Category Archives: Venture funding Best Practices

Debt vs. Equity Financing: Pros And Cons For Entrepreneurs

Forbes | | Aug 2018

startup financing - Debt vs. Equity Financing: Pros And Cons For EntrepreneursIs debt or equity fundraising smarter for startups?

There is more than one way to fund a new business venture and fuel its growth. For almost all, it is going to require bringing in outside money at some point. Even if that is only to multiply what is working or to create a source of emergency capital. The two primary options are to either leverage business debt financing or fundraise for equity investors.

Each method can carry its own pros and cons. It is vital for entrepreneurs not to blindly follow the herd just “because everyone else is doing it.” Discover which is best for you, at your stage in business, and stack the most advantages in your corner.

Once you have decided the course of action and have a lead investor covering at least 20% of your financing round you would typically also include in the pitch deck the form of financing in which you are raising the capital. I recently covered the pitch deck template that was created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

Debt Financing

We’re all familiar with debt. At some point we’ve all probably at least had a student loan, signed up for a mobile phone contract, had a credit card, or an auto loan or lease. Debt means you are borrowing. Often, you will have to repay in monthly installments, over a fixed period of time, at a predetermined rate. Though this can vary depending on whether you are raising debt from investors, are using lines of credit or working capital loans, or even new hybrid convertible notes.

See:  Where to Find Startup Loans in 2018

The Pros of Debt Financing

As described in my book, The Art of Startup Fundraising, the biggest and most obvious advantage of using debt versus equity is control and ownership. With traditional types of debt financing you are not giving up any controlling interests in your business. It’s all yours. You get to make all the decisions, and keep all the profits. No one is going to kick you out of your own company.

Another big pro is that once you’ve paid back the debt your liability is over. With a fluid line of credit you can repay and borrow just what you need at any time, and will never pay more interest than you need to. Looking at the big picture, using debt can ultimately be far cheaper.

One major benefit that is frequently overlooked is that business debt can also create more tax deductions. This may not have a big impact at the seed stage, but can make a huge difference in net profits as you grow and yield positive revenues.

The Cons of Debt Financing

The most significant danger and disadvantage of using debt is that it requires repayment, no matter how well you are doing, or not. You might be burning cash for the first couple of years, with little in the way of net profits, yet still have to make monthly debt service payments. That can be a huge burden on a startup.

If entrepreneurs have not separated their personal and business credit, they may also find their entire life’s work and accomplishments are on the line if they default on the debt. Your home, cars, washing machine, and kids’ college fund can all become collateral damage.

It is also vital that borrowers understand that financing terms can change over time. Variable interest rates can dramatically change repayment terms later on. In the case of maturing balloon debt, like commercial mortgages, there is no guarantee of future availability of capital or terms when you may need to refinance. In the case of revolving credit lines, banks have a history of cutting them off, right when you need them most.

See:  Saskatchewan and Alberta make cross-border financing easier

Too much debt can negatively impact profitability and valuation. Meaning, it can lead to inferior equity raising terms in the future, or prevent it altogether.

Structures used by early stage startups such are convertible notes, SAFEs, and KISS. These forms of debt eventually convert into equity on a subsequent financing round so it is a good way to bring onboard people that are likely to partner with you on the long run with the business.

For later stage companies, the route to follow is typically venture debt.

Convertible Notes

Convertible notes are a debt instrument that also gives the investor stock options. This flexibility gives them security from the downside, and more potential upside if the start-up performs as expected. Theoretically it can also be easier for some to justify making the loan, which has specific returns and maturity dates, versus the unknown.

Convertible notes are much faster than equity rounds. There are only two documents in place, which are the convertible note purchase agreement outlining the terms of the investment, and the promissory note explaining the conversion and the amount that the investor is investing.

See:  Report: State of Regulation Crowdfunding Says No Gold Rush But an Undeniable Job Creator

With convertible notes, there are only three main ingredients the entrepreneur needs to look after.

The first ingredient is the interest that the entrepreneur is giving to the investor. This is interest to be accrued on a yearly basis on the investment amount that the investor puts into the company. The interest will continue to be applied until the company does another equity round, when the debt will convert into equity with the amount plus the interest received.

The second ingredient is the discount on the valuation. This means that if your next qualified round is at X amount of pre-money valuation, the investor will be converting his or her debt at a discount from the valuation that has been established in the next round by the lead investor.

The third ingredient to watch is the valuation cap. This means that regardless of the amount that is established on the valuation in the next round, the investor will never convert north of whatever valuation cap is agreed. This is a safety measure in the event that the valuation goes through the roof. It is a good way to protect your early investors and to reward them for taking the risk of investing in you at a very early stage.

Convertible notes are, in my mind, the fastest and cheapest way to fundraise. While equity rounds can be north of $20,000, convertible notes should not cost you more than $7,000.

One thing to keep a very close eye on is the maturity date. This is the date by which you agree to repay unless you have not done a qualified round of financing in which the convertible notes are converted into equity. For this reason, make sure that the maturity date is a date that you feel confident about. You need to be convinced that you will be able to raise a qualified round of financing on or before that date in order to convert the notes into equity and avoid being in default. The last thing you want to happen is to be in default and to have to shut down your business because investors are demanding their money back.

Below is a good example of how convertible notes play out in real life.

Equity Financing

This type of funding exchanges incoming capital for ownership rights in your business. This may be in the form of close partnerships, or equity fundraising from angel investors, crowdfunding platforms, venture capital firms, and eventually the public in the form of an IPO.

There are no fixed repayments to be made. Instead, your equity investors receive a percentage of the profits, according to their stock. Though there can be hybrid agreements which incorporate royalties, and other benefits to early investors.

Typically the term sheet will be summarizing what are the terms of the equity round. You can read more on term sheets by reviewing my Forbes pieces Term Sheet Template: What Entrepreneurs Should Include and Term Sheet: Here Is Everything Entrepreneurs Must Know When Fundraising.

