of eternal optimists, health afficionados, yogis, runners, skiers and/or organic food consumers. Crowdfunding is immune to the cluster effect of San Francisco, Boston, or New York. With strong protective but less costly investor protection measures and feature friendly equity platforms for entrepreneurs, the world is indeed flat.

5. Gender is less predictive of selection in crowdfunding than in venture capital.

Comments: Not only is the world flatter, crowdfunding is indeed unisex. Certain studies have found women make for better CEOs or leaders. What about we  immigrants who came to North America just like the early pioneers that left Europe? Crowdfunding  breaks down all political, cultural, or ideological boundaries. At Healthy Crowdfunder, the market we serve will all benefit from the health ventures we support, regardless of creed, race, countries, age, and the list goes on as we destroy biases of dated monarchies. It is not surprising to see so much resistance to crowdfunding in certain circles. It is a battle for survival for ancient fiefdoms. The roadblock is not the SEC. It is the secret powers behind closed doors trying to assert their final control.

Click here to read Professor Mollick’s  Wharton Study Finds Crowdfunders Act Similar to VCs.

Your comments are welcome. Feel free to connect with me Twitter @alamidas.

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September 22, 2013 · 1:02 pm

SEC Lifts Ban on Advertising to Accredited Investors – Sept 23, 2013

by Antonio Arias

See “SEC Fact Sheet” >http://www.sec.gov/news/press/2013/2013-124-item1.htm
us sec
Significance to Securities Issuers
1. Subject to compliance of Regulation D Rule 506(c) exemption Form D, we can leverage both social and traditional media to reach out to accredited investors and present our value proposition.
2. Now, investors will know we exist. They could start doing their research. Because of technology, there will be traditional and digital conversations from which we can deduce new knowledge. With new knowledge we can connect the dots previously not apparent.
3. We will know our competition. How does their offering stack against ours? If they are better, we got more work to do. In the end, the end user ends up with a better product. We all win if we put our customers’ interest on top. Our customer can be our target strategic investors or strategic partners.
4. It is the perfect opportunity to practice transparency and operate with full integrity. It is an opportunity to build trust and a longer term relationship with our investors.
5. We can find more capital on this round and future rounds if we deliver expected results. More capital will flow to the US at the expense of other countries lagging behind equity crowdfunding.

Significance to Investors
1. For long term investors, the selection of private securities of industries we believe in has just expanded.
2. We will know other investors of common interest and co-invest like a syndicate. Conducting due diligence as a group could save us time and resources if we all collaborate.
3. We are no longer restricted to investing in the volatile public capital markets. The lines dividing the private and public company exchanges will blur and eventually converge.
4. Inclusion of “bad actor” provisions will prevent actors or relevant parties who have been convicted of securities fraud or violations from participating under this new rule.
5. For professional investors like Healthy Crowdfunder, our deal flow sources have just expanded. It can lower our acquisition cost.

Significance to Consumers
1. We can be investors and consumers of the very products we need and believe in.
2. Our choices of quality products have just expanded.
3. We can participate in the creation of innovative products or solutions by the kind of companies we support.

Significance to Securities Regulators
1. We can learn how technology can allay a lot of our fears of investor safety. Technology engineers are listening and will design the relevant algorithms.
2. We will see traditional and social media conversations and will alert us about the trouble spots.

To all positive thinkers, can you think of anything else?

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Crowdfunding or Financing Tips

On October 25, 2012, I presented the “12 Things You Must Do Before Crowdfunding” to the Koomoni and TechBA Group at Discovery Park, Vancouver, BC. The audience are composed of entrepreneurs primarily interested in the Latin American countries. I am sending copies particularly to those who did not make it. In exchange, I would appreciate getting your comments or questions. We aim to make Healthy Crowdfunder Corp, the global go-to merchant banker financing health wellness and high tech health ventures, so that we can be part of the solution to rising global health care costs.

Download these slides while watching the video.

Our crowdfunding platform is under construction. Meanwhile, we encourage viewers to go to our landing page: http://www.healthycrowdfunder.com play our video and download a more detailed checklist of the 12 Things You Must Do Before Crowdfunding. Your comments and questions are always welcome.

Gracias y saludos,
Antonio

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Healthy Crowdfunder Comments on Investor Protection

Tony Arias comments on balancing social returns with financial returns, creating jobs by facilitating easier access to capital for the entrepreneurs, and at the same time, protecting investors’s interest at the optimum cost in time and money. For example, in British Columbia we have an offering memorandum that can be streamlined. It is more important to spend time and money conducting due diligence on the CEO, his management team and his board of advisors/directors, to ensure that they have the right team players with the applicable track record of success, to execute the business plan according to pre-agreed milestones. More businesses have failed due to management incompetence or failure to execute the plan than due to fraud. For securities based crowdfunding, Tony Arias also cited another practical solution being provided by CrowdCheck Inc, led by Sara Hanks http://www.crowdcheck.biz/. During the due diligence process, validating the business plan assumptions to ensure milestones will be met, will result in better investor relations and further financing round support than burdening managment with the audit of historical data. Those are sunk costs. It is better to ask management to report on the ROI – return on investment for all of the sunk costs. How did the related activities contribute to the business development or advancement of the business towards commercialization?

Protecting investors or the shareholders is a continuous process. Companies being financed by the crowd should get accustomed to operating like public companies at no frills costs. Among others, the following protective measures should be in place:
– strong corporate governance with recruitment of more independent directors
– continuous disclosure of material events
– publication of target milestones
– quarterly progress report of actual results vs pre-agreed milestones

Canada is lagging behind on crowdfunding developments. Check out these sites for regular updates:
. Crowdfunding Professional Association http://crowdfundingprofessional.org/
. Crowdfunding Intermediary Regulatory Advocates http://www.cfira.org/
. Invest Crowdfund Canada http://icanada.nu/crowdfunding/

Since Canada has different provincial “SECs” become part of changing Canadian financial history. Help us appeal to the British Columbia securities regulators and our political leaders how friendlier crowdfunding laws will entice more innovative entrepreneurs and create more jobs for British Columbians. Join our LinkedIn discussion group: British Columbians for Crowdfunding Entrepreneurs and Job Creations http://www.linkedin.com/groups?gid=4612601&trk=hb_side_g. Set up your LinkedIn messages so that you get future meeting invitations on time.

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