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  • March 20, 2016 2:24 PM | Anonymous

    Raising capital through investment crowdfunding is different from the common approach to raising capital. 

    Best practices in investment crowdfunding should result in a capital campaign with multiple offering packages for different crowds.  Each crowd receives an offer package comprised of benefits and return on investment (ROI) that fits only that crowd.  The capital campaign takes on a complex, layered depth and richness.   

    There is not one crowd!  There are millions of crowds representing different combinations of billions of people!  Each offering package is designed to fit a specific group of people with similar needs and goals! 

    Investment crowdfunding campaigns that treat all investors alike will fail just like common approaches to raising capital. “The myth that crowdfunding is a magic bean that instantly draws thousands of strangers’ dollars to your idea - just by publishing it - is entirely false.”  https://www.fundable.com/crowdfunding-marketing

    By contrast with common capital raising approaches, investment crowdfunding is a multi-colored spectrum instead of a monochromatic black and white.

    Why the difference?

    When using common approaches to raising capital, the only decision variable is the return on the investment.  “It’s all about the money.”  A single dimension.  A single perspective. 

    It may be argued that there are all kinds of variables within an investment decision: risk, the experience of the management team, customers, the market and competition.  However, all of these factors are simply used in forecasting a return on investment.

    Although any organization sees itself as a unique combination of people, products and customers, from the perspective of an investor, only the outcome is measured:  return on investment. 

    When considering a multitude of investment opportunities, it becomes difficult to tell one opportunity from another.  Metaphorically, an investor finds himself or herself sitting on a large pile of coal, each lump representing a different opportunity, trying to find the ‘best’ one.  “Looking for a diamond in the rough.”  

    Knowing that investors have a single focus on ROI, organizations develop all of their offering documents, slide decks and pitches to tell the same story: “my opportunity will result in a higher ROI”.  Organizations seeking capital hope that their story will somehow resonate with the investor and gain them the capital they seek.  But how can organizations differentiate themselves when their story has only one dimension?  How can a story be different when it is designed to fit the needs of all investors: generating a higher return on investment?

    An investment crowdfunding campaign offering that meets the needs of a specific investor has to offer value beyond a return on investment.  It must meet other needs: financial, economic, social, spiritual, status and privilege.  The focus of an offering shifts from the need of an organization for money to the needs of the individual investor for deployment of their money as a reflection of self and in advancement of their personal goals.

    A single crowdfunding campaign will not meet the needs of all investors.  It may be of great value to some investors and of little to no value to other investors.  Capital campaigns can be targeted to those who benefit most.  Marketing becomes the guideline for matching organizations with investors.  Raising capital can become an art form instead of a gamble.

    Helping crowds, comprised of individual people, attain their goals by investing capital can become fun.

    These issues and related information on investment crowdfunding will be presented by Karl Dakin at the following upcoming events:


  • March 13, 2016 1:15 PM | Anonymous

    The term ‘smart money’ refers to individuals with experience and knowledge in making investments that are most often employed by a business that manages money on behalf of its clients.  Too often it is used to describe anyone with money without regard to their understanding of investments, economics, business management or markets. 

    As described in a recent article Hopes Role in Equity Crowdfunding by Paul Neiderer in CrowdFundBeat.com, it is not uncommon for an angel investor to have no criteria except to make ten times the amount of their investment within five years.   Will this approach to investment selection work in investment crowdfunding?  More specifically, will this approach work when raising money from non-accredited investors?  The article discusses ‘hope’ as a framework for investing.

    Too many commentators on investment crowdfunding continue to label non-accredited investors as unsophisticated individuals who are incapable of recognizing a good business opportunity or avoiding a scam.  This is ironic considering that the vast majority of angel investors have no experience or training in making investments.  Due diligence interviews often serve no purpose except to display the egos’ of the interviewers.  Investments by accredited investors are often no better than a blind guess.

    Is it possible that non-accredited investors will do better than accredited investors in making crowdfunding investments?

    It seems likely that non-accredited investors will use different investment criteria.  The money they invest is not discretionary income.  They will feel a loss much more painfully than someone who will not give up their house, car, vacation or other item of value if the investment goes wrong.  They will make their investments more carefully.