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NCFA Jan 2018 resize - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Crowdfund Insider | JD Alois | June 20, 2019 The Securities and Exchange Commission (SEC) has published a statutory report on Regulation Crowdfunding commonly referenced as Reg CF. The mandated report must be forwarded to Congress three years after Reg CF rules became effective (May 2016). Reg CF is the smallest of three federal “crowdfunding” exemptions allowing issuers to raise just $1.07 million from both accredited and non-accredited investors. According to the report authors: “the number of crowdfunding offerings, as well as the total amount of funding during the considered period, was relatively modest.” The report tallies activity under Reg CF from May 2016 to December 31, 2018. At the end of the period, there were 45 active Portals and 9 Broker-Dealers which had participated in at least one Reg CF offering. See: $5 million Equity crowdfunding extended to private companies Early-stage Investing – The Public gets a Seat at the Table Three platforms accounted for two-thirds of all initiated offerings and proceeds raised. SEC: the number of #RegCF #crowdfunding offerings, as well as the total amount of funding during the considered period, was relatively modest Click to Tweet According to the SEC: Between May 16, 2016, and December 31, ...
Read More
RegCF SEC report - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Chambers Pivot Industries | Greg Chambers | June 20, 2019 "All I need is an investor, and I’m ready to go," she says. I'm sitting in front of a passionate entrepreneur who knows I've successfully raised millions of dollars for various businesses. After hearing her story, what I'm about to say won't be what she wants to hear, but it's true. Funding isn't her problem. There's more money out looking for a home than there are good ideas to fund. The problem, I tell her, is she hasn't decided if she wants to build a company or master the growing seed and startup capital environment. Lessons from the past I was in her seat in the late 1990s shopping my big idea from investor to investor. Eventually unsuccessful, I was forced to abandon my startup and find a job. I took two big lessons from that experience. One is that if I wanted to get a company off the ground, I needed to get much better at selling a vision to investors. Second, based on the questions the investors were asking, I needed far more evidence from customers that my idea was the right one before they’d invest. Years later, ...
Read More
hunter to prey - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Luge Capital | Karim Gillani | June 2019 Intro:  NCFA Fintech Confidential spoke with some of Canada’s experienced fintech investors, on their background, how Canada has evolved, what we should be doing, advice to fintech founders and what keeps them awake at night.  This is part 1 of a 4 part series.   What is your background, and how did you come to co-found Luge Capital? Karim:  My background is in fintech, mobile tech, engineering, finance and strategy. Prior to Luge, I was at PayPal, leading M&A activities in Canada. I joined PayPal through its $890M acquisition of Xoom, a renowned cross-border remittance company, where I started the Corporate Development practice. I have an Engineering degree from the University of Waterloo, a Master of Finance degree from the University of London and a Master of Laws from the University of Toronto. Luge Capital was the byproduct of highly motivated LPs, and a recognition that fintech venture capital needed a kickstart at the early stages. David Nault and I co-founded Luge in early 2018 with a new model to seek out entrepreneurs in the US and Canada that not only had a drive to take over the world, but also built their ...
Read More
luge capital - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
CDL Team | June 18, 2019 The Libra Association announces a new initiative with the goal of increasing access to financial services and fostering financial inclusion around the world TORONTO, CANADA – Today, Creative Destruction Lab (CDL) – a not-for-profit seed-stage startup program – announces that it will be a Founding Partner of the Libra Association. CDL is keen to contribute to the success of the Libra initiative as the sole Canadian organization and academic institution in the Libra Association at present. The Libra Association will create Libra, a simple global currency and financial infrastructure that can empower billions of people. Libra will be built on a secure, scalable, and reliable blockchain; and it will be backed by a reserve of assets designed to give it intrinsic value. The Libra Association will govern the infrastructure and manage and evolve this new ecosystem. Libra will enable developers and businesses to build inclusive new financial service products for people around the world. See:  Facebook’s Libra Cryptocurrency: Everything We Know At this time, CDL is the sole academic Founding Partner of the Libra Association. The initial group of organizations that will work together on finalizing the association’s charter include: Payments: Mastercard, PayPal, PayU ...
Read More
CDL libra - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
PC Mag | Rob Marvin | June 18, 2019 Facebook's Libra Cryptocurrency: Everything We Know Facebook's big blockchain play, consisting of the Libra coin, the nonprofit Libra Foundation, and Facebook's Calibra wallet, will create a crypto-based payments ecosystem across Facebook, Messenger, WhatsApp, and beyond. Facebook's long-rumored cryptocurrency finally got its big debut, and it's called Libra after all. Facebook today released a lengthy white paper, along with a post from Mark Zuckerberg and another from VP of blockchain David Marcus, announcing the ambitious crypto initiative and all that comes with it. The open-source Libra cryptocurrency and blockchain will be governed by the nonprofit Libra Association, while a new Facebook-owned subsidiary called Calibra will release a wallet for Libra tokens and ultimately other banking and finance products—a move that could turn Facebook into a financial services giant in addition to a social and advertising one. See:  Facebook’s Cryptocurrency: Great Idea, Wrong Company While the public launch of Libra won't happen until the first half of 2020, the developer testnet of the Libra blockchain is live today. There will also be a new programming language called Move for developers to build distributed applications atop the Libra blockchain, though Facebook said neither itself ...
Read More
facebook launches libra - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
3iQ and Mavennet | Fred Pye and Kesem Frank | June 18, 2019 Stablecoins are now a necessary step to mass adoption of cryptocurrencies, as proven by the way they’ve been used to hedge the massive volatility of the market over the past couple of years. Their simple premise enables the seamless pairing of crypto-to-fiat pegged cryptocurrency. It might sound overly simplistic, but this straightforward innovation has spurred the growth of a new crypto asset class that measures in billions of dollars in aggregate market cap (e.g. Tether, USD Coin, TrueUSD, Paxos and Gemini Dollar). As much as this asset class is still gaining momentum driven by the current and common use case, the potential of stablecoins goes well beyond the tactical value of a trading tool. Stablecoins are strategically important because they represent a bridge between legacy fiat-based systems and the new digital and decentralized currency underpinnings we collectively call “blockchain.” The dream isn’t necessarily a prediction or extension of the purist’s vision   Bitcoin - blockchain’s earliest network - was born from tumultuous years in the traditional financial system. These were years defined by mistrust; not just towards the people at the helm of the financial system, but ...
Read More
stablecoins  - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
CNBC | Kate Rooney and Hugh Son | June 10, 2019 Mobility giant Uber is looking to accelerate the creation of financial products with a new fintech outpost in New York, according to people with knowledge of the plan. The ride-hailing company is aiming to hire several dozen engineers and product managers this year, and the New York team could eventually exceed 100 workers, said the people, who declined to be identified speaking about Uber’s plans. Uber, fresh from its IPO last month, is looking to tap New York’s talent pool, which is deeper when it comes to fintech and bank workers than its hometown of San Francisco. By building out its financial ecosystem, the company can increase its lead over rivals like Lyft. The efforts are likely to be focused on ways to increase engagement and loyalty to the Uber platform, according to people who attended a recruitment event earlier this year. Payments chief Peter Hazlehurst and top engineer Johnie Lee spoke at the event, held at Uber’s New York offices, the people said. There are many possible payment and lending innovations Uber could come up with: It has 93 million active users globally, most of whom use linked ...
Read More
Dara Khosrowshahi CEO uber tech - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Schulte Research | Paul Schulte | June 17, 2019 Digital banking finally arrives in HK --all in one go! Be careful what you wish for — you might get it.  Hong Kong People have been kvetching for years about the poor quality of banking services. Now, they will have a deluge of ultra-efficient and essentially free new services. These services will offer strictly online banking services without branches and ALL of them have very deep pockets. The first batch below, which I will enumerate in a moment, have capital to burn of about USD 250 million. This can go a long way in eroding the highly profitable cartel of HSBC and Hang Seng Bank.  Hang Seng Bank has consistently had among the highest ROE globally north of 20-21%. And its revenue per customer has been among the world’s highest as well. HSBC owns more than 40% of HSB, so it has been a cash cow for the bank. Hong Kong is really the center of profitability for HSBC, since its ROE for commonwealth countries is the single digits and it has basically given up on the US financial market.  It’s European business, like all Euro banking franchises, is in the ...
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global network and points of presence maps - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Forbes | Enrique Dans | June 17, 2019 All the signs are that Facebook is about to launch its cryptocurrency on June 18, a project known internally as Libra, and that soon, apparently, we will all be using. So what are the implications of a company with 2.4 billion users launching its own currency? Strategically, the movement makes sense for Facebook: at a time when many question the its dominance of social networks and when a majority of its own shareholders say they want to see the back of Mark Zuckerberg, the company announces a very ambitious project of universal appeal giving it a central role in the world economy, in the wake of innumerable cryptocurrency projects of dubious legality, irresponsibly speculative and wasteful in terms of energy, aimed among others at people in countries with unstable currencies or limited banking penetration. As Jack Dorsey has said, this maybe the perfect moment to create a universal currency for the Internet era, reflecting the trend toward a universalization of the world. However, what is less clear is whether this currency should be in the hands of Facebook. See:  FaceCoin: Here’s What Facebook Could Build In Blockchain And Cryptocurrency Technically, the project ...
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mark Z. facebook - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
PATIO TIME! Join the National Crowdfunding & Fintech Association of Canada, Spaces, Gowling WLG, LoanConnect, FrontFundr, Exponential Ventures, CoinChange, United Craft, Highlander Brew, partners and Canada's leading Fintech & Funding community in the heart of trendy Queen West for a celebratory night and prime networking mixer. Interested in disrupting the finance industry, raising capital or participating in Canada’s growing alternative investing and fintech sectors? Here's a perfect opportunity to connect with emerging fintech, blockchain, crypto, AI, stealth and marketplace startups and experts, strategize with partners, pitch investors and mingle with Toronto’s burgeoning fintech ecosystem. ANNUAL SUMMER KICKOFF EVENT Date:  THURSDAY, JULY 11, 2019 When:  Registration opens 5:30PM to 9PM+ Venue:  SPACES, 7th Floor Loft & Rooftop Patio Where:  180 John Street, Toronto, ON M5T 1X5 TICKETS - GET'M BEFORE THEY'RE GONE! $25 Early; $35 Standard; $50 Late All tickets include entrance to private event, drinks, food, lots of fun and prime networking Taxes and fees extra. No refunds after Jul 4. Ticket transfers ok. Want to pay in Crypto?  Email us for an address info@ncfacanada.org If it rains, we're covered literally inside. Checkout photos from last year's Summer networking event here and the year prior here This event is for ...
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The 11 Biggest Fintech Companies In America 2019

