Belay Capital

We are a localized crowdfunding platform that gives small business owners a way to raise capital while also forging strong relationships with their community.

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Three things I learned about Boulder Startup Week

Last week was one of the best weeks of 2014. Boulder Startup Week occurred thanks to Andrew Hyde, the countless volunteers, and sponsors. This event showcases all the great entrepreneurs, the various startups, and how we think community first in Boulder. After getting to attend a lot of different events there were three things that stood out to me. #1. The University of Colorado Is The Farm Team to The Big leagues of Startups

It is baseball season so I might as well pay tribute to one of the best baseball movies of all time, Field of Dreams. The quote "If you build it, he will come" doesn't always hold true with startups but in the case of the University of Colorado, it seems there are three areas at the University of Colorado that are getting some traction. From the additions of Spark Boulder- the off campus work space for CU students to the Deming Center for Entrepreneurship to the up and coming "Idea Forge" that the engineering school is launching, there is a lot of innovation occurring on campus. These three areas and the many others mentioned this week are great farm leagues to help young entrepreneurs get to the next level. The community support for these programs has been instrumental in getting them up and running. To help foster innovation in a younger generation, we need to do a better job of reaching out to the campus to help. I plan on mentoring more and see what other ways I can get involved with these groups. #2. One Common Boulder Entrepreneur Slogan: Get Shit Done There was one mantra that many of the speakers at BSW embodied. It may be the best entrepreneurial philosophy out there. It's called G.S.D. or "Get Shit Done." When all else fails, set aside your feelings about the work and get started doing it. One panel that discussed this a lot was the "Early Stories at Big Companies" presentation. There we heard the stories from companies like Twitter, Github, and Sendgrid and the ways in which these companies were able to move the needle when they were still considered a startup by not being afraid of failure and trying to get things done. #3. Embrace Failure The most interesting presentations at Boulder Startup week were on the failure track. It is against our internal motives to talk about our failures but there is so much you can learn when you open yourself up to talking about it. Making failure socially acceptable makes us more open and creative. Mistakes are part of taking healthy risk. They provide us with new ways of thinking and give us new insights into how we can improve as leaders. Real failure doesn't come from making mistakes; it comes from avoiding errors at all possible costs, from fear to take risks and from the inability to grow. Being mistake free is not success. Still, we avoid challenges and hide mistakes. We don't like to talk about them and bring attention to them. It's safer to look the other way or sweep them under the rug. That's why so many leaders have the same struggles over and over again. Thank you BSW for making us all think of failure a little differently this week.

All in all it was a great week.  Let's all keep the momentum going.  And start getting ready for Fort Collins Startup Week and Denver Startup Week

Brian Schmitt Founder Belay Capital

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What does broccoli have to do with your crowdfunding project? 

As I mentioned time and time again that a video on a crowdfunding project gives you a 30% better opportunity that your project will get funded.  To prove that point I wanted to give you another story of where video helped a company.  Back in 2010 a Canadian advertising company did a case study on the effects of television advertising.  This ad agency decided to pick the produce of broccoli to see if their advertising could make a difference on the brand awareness and sales of the product.  Yes, I know this is not an apples to apples comparison as advertising budgets for videos are just a bit higher than the general crowdfunding video budget but it does show the importance of a compelling video.  Here is one of the ads:

After the campaign the Television Bureau of Canada undertook a pre-post tracking study to measure the impact of communications on consumer perceptions and awareness. Top-of-mind awareness for broccoli went from receiving no mentions to being the second most recalled produce in the study. Thirteen percent of consumers responded that they had purchased at least one more bunch in their latest shopping trip as compared to the pre campaign period, while the intent to purchase at least one more bunch of broccoli also increased by 13%. The campaign also successfully shifted perceptions of broccoli as the attribute ‘tasty’ increased by 15%, ‘healthy’ by 18%, ‘full of vitamins’ by 20% and ‘more nutritious than other vegetables’ by 64%.  On the Internet (using Google metrics to track results), average mentions of "broccoli" or "miracle food" increased by 444% during the campaign and the weeks that followed, Broccoli's fan page on Facebook attracted an additional 17,000 followers and more than 30,000 people were compelled to watch clips of the ad on You Tube.  Finally, the most rewarding of all metrics; Broccoli sales rose 8% versus same period in 2009 compared to 2010 according to AC Neilson, smashing the 5% target uplift.  The takeaway Yes the broccoli example may be a little over the top but it proves the power of a solid video. Having a powerful video that tells your story can make a difference as to whether your investors help in your cause.  Develop an engaging story. Personality, voice and storyline count; humor is optional, but it better be good. To quote Daniel Pink, “People want purpose. They want the sense that what we do produces something transcendent or serves something meaningful beyond that of ourselves.”  In order for people to fund your idea they need to be engaged in your story and feel that sense of purpose.  That is what this ad agency did with Broccoli and that is what you can do with your project.  Brian Schmitt Founder Belay Capital

Sources https://www.thinkbox.tv/server/show/ConCaseStudy.1651

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Are Nonprofits ripe for crowdfunding?

