Don’t Be Fooled By All The Hype For Crowd Funding

Image via TheFrontStreet.net

The new hot topic for entrepreneurs the last couple of years is crowd funding, which is anticipated to at least supplement, if not replace, the slow and mysterious process of current Angel and venture capital investors. The problem is that crowd funding means something different to everyone, and even I have been confused by the different ways the term gets used.

So I have set out here to outline and offer some practical advice on the many different models currently used with the term “crowd funding” and “crowd sourcing.” The newest equity model was passed into law in early 2012 via the JOBS Act, and still has no scheduled date for availability in the USA, waiting for the rules to be defined by the SEC: Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 15th, 2013

How many startups are created every day?

This depends on how you define “startup”. Is a college student who advertises his dog-walking services a startup? How about one who spends nearly full-time developing her iPhone app? A real estate developer who incorporates to buy a piece of land in which to build a building?

Each year in the US there are likely tens of millions of individuals starting up something (like a dog-walking service or an iPhone app) on their own. Read more

6 Business Success Myths Entrepreneurs Must Avoid

Image via Business2Community.com

All true entrepreneurs operate off a set of tenets that are built into their psyche, or drilled into them from training and mentors. These are represented by sayings like “You never get anywhere unless you take a chance” and “Passion and persistence are the keys to success,” Unfortunately, there are still other old, reliable tenets that don’t work anymore.

In a book a while back by Jeanne Liedtka and Tim Ogilvie from the Columbia Business School, “Designing for Growth,” the authors encourage managers to think more like designers. I assert that designers have a lot in common with entrepreneurs, since both must innovate and start a deep understanding of what their customer really wants (“customer-centered”).

In most other respects, design thinking is the opposite of business thinking. For example, businesses must deal with reality as fixed and quantifiable, whereas design deals with subjective experience and a social constructs. Entrepreneurs need to bridge both these worlds, and I believe the authors outline the key business management myths that limit startup thinking: Read more

Martin Zwilling , Founder and CEO, Startup Professionals
September 8th, 2013

What are the main motivating factors for someone to take up entrepreneurship?

A) In a capitalist economy, because they seek to generate an economic return in the form of fungible cash that can support their personal needs and desires.

B) In many cases because they find it fulfilling and a good match for their skill sets, just as artists, dentists, lawyers or competitive athletes finds it fulfilling to go into their respective fields.

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

What is the most viable model for equity based crowdfunding?

One of the following two:

Revenue-backed, interest-bearing notes with a kicker multiple
The funds go into the company as a loan, and get repaid with interest by distributing a fixed percentage of gross revenues (say, 5%) among all the note holders. Once the base+interest has been returned to the investors, the company continues to pay out a percentage of revenues (perhaps at a lesser figure, say, 2.5%) until the investors have received a fixed multiple of their original investment (say, 5x). At any time, the company may retire the note(s) by paying off the base+interest+5x kicker.*
Some sites will use a similar approach, but limit the repayment by time (say, 5% of revenues for the first three years) rather than a multiple of the investment, but this is problematic for a number of reasons. Read more

What are good questions to answer for business plans?

This is my answer on Quora to ‘what are good questions to answer in a business plan?’

Congrats on your question. Basing your planning on what questions to answer, as you suggest, is a really good way to do it. Everything in business planning is case by case, and every plan is unique, so you’re on the right track.

First answer these core fundamental questions: Read more

Tim Berry , Founder, Palo Alto Software
September 3rd, 2013