Forbes | | Feb 4, 2019

stripe CEO Patrick and President John - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs

This article was updated on 2/4/19 to include Ripple, the fourth-most valuable private fintech company in the U.S. 

Financial technology startups continue to attract a growing amount of attention and capital. In 2018, valuations of the biggest private companies bulged, and at least six new fintech unicorns were minted in the U.S.

U.S. fintechs raised $12.4 billion in funding, or 43% more than 2017, reports CB Insights. That growth outpaced the 30% increase in venture investments across the entire U.S. market. And fintechs will need those dollars—they tend to burn about two to three times as much cash compared with other startups, according to an analysis by Brex, likely due to factors like regulatory hurdles.

Here are the 10 most valuable private, venture-backed fintechs in the U.S.:

1. Stripe, $22.5 billion

Originally a service to help small online sellers process payments, today Stripe serves tech giants like Microsoft and Amazon, too. In 2018 the company announced three new high-profile products, including credit card issuing technology, point-of-sale software and a billing platform for subscription businesses.

Cofounders: CEO Patrick Collison, 30, and president John Collison, 28. Irish-born brothers, dropouts from MIT (Patrick) and Harvard (John) launched Stripe in 2011

See:  Experts predict the five big fintech trends of 2019

2. Coinbase, $8 billion

Coinbase CEO Brian Armstrong. Photo credit: Bloomberg Finance LPMichael Short/Bloomberg

Expanding beyond its roots as a bitcoin wallet and retail exchange, Coinbase now offers cryptocurrency custody and professional and institutional trading platforms. Last year bought Earn.com, a service where users pay in bitcoin to contact experts via email, for a reported $100 million.

Cofounder & CEO: Brian Armstrong, 36, whose Coinbase holdings make him a billionaire

3. Robinhood, $5.6 billion

Broker offers commission-free trading of stocks, ETFs, cryptocurrencies and options through a mobile app. Robinhood Gold subscription service, starting at $6 per month, gives investors access to margin trading. Later this year the firm will take on the checking and savings market with a new cash management program.

Cofounders and co-CEOs: Stanford grads Baiju Bhatt, 34, a second-generation American with Indian parents, and Bulgarian-born Vlad Tenev, 32

4. Ripple, $5 billion

Its blockchain-based global settlements network aims to replace SWIFT, the interbank messaging platform that has long connected nearly every bank in the world. Also has a service that lets companies make cross-border payments in XRP, the cryptocurrency created by Ripple’s founders.