Last week I had coffee with a friend in the nonprofit space.  She works for a company that invests in grants and initiatives to health related nonprofits that encourage healthy living and increase the number of Coloradans with health insurance. Her company also works to ensure that Coloradans have access to quality, coordinated care as well as operating medical education programs to increase the health care workforce.  After some catching up, the conversation quickly turned to the grant-making process that she is so deeply involved in.  Here is what I learned. In my opinion the process seems quite arduous.  Information usually included in the grant writing process: -Financial Statements -The qualifications of the organization and leadership -Problem Statement -Program Goals and Objectives -How much funding they are looking for -Detailed Budget -Summary of additional funders -How will this work be sustained long term After a nonprofit writes up their grant, it is likely that they have to wait several months before knowing if they are going to receive the funding they need - or even a portion of it.  This can range anywhere from a month to six months.  During this period the nonprofits can spend late nights and extra time submitting additional information requests by the "funder" as the nonprofit goes through what they might call a due diligence process.  Every nonprofit out there has the opportunity to submit a grant but depending on the nonprofits alignment with the particular funder’s guidelines, there’s less than 50% chance that the nonprofit is granted funding.  Why not turn to crowdfunding?  After gaining a better understanding of the grant writing process, I think many of these nonprofits should look at crowdfunding.  Instead waiting for one board of directors to decide your fate let the crowd collectively decide if your idea is worthy of capital.

Brian Schmitt Founder Belay Capital

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7 Crowdfunding Pitch Tips

Congrats!  Maybe you have decided to take the plunge and use crowdfunding to help your small business/startup/nonprofit.  As you are preparing for your project launch there are at least 7 tips to think about.  You may be thinking, why seven?  There is no other reason to have 7 than I am from Colorado, a Denver Broncos fan, and why not pay tribute to the best quarterback to ever play the position. 

Go beyond just figuring out a top-line number of how much funding you'll need to raise.  You really need to look at the costs associated with the campaign.  Specific areas to think about  are the costs associated with each reward.  Will there be postage, manufacturing costs, and even thinking about time associated with each reward is important.  If you go deeper in thinking about these rewards now then when it comes time to take care of your customers, the process will be much smoother. 

Create your social networking platform, along with a business plan, well before you post. Most crowdfunding will come from fans and followers on social media, as well as from friends and family.   Continue to build that following base because once you submit your project you will be relying on them.  Another potential opportunity is to present your idea at local events.  There are countless opportunities to present from Boulder Denver New Tech to the monthly Boulder Startup Meetup.  This will help you collect more cards and drive more people to your page.   

Develop an engaging story. Personality, voice and storyline count; humor is optional, but it better be good. To quote Daniel Pink, “People want purpose. They want the sense that what we do produces something trancedent or serves something meaningful beyond that ourselves.”  In order for people to fund your idea they need to be engaged in your story and feel that sense of purpose and connection. 

Understand the funding platform rules, including whether it's an all-or-nothing model, what your timeframe will be, whether there's a penalty for missing your goal, and what percentage of your funds are paid to the platform. Read all the fine print.  At Belay you have 30-60 days to fund your project, we help make sure you reward your investors, and we typically take 7% depending upon the type of project.  But there is more fine print if you would like to read it.  

Choose your reward. Until the SEC releases investor regulations, your only crowdfunding choice is donation-based, so spell out what perk contributors will receive. Be specific about timing, as well as shipping options and delivery. The most important reward is in that $25 dollar range as that is where most of the contributions will come from. 

Keep your pitch concise. The optimal length for pitch videos is three minutes.  I have seen successful ones in under two minutes.  And make sure that elevator pitch is down cold. 

Keep in touch with backers and keep expanding your social network. It's hard but critical work.  Writing thank you notes can be the difference maker in picking up a couple new followers.  People want that personal touch and nothing beats seeing that handwritten address in your mailbox. 

