@voozahq : Best video comic strip about the startup world ever ! Can’t get enough of it ! 😀
Crowdfunding a project can be an effective way of raising money, particularly for start-ups. In light of this, the Corporations and Markets Advisory Committee is looking at whether or not to loosen the regulations on rewarding funders, potentially allowing equity crowdfunding.
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Par Jérémy Heleine, le 25 avril 2014 à 8:38::
ISEE est une famille de satellites dont le nom est un acronyme signifiant International Sun-Earth Explorer ou, en bon français bien de chez nous, Explorateur International Soleil-Terre. Comme leur nom l’indique presque, le but de ces satellites est donc d’étudier le Soleil et plus particulièrement ses actions sur la Terre. Ses actions autres que faire bronzer les êtres humains l’été sur la plage.
Lancée le 12 août 1978, ISEE-3, le petit dernier de la fratrie, a ainsi eu pour but d’étudier ce qu’il se passait exactement quand le vent solaire venait frapper la magnétosphère terrestre. Placé au point de Lagrange L1, sa position par rapport au Soleil ou à la Terre bouge ainsi très peu, même si des corrections doivent être faites de temps à autre. La mission de ISEE-3 est terminée depuis le 5 mai 1997 et on attend son retour pour août.
Seulement voila, une petite équipe d’ingénieurs ne l’entend pas de cette oreille et souhaiterait redonner une seconde vie à la sonde. Leur idée est ainsi de développer des applications permettant de prendre le contrôle de ISEE-3 afin de profiter de ses nombreux instruments de mesure.
Ces instruments pourraient ainsi permettre à des étudiants ou à des passionnés d’effectuer leurs propres mesures et ainsi de mieux appréhender ce qu’il se passe entre le Soleil et la Terre.
Mais, bien évidemment, une nouvelle vie coûte de l’argent et la NASA n’a aucun budget pour ce genre de choses. C’est pourquoi la petite équipe requiert l’aide du monde entier via une campagne de crowfunding ayant pour but de lever $125 000. Avec 23 jours restant, difficile de dire s’ils y arriveront, mais il serait plutôt sympa que ce soit le cas.
Over the course of the last couple years as crowdfunding websites have gained significantly in popularity, several celebrities have used them to raise funds for their own projects. For example, Zach Braff used crowdfunding to raise $3.1 million to produce his film “Wish I Was Here.” Director Rob Thomas raised $5.7 million to make “Veronica Mars” the movie. Singer, Amanda Palmer raised over $1 million to create her new album.
Some have criticized these celebrities for using crowdfunding instead of paying for their own projects. Although there are no rules against it, many feel crowdfunding is an opportunity for those unable to get the investment they need on their own to make their dreams come true.
Despite this criticism, each of the projects received more funding than they asked for. They were huge successes, which strongly suggest users are not opposing celebrities using the platform as well. Many backers stated they were excited to be apart of something big or they were happy to contribute to a creative project.
The overall support for crowdfunding has increased dramatically over the last year. According to assistant professor of management, Ethan Mollick, from the University of Pennsylvania, in 2012 the amount of money spent by backers on crowdfunding projects rose 81%. This brought the total spent to $2.7 billion.
Despite these numbers, the success rate is still less than 50%. This means that money was spent on less than half the campaigns launched. Mollick went on to explain that succeeding in a campaign is actually the easy part for most. Managing and fulfilling rewards is actually the difficult part. Mollick explains that 75% of campaigns end up being late delivering rewards to their backers.
Despite these drawbacks, the popularity of crowdfunding continues to grow. Users are eager to back projects; especially film and music projects, which have the highest success rate.
A successful campaign takes a lot of prep—and upkeep along the way
Natalia Rodriguez, co-founder of Jiva Cubes Jiva Cubes
Want to launch a crowdfunding campaign? You’d better get started yesterday.
The popular perception of fundraising sites like Kickstarter is that entrepreneurs can cut out a lot of the legwork of landing money. But experts say that’s far from true.