Cofounders: Jed McCaleb, 43; Chris Larsen, 58; and Arthur Britto

CEO: Brad Garlinghouse, 48, former AOL president

See:  Fintech Frenzy: Hype or Reality? A Closer Look at 6 Key Sectors

5. SoFi, $4.4 billion*

SoFi CEO Anthony Noto. Photo credit: Bloomberg Finance LPDavid Paul Morris/Bloomberg

Founded in 2011, SoFi started with online student loan refinancing and later branched into other services for affluent Millennials, including mortgages, robo-investing advice and life insurance.

CEO: Anthony Noto, 50, former Twitter COO

6. Credit Karma, $4 billion

Credit Karma cofounders (from left) Kenneth Lin, Nichole Mustard and Ryan Graciano. Photo credit: ForbesForbes

Offers its 85 million-plus “members” a growing suite of free services, including credit scores, tax-prep software, help fixing credit-report errors and alerts of new accounts opened in a user’s name. Credit Karma earns referral fees when users bite on the personalized offers for credit cards and loans it shows them.

Cofounders: CEO Kenneth Lin, 43; chief revenue officer Nichole Mustard, 45; CTO Ryan Graciano, 37

Continue to the full article --> here


NCFA Jan 2018 resize - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Debt vs. Equity Financing: Pros And Cons For EntrepreneursFF Logo 400 v3 - Debt vs. Equity Financing: Pros And Cons For Entrepreneurscommunity social impact - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
NCFA Summer Kickoff Event Jul 11 banner resize - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs

Crowdfund Insider | JD Alois | June 20, 2019 The Securities and Exchange Commission (SEC) has published a statutory report on Regulation Crowdfunding commonly referenced as Reg CF. The mandated report must be forwarded to Congress three years after Reg CF rules became effective (May 2016). Reg CF is the smallest of three federal “crowdfunding” exemptions allowing issuers to raise just $1.07 million from both accredited and non-accredited investors. According to the report authors: “the number of crowdfunding offerings, as well as the total amount of funding during the considered period, was relatively modest.” The report tallies activity under Reg CF from May 2016 to December 31, 2018. At the end of the period, there were 45 active Portals and 9 Broker-Dealers which had participated in at least one Reg CF offering. See: $5 million Equity crowdfunding extended to private companies Early-stage Investing – The Public gets a Seat at the Table Three platforms accounted for two-thirds of all initiated offerings and proceeds raised. SEC: the number of #RegCF #crowdfunding offerings, as well as the total amount of funding during the considered period, was relatively modest Click to Tweet According to the SEC: Between May 16, 2016, and December 31, ...
Read More
RegCF SEC report - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Chambers Pivot Industries | Greg Chambers | June 20, 2019 "All I need is an investor, and I’m ready to go," she says. I'm sitting in front of a passionate entrepreneur who knows I've successfully raised millions of dollars for various businesses. After hearing her story, what I'm about to say won't be what she wants to hear, but it's true. Funding isn't her problem. There's more money out looking for a home than there are good ideas to fund. The problem, I tell her, is she hasn't decided if she wants to build a company or master the growing seed and startup capital environment. Lessons from the past I was in her seat in the late 1990s shopping my big idea from investor to investor. Eventually unsuccessful, I was forced to abandon my startup and find a job. I took two big lessons from that experience. One is that if I wanted to get a company off the ground, I needed to get much better at selling a vision to investors. Second, based on the questions the investors were asking, I needed far more evidence from customers that my idea was the right one before they’d invest. Years later, ...
Read More
hunter to prey - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Luge Capital | Karim Gillani | June 2019 Intro:  NCFA Fintech Confidential spoke with some of Canada’s experienced fintech investors, on their background, how Canada has evolved, what we should be doing, advice to fintech founders and what keeps them awake at night.  This is part 1 of a 4 part series.   What is your background, and how did you come to co-found Luge Capital? Karim:  My background is in fintech, mobile tech, engineering, finance and strategy. Prior to Luge, I was at PayPal, leading M&A activities in Canada. I joined PayPal through its $890M acquisition of Xoom, a renowned cross-border remittance company, where I started the Corporate Development practice. I have an Engineering degree from the University of Waterloo, a Master of Finance degree from the University of London and a Master of Laws from the University of Toronto. Luge Capital was the byproduct of highly motivated LPs, and a recognition that fintech venture capital needed a kickstart at the early stages. David Nault and I co-founded Luge in early 2018 with a new model to seek out entrepreneurs in the US and Canada that not only had a drive to take over the world, but also built their ...
Read More
luge capital - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
CDL Team | June 18, 2019 The Libra Association announces a new initiative with the goal of increasing access to financial services and fostering financial inclusion around the world TORONTO, CANADA – Today, Creative Destruction Lab (CDL) – a not-for-profit seed-stage startup program – announces that it will be a Founding Partner of the Libra Association. CDL is keen to contribute to the success of the Libra initiative as the sole Canadian organization and academic institution in the Libra Association at present. The Libra Association will create Libra, a simple global currency and financial infrastructure that can empower billions of people. Libra will be built on a secure, scalable, and reliable blockchain; and it will be backed by a reserve of assets designed to give it intrinsic value. The Libra Association will govern the infrastructure and manage and evolve this new ecosystem. Libra will enable developers and businesses to build inclusive new financial service products for people around the world. See:  Facebook’s Libra Cryptocurrency: Everything We Know At this time, CDL is the sole academic Founding Partner of the Libra Association. The initial group of organizations that will work together on finalizing the association’s charter include: Payments: Mastercard, PayPal, PayU ...
Read More
CDL libra - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
PC Mag | Rob Marvin | June 18, 2019 Facebook's Libra Cryptocurrency: Everything We Know Facebook's big blockchain play, consisting of the Libra coin, the nonprofit Libra Foundation, and Facebook's Calibra wallet, will create a crypto-based payments ecosystem across Facebook, Messenger, WhatsApp, and beyond. Facebook's long-rumored cryptocurrency finally got its big debut, and it's called Libra after all. Facebook today released a lengthy white paper, along with a post from Mark Zuckerberg and another from VP of blockchain David Marcus, announcing the ambitious crypto initiative and all that comes with it. The open-source Libra cryptocurrency and blockchain will be governed by the nonprofit Libra Association, while a new Facebook-owned subsidiary called Calibra will release a wallet for Libra tokens and ultimately other banking and finance products—a move that could turn Facebook into a financial services giant in addition to a social and advertising one. See:  Facebook’s Cryptocurrency: Great Idea, Wrong Company While the public launch of Libra won't happen until the first half of 2020, the developer testnet of the Libra blockchain is live today. There will also be a new programming language called Move for developers to build distributed applications atop the Libra blockchain, though Facebook said neither itself ...
Read More
facebook launches libra - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
3iQ and Mavennet | Fred Pye and Kesem Frank | June 18, 2019 Stablecoins are now a necessary step to mass adoption of cryptocurrencies, as proven by the way they’ve been used to hedge the massive volatility of the market over the past couple of years. Their simple premise enables the seamless pairing of crypto-to-fiat pegged cryptocurrency. It might sound overly simplistic, but this straightforward innovation has spurred the growth of a new crypto asset class that measures in billions of dollars in aggregate market cap (e.g. Tether, USD Coin, TrueUSD, Paxos and Gemini Dollar). As much as this asset class is still gaining momentum driven by the current and common use case, the potential of stablecoins goes well beyond the tactical value of a trading tool. Stablecoins are strategically important because they represent a bridge between legacy fiat-based systems and the new digital and decentralized currency underpinnings we collectively call “blockchain.” The dream isn’t necessarily a prediction or extension of the purist’s vision   Bitcoin - blockchain’s earliest network - was born from tumultuous years in the traditional financial system. These were years defined by mistrust; not just towards the people at the helm of the financial system, but ...
Read More
stablecoins  - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
CNBC | Kate Rooney and Hugh Son | June 10, 2019 Mobility giant Uber is looking to accelerate the creation of financial products with a new fintech outpost in New York, according to people with knowledge of the plan. The ride-hailing company is aiming to hire several dozen engineers and product managers this year, and the New York team could eventually exceed 100 workers, said the people, who declined to be identified speaking about Uber’s plans. Uber, fresh from its IPO last month, is looking to tap New York’s talent pool, which is deeper when it comes to fintech and bank workers than its hometown of San Francisco. By building out its financial ecosystem, the company can increase its lead over rivals like Lyft. The efforts are likely to be focused on ways to increase engagement and loyalty to the Uber platform, according to people who attended a recruitment event earlier this year. Payments chief Peter Hazlehurst and top engineer Johnie Lee spoke at the event, held at Uber’s New York offices, the people said. There are many possible payment and lending innovations Uber could come up with: It has 93 million active users globally, most of whom use linked ...
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Dara Khosrowshahi CEO uber tech - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Schulte Research | Paul Schulte | June 17, 2019 Digital banking finally arrives in HK --all in one go! Be careful what you wish for — you might get it.  Hong Kong People have been kvetching for years about the poor quality of banking services. Now, they will have a deluge of ultra-efficient and essentially free new services. These services will offer strictly online banking services without branches and ALL of them have very deep pockets. The first batch below, which I will enumerate in a moment, have capital to burn of about USD 250 million. This can go a long way in eroding the highly profitable cartel of HSBC and Hang Seng Bank.  Hang Seng Bank has consistently had among the highest ROE globally north of 20-21%. And its revenue per customer has been among the world’s highest as well. HSBC owns more than 40% of HSB, so it has been a cash cow for the bank. Hong Kong is really the center of profitability for HSBC, since its ROE for commonwealth countries is the single digits and it has basically given up on the US financial market.  It’s European business, like all Euro banking franchises, is in the ...
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global network and points of presence maps - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
Forbes | Enrique Dans | June 17, 2019 All the signs are that Facebook is about to launch its cryptocurrency on June 18, a project known internally as Libra, and that soon, apparently, we will all be using. So what are the implications of a company with 2.4 billion users launching its own currency? Strategically, the movement makes sense for Facebook: at a time when many question the its dominance of social networks and when a majority of its own shareholders say they want to see the back of Mark Zuckerberg, the company announces a very ambitious project of universal appeal giving it a central role in the world economy, in the wake of innumerable cryptocurrency projects of dubious legality, irresponsibly speculative and wasteful in terms of energy, aimed among others at people in countries with unstable currencies or limited banking penetration. As Jack Dorsey has said, this maybe the perfect moment to create a universal currency for the Internet era, reflecting the trend toward a universalization of the world. However, what is less clear is whether this currency should be in the hands of Facebook. See:  FaceCoin: Here’s What Facebook Could Build In Blockchain And Cryptocurrency Technically, the project ...
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mark Z. facebook - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs
PATIO TIME! Join the National Crowdfunding & Fintech Association of Canada, Spaces, Gowling WLG, LoanConnect, FrontFundr, Exponential Ventures, CoinChange, United Craft, Highlander Brew, partners and Canada's leading Fintech & Funding community in the heart of trendy Queen West for a celebratory night and prime networking mixer. Interested in disrupting the finance industry, raising capital or participating in Canada’s growing alternative investing and fintech sectors? Here's a perfect opportunity to connect with emerging fintech, blockchain, crypto, AI, stealth and marketplace startups and experts, strategize with partners, pitch investors and mingle with Toronto’s burgeoning fintech ecosystem. ANNUAL SUMMER KICKOFF EVENT Date:  THURSDAY, JULY 11, 2019 When:  Registration opens 5:30PM to 9PM+ Venue:  SPACES, 7th Floor Loft & Rooftop Patio Where:  180 John Street, Toronto, ON M5T 1X5 TICKETS - GET'M BEFORE THEY'RE GONE! $25 Early; $35 Standard; $50 Late All tickets include entrance to private event, drinks, food, lots of fun and prime networking Taxes and fees extra. No refunds after Jul 4. Ticket transfers ok. Want to pay in Crypto?  Email us for an address info@ncfacanada.org If it rains, we're covered literally inside. Checkout photos from last year's Summer networking event here and the year prior here This event is for ...
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NCFA Summer Kickoff Event Jul 11 v3 - Debt vs. Equity Financing: Pros And Cons For Entrepreneurs

 

A Focus on the Future: How to Run a Forward-Thinking, Profitable Business

May 24, 2018

small business growth and competition - A Focus on the Future: How to Run a Forward-Thinking, Profitable Business

Many brands claim to be forward-thinking, but few fail to formalize the practice in their business, which can reduce their profitability. If you want to embody the word, you must strive to proactively look to the future to increase your revenue and grow your company. Learn how to run a forward-thinking business.

Hire a Technology Scout

Companies serious about competing with their competitors and satisfying their customers must hire a technology scout. It is their job to identify the best-emerging technologies that can be applied to your business, which can improve the customer experience, streamline internal processes, and increase business profitability. If you do not have a big budget to hire a technology scout, identify if an employee who has a technical background and can make recommendations for the business.