Hopefully these help and Go Broncos!

Brian Founder Belay Capital

Sources http://www.entrepreneur.com/article/226576#ixzz2lrGMjfmK

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Raising Capital Using Convertible Debt

I have been having a couple conversations with some potential companies about funding. And it seems these days the typical way many startups would like to receive funding is through convertible debt.  So I thought I would give my two cents on the subject for what it is worth.

Convertible Debt One of the most common forms of investment in early stage business is convertible debt. Convertible debt is exactly that – debt which is convertible into equity at some later point in time. Many entrepreneurs like convertible debt for a number of reasons.  Here are a couple: 1.  Typically convertible debt is much faster.  Most often there are fewer lawyers involved so it seems to move a lot quicker than an equity deal.  2.  It is cheaper.  Most often convertible debt is cheaper because there are also fewer hands in your pockets .This means fewer lawyers which is great because more of the capital being raised goes to the operations of the business.   3.  Convertible debt holders are not shareholders so they don’t get to vote on issues.  Every founder of the business loves this reason as they are still given a big check but get to make all the decisions.  4.  The biggest reason entrepreneurs like convertible debt is because it helps put off the valuation question to a later date.   My Two Cents Traditionally convertible debt is used for initial funding rounds that are smaller in size, where the financing isn’t substantial enough to cover the greater legal costs of a more traditional seed equity round, where the investor base lacks a “lead” to price and negotiate terms, or where the financing size is such that all parties agree that not enough money is being raised to put a stake in the ground around pricing.  Every situation calls for a different type of financing structure and of course, the more fair for both sides, the better. It is important that each benefit is weighed to see what is right for the startup and for the investor. As a startup, you want to give your early investors good terms because they are helping you accomplish your goals. As an investor, you want to make it as easy as can be for the startup because they need to be focusing on building the business and not revising terms for an offering but you also want to make sure you are being fairly compensated for the risk they are taking.  Crowdfunding is another way to receive the capital you need without worrying about valuations. At Belay Capital gives small businesses an opportunity to raise capital.  Instead of relying the traditional sources of capital to receive their line of credit, businesses can instead seek out “the crowd” to help businesses get funding.  The crowd--YOUR community members--have a tangible way to support businesses while also receiving special rewards, VIP treatment, and--down the road--equity within the companies they support.  Thus passions are shared, relationships are strengthened, and the sense of community is increased. Brian Schmitt Founder Belay Capital Sources http://www.bothsidesofthetable.com/2010/08/30/is-convertible-debt-preferable-to-equity/ http://www.sethlevine.com/wp/2010/08/has-convertible-debt-won-and-if-it-has-is-that-a-good-thing

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Mad Presentation Skills

Whether it is through a crowdfunding website, in front of a couple angel investors, or even at the local startup tech meeting, presentation skills are crucial to selling your potential investors.  Here are some helpful tips for those important meetings.  I picked up a couple of these from Mark Suster who is an Entrepreneur turned venture capitalist. 

1. Energy is Crucial – Presentations must be delivered with a ton of energy and oomph.  Not like a conversation.  It is important to project your voice and use your hands.  I know it seems basic but is always forgotten.  To help with your energy levels I joined a local toastmasters club.  This is a great place to practice you energy and learn some great tactics.    2. Tell a story – Every great presentation tells a story.  Stories have starts, middles and ends.  They are human and touch emotions.  They bring your product to life.  

3. Learn how to structure your story – Telling a story is one thing.  But make sure that you’re structured in the way you communicate.  You need to break down your message into key components.  It is generally best if you have a “theme” or “thesis” which is the main point you want to get across.  

4. Know your audience - I always try to find out something about the audience before I present.  I ask the conference organizer all the details I need to know:

How many people will be in the audience?

Is there a theme for the event?

What level will the audience be in terms of knowledge / experience?

What do you think they’d want to hear about?

5.  Be unique / memorable - Remember that at most speaking events you have a ton of other speakers – most who are exceedingly boring. They all start to blend together.  Do SOMETHING that makes you stand out.  Don’t overwhelm the audience – just find some way to be on their memorable consciousness.

6. Summarize – The old line about presenting was, “tell us what you’re going to tell us, tell us and then tell us what you told us.”  If you want the audience to remember what you covered you need to be slightly repetitive with your key take-away message.  I like to have an “anchor line” which is my big take-away point and have it repeated three times throughout the presentation. One of the best anchor lines I have seen in a presentation lately was from Evver.  The anchor was “Liberate Your Photos” was catchy and was tied in rather well. 

