How to use the TEN funding portral for your campaign by Hall Martin

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In this session, we will discuss how to run a crowdfunding campaign including preparing for the campaign and executing it.

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How to use the TEN funding portral for your campaign by Hall Martin

  1. 1. How to Use Crowdfunding to Fund your Startup Hall T. Martin Texas Entrepreneur Network, Director txenetworks.com
  2. 2. Agenda Crowdfunding– what it is and how it works Type of crowdfunding sites Elements of a crowdfunding program Five most common mistakes in crowdfunding Three critical elements to crowdfunding Q&A
  3. 3. My background Angel investor for over 10 years Started three formal angel networks Coached hundreds of companies Helped entrepreneurs raise over $50M in funding
  4. 4. What is crowdfunding? Sourcing funds for a startup through the internet It is a new source of capital The funding comes in smaller increments but from more investors
  5. 5. How does crowdfunding compare? 40+% of posted projects to crowdfunding sites get funded 15% for angel deals 1% for venture capital deals
  6. 6. How does it work? 1. Choose a crowdfunding site based on your project 2. Submit your application with target funds sought & timeline for the campaign 3. Launch your campaign 4. Promote your deal to your network 5. Respond to questions and feedback 6. Raise your funds
  7. 7. What is the JOBS Act of 2012 Jumpstart Our Business Startups (JOBS) Signed into law April, 2012 Allows anyone to invest in startups for equity Goes into effect early 2013
  8. 8. What does it mean to you? Small firms can now raise up to $1M without having to register with the SEC Non-accredited investors can invest for equity There will be some limits based on annual income. “Funding Portals” will act as broker/dealers to ensure compliance
  9. 9. Benefits of crowdfunding Raise funding for your project Check the market’s interest in your project Create potential customers and enthusiasts Build your network Raise awareness for your cause Create some buzz around your pre-market product
  10. 10. Risks in crowdfunding You may not reach your funding goal The process takes substantial time commitment Your project may take more funding than raised Personal exposure is high
  11. 11. Crowdfunding models There are four models Rewards/Pre-payment Equity Peer to Peer lending Donations
  12. 12. Reward/Prepayment Sites Offers rewards to donors Examples include Kickstarter -- http://www.kickstarter.com/ RocketHub--http://www.rockethub.com/ IndieGoGo--http://www.indiegogo.com/ Cost: 5% to 12% of funds target
  13. 13. Equity sites Offers equity to investors CircleUp--http://www.circleup.com Crowdfunder-- http://www.crowdfunder.com Cost: Typically 10% of funds raised Others TEN-- http://www.txenetworks.com/
  14. 14. Peer to peer lending sites Facilitates peer to peer lending Lending Club https://www.lendingclub.com/ Somolend http://www.somolend.com Cost: Varies based on terms and credit history
  15. 15. Donation Sites Microlending to startups through donations Kiva -- http://www.kiva.com CauseVox --http://www.causevox.com/
  16. 16. One more option You may use your own website The initial traction comes from your network With the right PR/social media skills you can drive traffic to your site There are no fees to pay
  17. 17. How much can you raise? There’s no limit For reward sites most raise $2K to $20K For equity sites most raise $100K to $500K
  18. 18. Timeframe and Funds Target You specify a target fund raise amount and timeframe Some sites require you to raise the entire amount Most deals raise their funding within 30 to 60 days
  19. 19. Donors vs. Investors Donors -- receive cool perks (music downloads, sample product, naming a cupcake after you) Investors – receive an equity stake in your business
  20. 20. Crowdfunding campaign Pitch Video Description Images Biography Funds Target and Timeline Rewards offered
  21. 21. Making a pitch video Outline the points you want to make Your pitch should include: What you are doing How much you are raising Where the campaign will be held When the campaign will close Why the viewer should care
  22. 22. Making a pitch video Keep it short – 2 to 3 minutes only Make sure the audio is good Use a high quality Lavalier microphone Record in a quiet place Practice your pitch multiple times and make multiple shoots Consider using other video to highlight your project
  23. 23. Choose a proper setting Consider the background and how it affects the tone of the presentation Choose a setting away from distracting background noises
  24. 24. Make your pitch compelling Show the human side of the project Show your passion Show how the project delivers a positive outcome Demonstrate your unique talents and skills Create a sense of urgency Show how the project promotes a greater cause
  25. 25. Description Create a five word tag line describing the project or company Ex: “A satellite webcam for penguins” Use compelling headlines Use descriptive words
  26. 26. Description cont. 250 word description of the deal including What it does Why it is important How you will accomplish it When and where you will accomplish it What is unique about it How much backing is required
  27. 27. Images Need to be high resolution photos Clear and crisp images
  28. 28. Biography 50 to 100 word description of yourself Demonstrates your capability and experience
  29. 29. Fund Raise Target 90% of projects reaching the 30% funded mark go all the way to the goal 21% of all projects never get off the ground 70% of the pledges come from those directly engaged by the originator
  30. 30. The U-shaped Funding Most of the funding will come at the beginning and the end of the campaign Creates a U-shaped effect Your network will comprise the first portion People you don’t know will comprise the last portion
  31. 31. The Rewards Projects get funded because the donors-- Like the project creator Share the passion of the project Seek the rewards on offer
  32. 32. Campaign time commitment Pre-Campaign— start 3 months before launch Develop descriptions, videos, etc. Alert your network Campaign—30 to 90 day campaign Daily Execution—expect 3 to 4 hours/day Post-Campaign—1 month follow up work
  33. 33. Pre-Campaign Prepare your network Identify core & secondary network contacts Identify your evangelists & fans of your project Line up PR contacts for broader exposure later Setup blog/twitter/Facebook pages Identify relevant blog sites Identify broader media targets for PR
  34. 34. Five most common mistakes 1. Not making the pitch compelling enough You need a great team doing something great Mediocre projects don’t attract much attention
  35. 35. Five most common mistakes 2. Not promoting the pitch through blogs, emails & social media Engage your network to start Leverage your social network to expand Develop and run a broader PR campaign
  36. 36. Five most common mistakes 3. Not demonstrating a detailed plan You need to show how the funds will be used The plan needs to look realistic and achievable Vague or fuzzy plans do not get funded
  37. 37. Five most common mistakes 4. Not asking for realistic amounts of funding You need to raise enough funding to accomplish the project Asking for too much or too little will kill the raise
  38. 38. Five most common mistakes 5. Not responding to questions nor asking for feedback Respond to questions quickly and with competence Start a dialog and then build a relationship with the investor
  39. 39. Three critical elements 1. Make a pitch video - Keep it short and cover the basics - Use high quality audio
  40. 40. Three critical elements 2. Demonstrate credibility and success - Show use of the funds with financial statements - Polish your online image including your social networks
  41. 41. Three critical elements 3. Create a community with a cause - Investors want to engage and contribute to a community - Donors often fund based on interest in having the product
  42. 42. Crowdfunding New way to raise funding for your business Place your pitch video, project description, and financial plan on a web portal Leverage your network to fund it Spiral out to the broader media to finish the raise
  43. 43. Questions
  44. 44. To learn more about fund raising checkout txenetworks.com and sign up in our Connect program

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