Alter Your Perception of Demographics

If you want to connect with modern consumers, you must change your tactics when targeting audiences. Changing lifestyles have ultimately led to a blurring of demographics. So, rather than targeting people by their age, gender, location, or salary, you must tap into their values, aspirations, and lifestyles. You can find more about how to target new demographics with Sage’s advice in here.

Conduct Annual Scenario Planning

Prevention is always better than cure, which is why you should conduct annual scenario planning. Asking “what if?” for a range of realistic problems in the future can prevent them from becoming a reality, or could help the business to quickly bounce back from a disaster. There are multiple scenarios your business should consider that involve financial issues, PR disasters, data breaches, global economic environment, political problems, product availability, and industry changes.

See:

Review the Past

If you want your business to enjoy a profitable future, you must review your company’s past to identify productivity problems, internal mistakes, or poor marketing campaigns. You could also learn from a successful campaign or can utilize past data to strengthen your company.

Dare to be Different from Your Rivals

If you want to capture your audience’s attention and set your business apart from your rivals, you must be prepared to take risks. This means embarking on a new idea or process, which could improve brand awareness, profitability, and growth. Not every risk will pay off, but you simply need to learn from the mistake and try again.

Read As Much as Possible

If you want to develop a forward-thinking mindset, you must read as much as possible, so there is always substance behind your thoughts and ideas. Read industry books and articles will help you to easily spot emerging trends, and you can learn from others’ mistakes to ensure your company’s success. The more knowledgeable you are about your industry, the easier it will be to pitch a new process, technology, or vision to board members, management, and shareholders.

Share Your Vision with Your Team

It’s imperative that every member of the team is working towards the same goals, so the business can quickly and easily reach its vision. Encourage your staff to offer their ideas and opinions to create a more creative, visionary business, which will make your team feel excited to be apart of the company’s future.

You may also like:

 


NCFA Jan 2018 resize - A Focus on the Future: How to Run a Forward-Thinking, Profitable BusinessThe National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry.  Join Canada's Fintech & Funding Community today FREE!  Or become a contributing member and get perks. For more information, please visit:  ncfacanada.org

How to Crowdfund for Your Next Venture

NCFA Guest Post | February 28, 2018

crowdfunding banner - How to Crowdfund for Your Next Venture

Crowdfunding is a great new way to raise the funding that you need for your next venture, whether you are hoping to start a small business of your own or you are working on an artistic project like a new album of music with your band. But how can you go about crowdfunding to make sure that you are doing it right and that you are raising the highest amount of money possible? Keep reading to discover a few helpful tips that you can put to use right away.

Consider Getting Legal Protection First

When you set up a crowdfunding campaign, you will be putting your ideas out there in order to let people know about what you are planning on doing. But once you put those ideas out there in the open on the World Wide Web, they might be stolen. People might take your ideas and run with them so that they can then make profits on your ideas without your consent. So, one of the first things that you should do is seek advice from a lawyer who has attended a program like that offered by USD Law School. In this way, you can rest assured that you will be getting the best and latest information on how to protect your creative aspirations. You might be told that you should copyright your ideas or apply for some sort of patent, as a copy of examples. The goal here is to protect your intellectual property before you launch your crowdfunding campaign.

Get Your Friends and Family Involved

You will need to find creative ways to market your crowdfunding campaign once it is up and running. But the first people that you can turn to for help in spreading the word are your friends and your family. Do not hesitate to get them involved so that they can enthusiastically share the news about your upcoming venture and your need for financial assistance to get the ball rolling.

See:  The digital transformation of learning: Social, informal, self-service, and enjoyable

Your existing network on social media is also a great way to spread the word, as they can encourage their friends and family to get involved as well. The more people that are talking about your campaign and sharing the link to it, the better your results will be right from the start.

Give Great Rewards

Make sure that you set up tiers for potential donations that people can give, such as $5, $10, $20, and so on. With every tier, provide some kind of perk or reward in exchange for the donation. In this way, people will be even more motivated to give their money to you because they will be getting something substantial in return. Just be sure that the rewards are really interesting, relevant to your project, and worthwhile to donors.

Stay Active and Keep People Updated

Finally, stay active on social media and keep updating your campaign page as you have news to release about its progress. Your donors will appreciate the fact that you’re keeping them in the loop, and the more you promote your campaign, the more donors you can find.

With these tips, you could launch a successful crowdfunding campaign for your next venture and reach your goals in no time.

Other links you may like:

 


NCFA Jan 2018 resize 1 - How to Crowdfund for Your Next VentureThe National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada.  For more information, please visit: ncfacanada.org

 

Jan 8, 2018: Intro Presentation on Raising Equity and Funding for your Startup

NCFA Canada | Jan 15, 2018

Raising startup capital banner - Jan 8, 2018:  Intro Presentation on Raising Equity and Funding for your Startup

Slides:  NCFA Canada Founder and CEO, Craig Asano, delivers a presentation on raising equity and funding for the graduating class of Founder Institute companies in Toronto on Jan 8:

  1. Equity & Funding Introduction Date: January 8, 2018 Prepared for: Founders Institute Toronto Prepared by: Craig Asano, NCFA Canada
  2. Fintech & Funding Association Massive Fintech Network Partners Advisors Members 90+ Platforms 20+ Providers 45 Portals 2018 2017 2016 2015 Oct 2012 Programs Services Global Network P1 P2
  3. Are you ready to raise capital?
  4. Are you ready to raise capital? Set your valuation appropriately • Look for comparable businesses • Geographic and investor group dependent • Discounted cash flow. Make your projections realistic. would you be willing to take your compensation as a % of forecast? • Ultimately a negotiation between investors and the business • Expect 10% - 30% dilution per round • Use preferred shares, convertible notes, SAFE / SAFT if uncertain or to avoid significant dilution How much time can you devote to funding? • Do not do this half ass. If after a defined period (ie 1 year) you’ve been unsuccessful then face facts (markets are highly efficient) • Understand potential impact to ego / brand equity and team motivation • Leverage templates. Be resourceful. Seek expertise.
  5. Are you ready to raise capital? How much money should we raise? • Determine key milestones that impact business’ value • IP strategy, Prototype • Sales and Revenue (ie repeat customers/month • Product/market fit or key development milestones • Human resources and team building (growth) • Raise what you need to get you to the next milestone (iterate and prove) Bootstrapping: advance your situation using existing resources Lean start-up: get to market and revenue positive as quickly as possible What non-dilutive sources of capital are available at each step?
  6. Are you ready to raise capital? Understand your initial capital structure (and dilution) • Founders (80-90%), Leadership team (10-15%), Advisors (1-3%) • Skin in the game • Put in writing and use vested agreements • Source cap table excel sheets online
  7. Where can I find Investors? • Identify potential investors and sources of funding (keep doors open): • Government grants / funds • Corporate sponsorships and grant programs • Friends and family, Loans and credit • Crowdfunding (Equity, debt/lending, reward, ICOs/tokens, Royalty) • Angel investors • Venture capital • Dealer-brokers, agents, intermediaries • Private equity interested in side-car investments • Ask for introductions • Global markets Sources of Private Capital
  8. Be strategic with your approach • Make a list of contacts that can realistically help (assign probability and amount you are seeking from them) • Seek to develop long term relationships and understand what you can offer them and vice versa. • Learning loop: Listen – learn – track and improve (alignment, probability) • Start building your funding networks yesterday • Online – personal & company profiles • Offline - Events, conferences, pitch forums, investor networks • Understand the timing of your ask relative to the ‘funding window’ and type of investor • Stay on top of funding research and news to find similar companies to learn from / with. • Ask for introductions • Turn advocates into loyal customers and investors Get in Funding Mode
  9. What are investors looking for? • A product/services that addresses a large market need (not a nice to have) • Team that can execute who has a solid understanding of business and challenges • Validation/proof (de-risk) • Some are seeking social impact or to balance impact with profits The Investment Process • Pitch deck is bare essential • Meet and greet is only the first step • All investment basics must be met • Due diligence review • Terms negotiated • Close (in person) What are investors looking for?
  10. Deal Breakers and Tips • Avoid one man team, no skin in the game, unrealistic valuations, serious character flaws • Raise equity capital with no clear purpose, to replace debt, pay big salaries, to develop an idea and not a business • Face to face meetings (3-5x more capital $ than email or call) • Securing initial key/lead investor will make raising $ significantly easier • Only invest if they know you, know the business and like the investment opportunity What you Need to get Started
  11. Basic Crowdfunding Models < $10K $10 - $250K < $100 - $350K+ < $250K - $3M+ Social Material Investment Benefits
  12. Raising Capital Online in Canada
  13. Wide distribution over the internet • Low cost, efficient, transparent capital • The `great equalizer` • Media/PR, awareness • Increase customer engagement and • Evangelize backers into investors (customer acquisition) • Reduce risk by getting feedback on new launches (product or ventures) • Market research Access to Capital Marketing Platform Validation • Raising funds via crowdfunding markets is a very public and transparent • Protect your IP and speak to a lawyer • Crowdfunding takes a lot of effort and commitment • The majority of Ideas fail to reach their funding goal • How will this affect your companies brand? Expose your Idea Resourcing Failure Crowdfunding Pros/Cons Benefits Risks For Companies
  14. Examples Source: Kickstarter Campaign page Innovation – Social – Incentives – Economic Growth Quidni Estate Winery (NCFA Director) • Just completed $100K equity raise (for 3% equity ownership) • Took over a winery. Went digital (including online wine sales). Converted virtual wine tasters into investors Impak Finance (Equity Offering) • Raised $1.2 million (goal was $500K for 6%) from 1450 shareholders to create first socially responsible Canadian bank • $500,000 in the first 24 hours! • Inclusive & accessible: $100 shares for $100
  15. NCFA Canadian Online Funding Directory Reward/Donation: Equity-based via Dealer: • Steady growth in portals • Equity, Debt & Royalties all emerging • Fintech is all the rage • Real estate and entertainment, film/media crowdfunding emerging Consumer and Small Business Loans:
  16. Crowdfunding Framework Planning & Strategy • The greater your planning efforts, the greater your chance of achieving your funding goal • Do not launch a crowdfunding campaign if you are not ready. (3 months) (40 days – 90 days) (Ongoing) Post-campaign • Your campaign is done but now you have to deliver on your promise • Fulfillment • Ongoing customer engagement Campaign Execution • Daily execution of tasks outlined in the campaign plan • Control, monitor and adapt Feedback Loop
  17. Success Factors SUCCESS 2. Network Strength • Sizeable online network and social media presence? • Will media/PR and influential bloggers cover your story? 1. Quality Idea & Pitch • Unique, enterprising and clear value proposition (conveyed online in a simple manner) • Get others excited about your story? • Clear funding target and specific goals? 4. Key Docs and Content • Compliant and necessary for investor review 3. Strong Committed Team • Is your team credible, committed and willing to deploy the resources and time to execute effectively? • Time management HARD WORK! 5. Marketing Campaign & Incentives • Planning and strategy with ability to execute through launch to post campaign
  18. Common Mistakes • We underestimated the time commitment involved • We didn’t test our campaign sufficiently • We launched before we were ready • We didn’t develop an accurate budget • We didn’t consult legal counsel or professional providers • We didn’t account for taxes • We tried to do everything on a shoestring • We didn’t realize how important the video was • We didn’t understand liability exposure (eg. misrepresentation) and intellectual property • We had little to no traction so we gave up • We blamed it on the portal
  19. Join Us Education & Research Market Access Crowdfunding Infrastructure Capital Raising Prep Services Support and Leadership Advocacy GET IT IN TOUCH Fintech & Funding Association ncfacanada.org crowdfundingsummit.ca

ncfa logo 600 - Jan 8, 2018:  Intro Presentation on Raising Equity and Funding for your StartupThe National Crowdfunding Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada.  For more information, please visit: ncfacanada.org

Crowdfunding 101

Rogers Small Business | Robin Roberts | Nov 10, 2017

Crowdfunding 101 300x228 - Crowdfunding 101

How to launch a successful campaign for the funds you need

Now that seven provinces (B.C., Sask., Man., Ont., Que., N.S. and N.B.) have legalized crowdfunding for businesses – which involves collecting small contributions from a large group of people – Canadian entrepreneurs have amassed between $250 million and $300 million in the last year alone to start up and scale up their businesses.

But successful crowdfunding is not just about posting a pitch on Facebook and expecting the cash to roll in. Craig Asano, founder and CEO of the National Crowdfunding Association of Canada (NCFA), offers some tips and tools for launching a winning campaign.

Choose your model

There are many types of crowdfunding, but for entrepreneurs, there are really only two models: investment/equity and donation/rewards.