7. Make it visual – Bullet points were the worst thing ever created for group presentations.  Nobody wants to read your text on a big screen.  You presentation should have almost no bullet points.  The way to capture an audience’s attention is visually.  Pictures set the image; your voice tells what would have been in the bullet points.

8. Stick to your allotted time – If you’ve been given 6 minutes then plan a presentation that can be done in 5.  Trust me – whatever amount of time you’ve gone over in practice it will be longer when you’re on stage.   It is a great idea to actually need to do a dry run in front of friends, colleagues and others.  People don’t like to do this because it feels funny “pretending” to deliver a presentation.  You’re going to read out your points like it is for real.  You’re not going to stop and go out of character and say, “oh, that didn’t sound right.  Overall hopefully some of these tips can be helpful with upcoming presentations. 

Brian Schmitt Founder & CEO Belay Capital Sources http://www.bothsidesofthetable.com/2010/01/31/how-to-not-suck-at-a-group-presentation/comment-page-2/

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Bootstrapping for Startups

You're building your business with your own money, which means you get to keep control of it, not hand it over to some investor. But bootstrapping is tough, especially if it means putting every dollar you make back into the company instead of into your pocket. Here are some potential tips that could be useful when bootstrapping your own business. 

1. Defer legal fees. Negotiate with your lawyers so that you don't have to pay them until you raise seed or Series A funding. Or better yet, rely on volunteer lawyers to get you the consulting you need to get things going.  There is great legal advice at the local universities that may worth looking into.   2. Use QuickBooks. Yes, you're busy, but managing your books isn't terribly onerous once you get your accounts set up and data input. Looking at your monthly burn helps foster a cost-saving attitude because you can see how fast money runs out. CPA’s are pretty important when you are getting ready for a Series A but can come at a pretty penny. 

3. Ask for a discount on your server costs. Microsoft, SoftLayer, Rackspace, and Amazon Web Services all offer start-up promotions. In fact, the latter offers more than a dozen products that include a free tier.

4. Tap your well-connected friends for their company discounts or hand-me-downs. Know anybody who works for Apple? Apple employees can get up to $500 off the sticker price of a Macbook and 20-30 percent off iPads.  There are other companies like dell and HP that offer discounts too.  May be worth talking to your corporate buddies who are still living the corporate life to see if they can help with any of those discounts. 

5. Look for shared office space. Working at home is isolating and if you camp out at a coffee shop you can end up spending too much money on food and drinks. Instead, find another start-up that has extra space and make a deal to use it. Either that, or rent a spot in a coworking space. In addition to being a lot cheaper than paying for your own office, they're great places to meet other founders and creative types who can end up being new partners, allies, and even clients. There are a ton of great coworking spaces in Denver/Boulder.  From Shift Workspaces, to Uncubed, to Scrib, to Fuse, to Galvanize, there are a ton of great places in Colorado. 

6. Ask for event discounts. Many event organizers understand that entrepreneurs don't have a pile of money to spend on networking events or conferences and will provide special discounts that are often not advertised publically. I have also had luck myself volunteering at events.  This is a much better way to get involved.  7. Don't use a PR firm. Publicity is extremely important--but incredibly expensive if you're paying someone else to drum it up. It doesn't matter what they tell you, as an early stage company, you cannot justify a retainer of $8,000 to $10,000. Do your homework and reach out to reporters yourself.  There are great reporters in Colorado that cover many of the businesses in Denver.  8. At first, use WordPress or Weebly.com for your website. While you do need a professional-looking website or digital store front, hiring an agency or design shop to create one can be expensive. Many entrepreneurs create their own websites.  At first, though, WordPress and Weebly will work great. Hopefully these can be helpful for your business. 

Brian Schmitt Founder & CEO Belay Capital

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Power to the People

Whenever I am walking around Pearl Street in Boulder, Downtown Denver, or even Cherry Creek, I will more often than not see a young, energized person approach me with a clip board asking if I “have a minute for ______________.”  Occasionally I will be nice and let them discuss their mission for a better world but rarely do I feel excited enough to give.  Many times I think to myself, how this economically makes sense for this non-profit to spend $8.50 an hour to have a poor college student get rejected.  There needs to be a better way to rally support.  ENTER Crowdfunding. 