    An individual making a small dollar investment – less than $1,000 – cannot expect to get rich off of their investment.

    In fact, non-accredited investors will rarely get the opportunity to invest in a ‘unicorn’ or any of the very, very few businesses that can actually achieve a 10x return in five years.  These opportunities will be grabbed up by institutions that can bear the cost and time of continuously searching for that opportunity.  Almost every investment opportunity offered up in investment crowdfunding will be a local business that grows slowly, that is built to hold instead of to flip and that will never be on the cover of a national entrepreneur magazine.  An average business.

    Since these businesses cannot attract investors through promises of fast growth and huge profits margins, it will be necessary for them to offer something else of value to friends, family, customers, other businesses and community members.   This value may take many forms:

    • Local availability to products and services
    • Discounts resulting in personal savings
    • Enhancements in status
    • Privileges
    • Jobs
    • Secondary business opportunities
    • Support of community programs and charities
    • Payment of taxes that pay for schools, roads and safety
    • Solving specific problems of the community – social impact

    The non-accredited investor may place greater weight on other criteria:

    • Personal relationship
    • Honesty
    • Tradition
    • Clarity
    • Transparency
    • Spirituality

    Using criteria other than a return on investment, non-accredited investors may legitimately and confidently place their money in the hands of local businesses and investment crowdfunding should flourish.  

    These issues and related information on investment crowdfunding will be presented by Karl Dakin at a number of upcoming events:


  • March 07, 2016 9:05 AM | Anonymous

    What if an organization cannot raise all the money it needs from friends and family or from large dollar investors (venture capitalists, angel investors, foundations or strategic partners who can commit $10,000 or more to a single investment)?  Many capital campaigns fail to hit their goals.  This failure is usually not total, because the organization is able to raise some of the money it needs before hitting the wall.  However, raising only part of the needed money may be worse than raising no money at all.  The organization may have launched operations in expectation that more investment dollars would follow.  It then finds itself trapped in a strategy that will not work. A common story.

     There are many reasons why an investor will not invest or will only make a small dollar investment:

    • The investor doesn’t have all of the money needed by the organization
    • The investor has no prior relationship with the organization or its management that makes it comfortable in making a large dollar investment
    • The investor has not heard of the organization or its efforts to raise capital
    • The investor may have little or no prior experience in making an investment

     Every capital campaign should have a fallback strategy – a course of action to take when the organization is unable to implement its primary or preferred strategy.  A fallback strategy may be to get by with less money and bootstrap the organization through sales.  A fallback strategy may be to shift the focus of the capital campaign to a different investor group or class.  Or, it may be simply to lower expectations.

     A new fallback strategy is to conduct an investment crowdfunding campaign.

     Investment crowdfunding represents the newest and possibly the best way for your organization to raise money.  It fills the major gap between bank financing and angel investing within the capital industry.  New laws now enable raising capital where you can publicize your capital campaign and accept investments from everyone.

     For total costs of an investment crowdfunding campaign that may be less than $50,000, a business, social enterprise or community project may be able to raise between $1 million to $50 million from non-accredited investors.  These investors may be stakeholders who stand to benefit from the success of an organization and have additional reasons to invest in an organization beyond a simple return on investment.

     A large dollar investor may loan an organization the money needed to plan, manage and promote an investment crowdfunding campaign.  With money raised from a successful campaign, this loan may be repaid with interest – a simple, short term investment.  In effect, an organization may leverage a smaller investment to complete its capital strategy with small dollar investors and obtain the money it needs.

     A successful crowdfunding campaign may also support an organization in building its brand and growing sales – accelerating the ability of the organization in fulfilling its mission and attaining profitability.  It will also make the organization visible to more large dollar investors.

     The large dollar investor may treat the conduct of an investment crowdfunding campaign as a test of whether or not the organization can be trusted with larger investments.  A customer focused investment crowdfunding campaign will serve to demonstrate the need for the products and services of the organization.  It will demonstrate the extent to which customers will support and be loyal to the organization.  The conduct of an investment crowdfunding campaign will also demonstrate the management skills of the organization’s leadership.