A successful campaign takes plenty of advance planning—as well as constant involvement along the way—to keep backers happy and new supporters joining on. A halfhearted effort could not only make a cash drive stall out, it also could do lasting damage to an entrepreneur’s standing with customers and potential investors down the road.
Here’s some advice from pros and entrepreneurs who have made the process work.
Form a Company
As you plunge into fundraising, it’s smart to make sure that you protect yourself by creating a formal business entity, such as a limited-liability company. With a structure like an LLC in place, anyone who sues you can only receive assets from your LLC, not from your personal wealth, says Tom Murphy, senior partner at McDermott Will & Emery LLP in Chicago.
Ms. Rodriguez has run two successful campaigns for her products Jiva Cubes
Beyond that, having a company structure shows potential clients you’re a professional. Samantha Rose, founder of GIR: Get It Right, which launched two Kickstarter campaigns in October 2012 and September 2013 for silicone spatulas, says if you’re trying to get your product into stores, retailers will expect you to have a business entity, such as an LLC or corporation, in place. Forming a corporation also makes the process of filing taxes at the end of the year easier, she says.
Find Backers First
On Kickstarter, which launched in April 2009, people seeking funds set a deadline within 60 days of the start date and a goal amount for funding. But campaigns should start gathering support even before they launch.
Natalia Rodriguez, co-founder of Jiva Cubes, which makes cubes of instant coffee and hot cocoa, found this out after a failed campaign in March 2012. She didn’t get enough backers on day one—and thus her project didn’t gain any momentum.
When she made a second attempt in May 2012, she asked the initial backers to lend support early on in the second campaign and to tell others. Forty of the original backers came on board, and that strong initial presence placed the project on the Kickstarter home page, thus attracting more supporters.
She reached $1,000 within 24 hours and the $15,000 target of the previous project on the fourth day.
“The name of the game is to get on these front pages where people are going,” Ms. Rodriguez says.
For her third campaign, Ms. Rodriguez reached out to even more potential backers in advance by contacting bloggers who covered her target market—travelers, moms and students. That effort brought in $82,012.
Keep Talking to Backers
Scott Heimendinger, co-founder of Sansaire, launched a Kickstarter in August 2013 for an at-home sous vide machine—a method of cooking that heats food to a precise temperature. During his campaign, which hit its funding goal of $100,000 in 13 hours, he spent seven to eight hours a day addressing comments from backers and fine-tuning the prototype.
“It makes them feel like the project is alive,” Mr. Heimendinger says. “It makes them feel like there’s a human being on the other end.”
If existing backers are unhappy, then they can voice concerns on the creators’ comment page, thus dissuading others from backing the project. Backers can also decrease or cancel their pledge at any time in the campaign, except for the last 24 hours.
Another reason for entrepreneurs to keep talking: Midway through the campaign, projects often hit a lull in new backers. That’s why it pays to plan surprises, like testimonials from well-known individuals in the field, rewards or small project announcements, says business consultant and speaker Scott Steinberg.
Keeping backers updated can also keep them happy if things go wrong after the campaign is over. Kickstarter creators have been infamously plagued by delays in shipping and fulfillment. Both of Ms. Rodriguez’s completed Kickstarter campaigns for Jiva products have been behind schedule, and at the end of the most recent one, she and her co-founder had to fly from Miami to Colombia to package about 250,000 cubes themselves.
But by keeping the backers updated at every turn, Ms. Rodriguez says that they were able to keep the backers happy. “We got so much respect for that,” she says. Still, Ms. Rodriguez advises, “Always create a buffer of at least an extra month.”
Mr. Heimendinger has had a similar experience. He experienced delays with his Sansaire product due to malfunctions in the back cover and a patent complaint, since resolved. But the situation has been helped by open communication with the backers—who have responded well to the updates, he says.
“If you sum it all up, it probably tilted in the positive direction,” Mr. Heimendinger says.