“Crowdfunding is the collective effort of individuals who network and pool their money, usually via the internet to support efforts initiated by other people or organizations”(Ordanini, A).  Many are relying on this to help raise money for causes, products and businesses.  One of the most successful crowdfunding campaigns was Barak Obama presidential campaigns.  “Barack Obama, by all accounts an underdog, used social media to get the word out, rally his supporters, and raise money. It seemed amazing at the time for a presidential candidate to ask millions of people, not a handful of millionaires, to open their wallets for a movement. But even more amazingly, it worked. Obama raised half of a billion dollars from three million donors, who made a total of 6.5 million donations. The average donation was $80. That's power in numbers, and it simply wouldn't have been possible without the digital grid and a nascent, though powerful, people economy. (Allison, A)”

What does this mean for entrepreneurs and crowdfunding?

The grid has made the global community local, allowing any group to get together online and amplify its collective voice. Your customers can be a powerful ally, now more than ever.

Entrepreneurs can connect with people in ways that weren't possible, from crowdsourcing a new product direction to improving a website.

Access to the grid--and to a network of customers and supporters--is an important tool for overcoming resistance from incumbents.

It's an exciting time and technology has made it easier than ever to build a movement. Engaged communities are the rule, not the exception, among the most successful disruptive technology companies.   So thinking back to that person on the street.  Is it time to look at a new way to push your agenda and raise money?  

Brian Schmitt Belay Capital Founder & CEO

Sources http://www.inc.com/austin-allison/it-takes-a-village-in-the-people-economy.html

http://en.wikipedia.org/wiki/Crowdfunding#cite_note-1

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3 things that stood out most at the 25th Annual Colorado Capital Conference

Last week I had the privilege of attending the 25th annual Colorado Capital Conference up in Golden, Colorado.  The Colorado Capital Conference has been a leading investor conference in Colorado for 25 years. The Rockies Venture Club has always hosted this historical event with the goal of connecting entrepreneurs and investors in Colorado. Attendees include angel investors, venture capitalists, entrepreneurs, service providers, and students.  

Not only was the company presentations pretty strong but the CEO’s from the area were top notch.  The list of speakers included US Representative, Jared Polis, CEO of Noodles, Kevin Reddy, CTO of Rally Software, Ryan Martens, CEO of NexGen Storage John Spiers and many other top executives in the Colorado area.  What stood out most during the conference: -The willingness of all to help along the way.  Through my conversations with the many entrepreneurs and investors, there seemed to be a “give before you get” mentality.  I saw many people offering up constructive feedback, giving potential introductions, and being down right cordial.  No matter the size for your company, every entrepreneur was given equal opportunity and time to discuss their ideas with the crowd.  -The depth of Startup Talent in Colorado.  During the conference there were twelve companies seeking capital from the VC’s and Angel Investors in attendance.  For the most part, all companies seemed strong in their presentations and many of the businesses had the strong balance sheets and Income statements to back up the need for capital.  -The Unique business Ideas. There were many great presentations but the ones I enjoyed the most were Evver, a music/slideshow platform, Closely the everyday digital marketing company for local merchants, and Orbtr, the sales marketing toolkit for wordpress.  These companies brought unique ideas to the table and the passion behind the CEO’s was truly exciting

Thanks for a great conference and I look forward to going every year moving forward. 

Brian Schmitt Belay Capital Founder & CEO

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The Power of Vulnerability and Crowdfunding

  Brené Brown is a research professor at the University of Houston Graduate College of Social Work. She has spent the past ten years studying vulnerability, courage, authenticity, and shame. She spent the first five years of her decade-long study focusing on shame and empathy, and is now using that work to explore a concept that she calls Wholeheartedness. Here is an oldie but goodie Ted talk from Brené about the power of vulnerability. In this ted talk a couple things stood out to me that could be helpful when think about your crowdfunding campaign:

1. Connection is why we are here. It gives purpose and meaning to our lives. In order for connection to occur, you have to allow yourself to really be seen. The truly successful crowdfunding campaigns out there are not afraid to let their guard down. They open up the kimono and share their passion and their dreams. Doing so is nerve racking because it allows for everyone to judge you. But there is the opportunity for deep connection. If you look at the extremely successful crowdfunding campaigns, they have made a strong connection to their investors and it has helped them achieve their goals.

2. The problem with allowing yourself to be seen is there is a chance of disconnection or shame. People want to be worthy of connection but there is always that worry that "there is something about me that if other people know or see, then I won't be worthy of connection." With any crowdfunding campaign there is the worry that no one will fund your idea. It is important to understand the worse case scenario and let those feelings go.