Investment/equity models allow an investor to either buy shares or securities in your venture, or to receive a profit from your product. The equity option is the most successful, according to the NCFA, but tends to work better for established companies looking to expand, rather than bootstrapping startups.

The donation/rewards model, on the other hand, allows people to give money without getting anything in return – other than rewards in the form of whatever the company is selling or providing (e.g., their name on a funders plaque, a free meal at the restaurant, etc.). This model works best for raising capital for a specific product or idea.

Plan, prepare and promote

“You wouldn’t go to market without a strategic plan,” says Asano, who recommends spending up to three months preparing your crowdfunding campaign, adding that you need a good value proposition to present to your customers or investors.

Present your project clearly – have a prototype, if appropriate – so potential donors are confident your venture is on solid ground.

To reach the maximum amount of potential investors, says Asano, you should already have a following, online and off – preferably made up of people who will care about your idea. Use social media, attend networking events, and let your family and friends (and friends of friends) in on your venture. If you can attract media attention, all the better. Research other successful (and failed) campaigns to see what worked, what didn’t and why.

See:  Learn all about the latest innovation finance models in venture funding:  VanFUNDING Nov 28, Vancouver

And once your campaign is launched, keep your donors or investors in the loop about its progress.

Tell a story

To boost your crowdfunding campaign’s potential for success, create an emotional connection between you, your idea and your supporters. Use video, photos and narration to tell a compelling story about why you want to launch your business or product, or grow your company. Two of the most popular crowdfunding portals, Indiegogo (for entrepreneurs) and Kickstarter (for creative projects), walk you through the process and provide online support, as do other platforms, such as Canadian companies Seedlify and FrontFundr.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit ncfacanada.org.

How to Effectively Market an Equity Crowdfunding/Reg A+ Offering

HuffingtonPost | By Eric Fischgrund | Sept 25, 2017

59c96b041a00001500f08761 - How to Effectively Market an Equity Crowdfunding/Reg A+ Offering

Equity crowdfunding appears to represent a simple solution for businesses – both startup and firmly established – that are looking to raise money to fund their vision. By allowing investors (and fans of the brand) to invest in their company online, companies view this funding mechanism as a way to bypass banks, brokers, and toxic financers. You file significantly reduced SEC-paperwork, throw a website up, and wait for your offering to go viral. Once the internet does its thing and your hyperlink is shared by e-mail as well as endless Facebook and Twitter accounts, the raise will be complete and you can begin planning the listing of your IPO.

If this seems too easy and too good to be true, you’re right – it is.

Unfortunately, too many companies and individuals are being talked into this strategy without the appropriate background information, and as such, the results of poorly executed crowdfunding campaigns are much easier to find that the success stories.

But there are success stories that were made possible only because of those who adequately planned for them. Over the past year, I have spoken with at least 30 companies considering some form of equity crowdfunding (Regulation A+, Reg CF, 506c, testing the waters, etc.). One thing I am continuously surprised by is those who are unprepared to commence an online raise.

See: What Works In Equity Crowdfunding; Insights From Research

As such, here are some general tips for marketing an equity crowdfunding campaign:

1. No two campaigns are alike. Like any marketing or communications initiative, no two companies are the same, and thus, no two crowdfunding campaigns should be executed the same way. The biggest mistake I see is thinking that a one-size-fits-all marketing approach that “worked really well in the past for another company and their raise” – will be successful. It won’t.

“Successful equity crowdfunding does require a great marketing plan executed by a creative marketing team,” said Kendall Almerico, CEO of Bankroll Ventures and one of the country’s leading experts on equity crowdfunding. “Coca-Cola, Cadillac and Calvin Klein do not market their brands the same way. Equity crowdfunding companies must engage a team that understands and markets the company in a unique way that stands out from all the noise.”

Take this into consideration before planning, as each company and campaign requires its own messaging, its own advertising strategy, and its own look and feel. Figure out what your strengths are, and market to them. For example, if your story has great visuals, find a way to leverage it via some form of multimedia, preferably video. Perhaps you are an emerging company working in a high-growth industry with plenty of competition. Focus on how to differentiate yourself from the competition, while outlining the existing market opportunity and what it means for you and your investors.

2. Get your online presence in order. Raising money from a diverse audience and group of sources can be difficult, but nothing makes equity crowdfunding so challenging as to do so with a poorly designed or ill-functioning website. The investment website is the primary way you are soliciting funds, and as such needs to clearly lead potential investors through the offering process. Think about it – using the analogy of an open house – why leave your trash on the front lawn, not fix the fence, and neglect a new paint job? Getting your digital presence ready means focusing on messaging for the website, carefully reviewing the design and aesthetics, proofing all content, and last but not least – making sure the user experience is a positive one! Do not underestimate the importance of the landing page for your online offering.

Further, legal context with regards to selling securities online must be considered. “General solicitation under the JOBs Act can open up many doors for a company seeking investments, but please, run your proposed content by your securities lawyer,” said Andrea Cataneo, a securities attorney with Sheppard Mullin Richter & Hampton LLP.

“Solicitation can mean advertising, webinars, internet offerings, group presentations, but it does not mean hype or exaggeration.”

See: Equity Crowdfunding Is 1 Year Old Today, Wefunder Is Top Platform

3. Identify and market to your audience. Understanding your ideal investor profile isn’t easy, but it needs to be done to build and leverage a captive audience. If you are a company reading this and looking to raise money online, and already possess an existing database of thousands or even hundreds of thousands of contacts (be it customers, clients, partners, etc.) with e-mail addresses, congratulations! You are ahead of the curve. Or, perhaps you already have a good feel for the sort of individual who is likely to invest in your company, and now you just need to go about marketing directly to them. Review site demographics, consider the profile of past investors and interested parties, and try to make that determination early, but…

4.…If you don’t have an existing audience, build one. Far too often a company approaches us with a great idea, a well-designed website and video that clearly spells out the investment opportunity, and a strong message for the media. This should result in success, right? Well, not always. Equity crowdfunding requires some form of direct marketing, and to do so, a company must have a base, either a significant social media following or a database consisting of contact information. If you don’t, social media advertising has proven to be a lead driver of web traffic and conversions. Consider running a Facebook advertising or Google AdWords campaign that drives specifically targeted people to your investment landing page. As many know, online advertising can be precisely targeted and is a great way to get an idea and offering in front of potential investors.

Continue to the full article --> here

ncfa logo 100.gif?zoom=1 - How to Effectively Market an Equity Crowdfunding/Reg A+ Offering

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit ncfacanada.org.