Think Long Term
Keeping up the flow of backers can also lead to business opportunities outside of the site. If the campaign is successful, and especially if it has a large number of backers, it can be “a ticket to [venture capital] meetings,” says Jeffrey Bussgang, general partner at Flybridge Capital Partners in Boston, adding that associates regularly look through the site for popular projects.
“We want to see what has momentum,” he says.
However, if a campaign fails, Mr. Bussgang says, getting funded by venture capitalists becomes very challenging. “It’s hard to erase those initial failures,” he says.
Ms. Huston is an editor of The Wall Street Journal’s Accelerators blog on startups. She can be reached at email@example.com.
Source : The Wall Street Journal
BY David Nilssen | January 28, 2014
Crowdfunding in one form or another has been around for years but has become a sexy buzzword of late. The majority of news articles about it are positive, to the point where many seem to view crowdfunding as a cure-all for small-business funding woes. But this hype has clouded a number of pitfalls both entrepreneurial hopefuls and prospective investors need to be made aware of before jumping on board.
Crowdfunding has little application to business unless an entrepreneur only needs a small amount of money to get started. For projects requiring $5,000 or less, for example, it may be the right route. But for anything larger — especially where the total investment is in the tens of thousands or greater – it usually won’t suffice. Small amounts of capital can certainly help start a business initially but most will need to be recapitalized. Unfortunately, subsequent capital is not as easy to secure as some would assert.
That means that many of these “crowdfunded” businesses are often severely undercapitalized and that could translate to dramatically lower success rates. Some reports show crowdfunded businesses fail at a higher rate than other small businesses. As more crowdfunded businesses fail, fewer entrepreneurs will trust its model and regulations may be implemented. Companies requiring large amounts of capital will likely continue to seek traditional funding or forms of alternative funding.
Several pitfalls are often overlooked in the current crowdfunding conversation. Here are a few.
Buyer beware: While the overall financial risk can be less due to the “donation” or “contribution” being smaller, crowdfunding investors are often far removed from the business they are funding and therefore may not perform due diligence in learning about the startup, the crowdfunding platform, where their money is going or how it is being spent.
Entrepreneurs should choose their investors wisely, being strategic and selective, ensuring they are receiving capital from fully educated “angels” who understand the business, how their money is being spent and what risks they are accepting.
Ongoing obligation: Many crowdfunding models require the business to give something back to investors in the form of products, services, ongoing discounts or deal with the administrative and legal burden of having shareholders (new regulation may complicate this further allowing non-accredited investors to buy in). And while every investment should see a return, businesses must be careful to not over extend what they can deliver, or even negate the value of the funding to cover the cost of fulfilling those obligations.
Entrepreneurs should be upfront about the relationship from the beginning, outlining what discounts or deals are involved, if any. Then investors can make the decision to participate or not.
Platform credibility: With about 450 platforms now on the crowdfunding bandwagon, due diligence has never been more important. Most do not disclose how many businesses even get funding — nor will they share how many of them continue operating after the initial cash injection is accepted. And as with any financial transaction, the rise in options can lead to an increase in potential scams. There have been some reports of instances where entrepreneurs have been unable to withdraw the capital given to them, making the donation worthless.
Both businesses and investors need to carefully investigate their crowdfunding platform options to ensure it is credible and legitimate. Some have better reputations than others, so make sure to do your homework and choose the one that has a good track record of results.
Finally, as a result of its growing popularity, politicians jumped on new regulation for crowdfunding, namely the Jumpstart Our Business Startups (JOBS) Act. The JOBS Act encourages small-business funding by easing securities regulations. While I applaud the intended value, it opens the door to more abuse around soliciting investors. Many people don’t know, however, how or when the many risks associated with crowdfunding will make themselves known and even shape subsequent regulation.
So, is the hype around crowdfunding too good to be true? In a word, yes. While for some it can be a viable option, businesses and investors must start conducting the type of due diligence we have come to expect in traditional financing models to make sure it is right for them. There are inherent risks with every new business venture, but for many, crowdfunding simply has more risk than reward.