3. The interesting part about vulnerability is that although it is the core of shame, and fear, vulnerability is the birthplace of joy, belonging, creativity, worthiness, and love. In order to be successful one must let yourself be seen. The only way for your company to receive capital is to put your idea on our crowdfunding page and be seen.

Brian Schmitt Belay Capital Founder & CEO

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Small Businesses still reeling

Although many believe we may be on our way out of this recession, there is still a lot of room for improvement.  And one specific area that we have yet to see growth from is small business loans.  While banks are reporting improved earnings and even double-digit uptick in business lending, the little guy is still not feeling the love.

Statistics tell the story. For the first time since the start of the financial crisis, banks are lending more than they did in 2008. Higher profits and healthier balance sheets have helped open the money spigot.  But the data on small business lending paint a bleaker picture. FDIC data show a 19.1 percent decrease in small business loans ($1 million or less) outstanding since the start of the Great Recession. In 2007, $686.8 billion in loans were issued, compared with $587.8 billion last year. In contrast, loans to midsize and large companies rose from $1.5 trillion in 2007 to $1.9 trillion in 2012—a 12 percent increase.

Even the $30 billion Small Business Lending Fund launched in 2010 as part of the Small Business Jobs Act was a nonstarter. It dispersed only $4 billion or roughly 13% of the designated capital because many community banks found the program's requirements too stringent, and the Treasury Department was slow to approve applications.   Stricter requirements have made the bank loan process difficult for the vast majority of entrepreneurs. Many banks are looking for at least three consecutive years of profitability and are even demanding more personal collateral.   If you are an entrepreneur, 3 years of waiting for capital is way too long.

One way to solve for this is many small businesses have been turning to crowdfunding as a way to fill the void.  Instead of relying on three years of bank statements and tough policies people on crowdfunding sites can look for businesses that have been looked over by the banks.

Brian Schmitt Belay Capital Founder & CEO

Sources http://www.cnbc.com/id/101009116?mkt_tok=3RkMMJWWfF9wsRoks6nNZKXonjHpfsX56eslXqK2lMI%2F0ER3fOvrPUfGjI4DRMZrI%2BSLDwEYGJlv6SgFS7fDMapx0bgNUxY%3D

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Just the Beginning for Crowdfunding

Yesterday, September 23rd 2013, marks a historic day for crowdfunding as Title II of the JOBS Act went into affect. For the first time in nearly 80 years, small businesses can raise capital by advertising publicly. Before today publicly advertising the fact that you were raising investment (general solicitation) was against the law for early stage private companies. Fundraising from the general public was the exclusive domain of larger companies who can afford to spend the millions it takes to become listed on stock exchanges like the NASDAQ.

But now, as a result of Title II, early stage investing in the U.S. has stepped squarely into the digital age and has become more public, kicking off one of the largest new capital markets in our time for online investing via equity crowdfunding.

How does Title II work? Instead of trying to make you translate the SEC's press release, here is the quick and dirty:

For Investors in Crowdfunding: -Only accredited investors will have the opportunity to invest in companies who generally solicit. -Qualifying as an investor means: 1) earn an individual income of more than $200,000 per year, or a joint income of $300,000, in each of the last two years and expect to reasonably maintain the same level of income. 2) have a net worth exceeding $1 million, either individually or jointly with his or her spouse. 3) be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered. -Investors will need to prove accredited investor status, which can be done through written confirmation by a CPA, attorney, Investment Advisor, or Broker Dealer, or income-related IRS forms.

For Businesses -You can now generally solicit and advertise publicly. Side note: This will be interesting as companies will be soliciting in public spaces where there are individual investors which could pose as an issue. -Only accredited investors can actually invest in generally solicited companies -File Form D with the SEC before you begin Soliciting -Disclose details about your general solicitation to the SEC within 15 days of the first solicitation -The penalty for not adequately meeting and following general solicitation requirements with the SEC is being banned for a year.

Bottom line: This is a great step in the right direction for crowdfunding. There is still much more regulation that needs to be passed by the SEC before crowdfunding could become more mainstream. Specifically the formation of Title III of the JOBS act needs to be addressed by the SEC. For more information on the JOBS Act, check out my other post titled "Jumpstarting the Economy".

More to come!

Brian Schmitt Founder & CEO Belay Capital

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The Art of Asking

  Recently in March 2013 Amanda Palmer delivered a Ted talk about the art of asking.  Amanda Palmer has had one crazy life.  The singer-songwriter-blogger-provocateur, known for pushing boundaries in both her art and her lifestyle, made international headlines this year when she raised nearly $1.2 million via Kickstarter (she’d asked for $100k) from nearly 25,000 fans who pre-ordered her new album, Theatre Is Evil.  In her recent Ted talk she talked about the art of asking. There are three takeaways I learned from this Ted talk.  The importance of being authentic, the random acts of kindness and closeness she feels to strangers, and the art of thanking.

Being authentic It doesn’t matter if you are buying a sofa, asking someone out on a date, or trying to crowdfund your own business idea, it is crucial to be authentic.  We all know it when we see it.  The guy/gal that seems fake.  They may have an ulterior motive.  When you are authentic, people forget what your selling and just want to help in any way.

Random Acts & Closeness Whenever you ask, you will be surprised as to how often people will say yes.  We don’t do it enough because there is that moment when we have to be vulnerable.  Through the very act of asking people, Amanda Palmer has connected with them, and when you connect with them, people want to help you.  It’s kind of counterintuitive for a lot of people. They don’t want to ask for things.

The Importance of Thanking Anytime you are asking for something, it is important to thank them when you receive your gift.  So often people on any crowdfunding portal don’t thank those that made their dream come true.

Brian Schmitt Belay Capital Founder & CEO

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Getting Your Investors Excited

About 56% of the projects posted to kickstarter don’t get the funding they need.  There could be many reasons for this failure.  It could range from a poor marketing plan, lack of planning, or even the funding goal is too large.  But really what it comes down to is getting your investors excited about your idea.

Sales messages always consist of a claim or a series of claims that you’re making about yourself, your firm or your product.  And really if you want your sales claim to be effective, you need your investor to believe it, remember it and take action based on it.  To do so you must make your sales claim Credible, Meaningful, and Memorable.  Geoff James, author of the book, “Business Without the Bullsh*t”, believes these three points to be true.  Lets break these three out.

Credible-“To excite an investor, a sales claim must be credible.  The easiest way to add credibility is to attribute the claim to somebody whom the customer already trusts” (Geoff James).  Ways to do this in your crowdfunding campaign is to have testimonials within your post. This gives it a bit more credibility than when you pitch your own product.  Find people who are passionate about your product and ask for permission to put their testimonial on your page.

Meaningful-To excite an investor, a sales claim must have a serious, important, or useful quality or purpose.  To make a claim meaningful it needs to address an issue and show its true value to the business and or community.  A meaningful claim will hopefully help your investor take some sort of action.  Examples of such claims are “This product will save you time” or “this product will reduce costs to your business”.  If you can truly make it meaningful your investors will want to make your crowdfunding idea come true.

Memorable-“To make a sale claim memorable, you must add emotion to the equation.  Emotion comes not from adjectives like exciting or innovative nor from financial figures, but from real events involving real people facing real challenges” (Geoff James).  Within every successful crowdfunding raise, the most important factor is the emotional connection that you create.  I wish there was a truly tangible solution or way to construct these types of claims.  This one takes time.

Hopefully these three ideas can help make your crowdfunding project more successful.

Brian Schmitt Belay Capital Founder & CEO

Sources http://www.inc.com/geoffrey-james/how-to-get-a-customer-excited.html

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Crowdfunding as Game Theory

Game theory is a study of strategic decision-making.  What economist’s call game theory psychologists call the theory of social situations, which is an accurate description of what game theory is about. Although game theory is relevant to games such as poker or bridge, most research in game theory focuses on how groups of people interact. There are two main branches of game theory: cooperative and non-cooperative game theory. Cooperative game theory is a game where groups of players ("coalitions") may enforce cooperative behavior; hence the game is a competition between coalitions of players, rather than between individual players.  Non-cooperative game theory deals largely with how intelligent individuals interact with one another in an effort to achieve their own goals.  Crowdfunding is more or less non-cooperative game theory.  What every crowdfunding project wants is for their project to get funded.  And how you interact with your potential investors is important to getting your project to the next level.  So below are 5 ideas to help improve your non-cooperative game theory when it comes to crowdfunding:

1.  Before you start your crowdfunding project, set up 50-100 people you can reach to get to commit right away.  Most likely this group is your best friends and family.  Start putting that list together right away.  What you want these people to do is not only invest but also aim to get 10 other people to support the project.

2.  Stagger your supporters.  You don’t want to get all your support right up front.  Some may argue that any supporter is great but consistent growth is necessary to keeping your project at the front of everyone’s mind.

3.  Compile a list of special interest groups you believe that would be interested in the idea.  If you have a new beer product invention, reach out to local brewers, brewers associations, brewing magazines and look for ways to get them to connect to the idea.

4.  Figure out an implementation strategy where you can be constantly updating your supporters with the progress of your crowdfunding project and as a way to pique interest of potential investors.

5.  Personal connection is key.  Writing your supporters on a one off basis is the best way to get those people more connected to your cause.  People love a handwritten note or truly personal email that says thanks.

These 5 steps are not the end all be all to a successful crowdfunding project but hopefully they can help.

Brian Schmitt Belay Capital Founder & CEO

Sources

http://www.documentary.org/content/kickstarter-effect-fundraising-game-theory

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5 Tips to Using Social Media in your Crowdfunding Campaign

Any crowdfunding project utilizes social media to try and help make their campaign successful. But so many times I see people not use the various social media platforms to there benefit.  Here are 5 tips that can potentially help with making your crowdfunding campaign successful.

1. Don’t just think you can launch your crowdfunding campaign and then the very next day use social media to make your campaign successful.  It is at least a 6-12 month process.  During this time you may want to start your own facebook page, LinkedIn group, or Twitter page.  This will help you start to get the word out about what you do.  But it usually takes months to build up an audience in those specific groups.

2. Understand the differences between the social media platforms and what will work best for your business.  In short, Twitter is for news, Pinterest is for pictures, LinkedIn is a great way to talk about yourself and connect with groups or people that are interested in similar subjects, and Facebook is about the people you already know. Knowing this can help you target your specific message for each specific social media.  EX: On LinkedIn you may want to look for special interest groups that you may be able to spread your message and Pinterest could be a way to get to the name and picture of your product out there.

3. Be a great curator of content.  It takes time to truly develop content and many may not have the time to construct that content. Finding content that is relative to your business can be helpful in getting more people following you on twitter.  This is a great way to help you stay on the top of peoples minds and many may start to view you as a thought leader.

4. Make sure your posts are authentic.  No one wants to read a self promoter.  Be real in your ideas and posts.  Think of why people click on posts and try and replicate.

5. Repeat your posts.  This is something I was very skeptical about doing.  But so many of the big companies do this.  People will miss your posts on Twitter and only 35% or so of your facebook friends actually see your posts.  Repeating posts is okay.  Just don’t overdo it too much.

Hopefully these were useful in your helping you attack your crowdfunding campaign.

Brian Schmitt Belay Capital Founder & CEO

Sources http://www.crowdcrux.com/kickstarter-social-media-marketing-tips-from-guy-kawasaki/

[belaycapital]

Fulfilling your promise to investors

I know in the past I have blogged about the importance fulfilling your promises to investors but it still seems to be a large issue.  I have seen even more companies struggle on kickstarter with fulfilling their orders and the reason for these issues is the lack of due diligence from the companies as to what it takes to get their product up and running.  In the last couple of months there has been countless articles written about the subject.  Here are just two: The perils of Kickstarter: Fulfillment can be a Pain Calculating Reward Fulfillment What happens is many companies don’t fully account for the costs associated with launching a new product to the world.  Manufacturing, shipping, prototyping costs are just a few of the potential money drainers that can be associated with a new product.  Here are a couple important issues that need to be addressed when calculating your fulfillment costs: Return Mail-It happens more often than not.  Somehow the wrong address gets entered for your investors.  This means that you will have some returned mail and it is important to add a little bit of a cushion when calculating your shipping costs.  Always err on the side of caution. Manufacturing Costs-Before you embark on your crowdfunding campaign it is important to really drill down on the manufacturing costs associated with creating your product in mass production.  Try and get your manufacturer to commit to price and always account for delays in manufacturing .  Also looking at other potential options such as 3-d printing could be a way  to save money but make sure to test these out before committing. Time Costs- Another cost that rarely gets factored in is the time associated with fulfilling these orders.  There are definite time drains of stuffing envelopes, talking with customers, and making sure all orders are correct.  This will likely take away time from your business development to fulfill these orders.  Look for ways to automate this process as much as possible. Lastly, always communicate and update your investors.  Time and time again people are afraid to be upfront with their investors and let them know if there are delays.   It is okay to delay the return of your promise, as you want to make sure you deliver the best product and customer experience possible. Brian Schmitt Belay Capital Founder & CEO