     If an organization is unable to obtain the large dollar investment it seeks from a particular investor, it may want to suggest that the investor first finance an investment crowdfunding campaign – a fallback with many advantages.  After completing the campaign, then the organization is well positioned to seek even more money.

     This strategy and related information on investment crowdfunding will be presented by Karl Dakin at a number of upcoming events:


  • February 15, 2016 8:19 AM | Anonymous

    A myth has been widely adopted with regard to capital investing that “With great risk, comes great reward.”  This statement, attributed to Thomas Jefferson, has been used by many to justify placing their money into questionable ventures.

    The fact of the matter is that very few business ventures have an opportunity for great reward.  This poses a problem for any business that faces any level of risk.  These businesses will find it difficult, or even impossible, to raise capital.

    Although some banks, mostly private banks, will still make loans to businesses that bear some level of risk, the Dodd-Frank Wall Street Reform and Customer Protection Act has greatly limited the ability of any depository bank to engage in any risky activities.  The impact of this Act has been largely felt by startup businesses that are all generally viewed as high risk. It is the general perception of any new business that when it comes to bank financing that they need not apply.

    In raising capital, no rules are absolute.  Bank financing is available to any business that can show sufficient collateral to securitize the loan. 

    Very, very few businesses experience any significant rate of growth sufficient to represent an opportunity with great reward.  In a Forbes article, it was reported that Privately held companies on average ended 2013 with annual sales growth of 5.4%”.  A statistical analysis of this fact suggests that less than 1% of all businesses may attain a rate of growth high enough to attract angel investments.  A number of angel investor groups have declared their goal is to only invest in businesses that can attain “10x growth in 5 years”.  This 200% per year growth rate is a rarity in the business world.

    Fortunately, not all angel investors require high rates of return.  As has been demonstrated by the recent trends in ‘impact investing’, many investors are declaring other factors as dominant in choosing between multiple ventures in which to make an investment.

    The key to finding investment when a business is high risk and medium to low reward is to identify and offer other items or outcomes that are valued by some investors who do not limit their decisions to the amount of the reward as reflected in a return on investment (ROI).

    Investment crowdfunding, when properly structured, represents one approach to offering benefits beyond a return on investment.  It is possible to bundle one or more benefits with a classical investment structure.  These benefits may be tailored to different investor groups to better match their interests.

    Benefits may take multiple forms, limited only by the creativity of the businesses seeking investment and by the needs and interests of investors seeking to make investments:

    • Free or discounted products or services (to customers, distributors and retailers)
    • Privileges (exclusive rights to participate in sales programs, celebrations or other events)
    • Priorities (special status)
    • Opportunities (grants to participate in supply materials or components or to sell products or services)
    • Solutions to community problems (direct solutions or support of local charities)
    • Jobs within a community (economic activity and growth)

    It is anticipated that as investment crowdfunding grows to fill the gap between bank financing and angel investment, that the body of knowledge about how to offer rewards that are alternatives to return on investment will also grow.  This subject represents its own opportunity.

    The subject of investment crowdfunding, with a focus on customers as investors, is the subject of a workshop that will be presented this Thursday, February 18th by the Colorado Capital Congress at Colorado Lending Source.  http://www.coloradocapitalcongress.com/events


  • February 13, 2016 9:07 AM | Anonymous

    As multiple states roll out their new intrastate crowdfunding laws and different groups scramble to build out the necessary infrastructure, the question is raised as to whether state or federal crowdfunding is better.

    This and other important related questions will be the subject of ComCap 16, a two day conference on investment crowdfunding.  http://www.comcapconference.com/.  The conference will be held on April 26 and 27 in Portland, Oregon.  Early bird registration ends February 18: https://www.eventbrite.com/e/comcap16-tickets-18855167313

    Crowdfunding comes in three types: charitable, product or service pre-sale and investment.  Most people are familiar with product or service pre-sale crowdfunding that is represented by Indiegogo and Kickstarter.  However, very few people are familiar with investment crowdfunding that has been recently enabled by new federal and state legislation.  Investment crowdfunding involves the sale of securities (stocks, LLC memberships, promissory notes and revenue certificates or royalties) and is highly regulated by the government.

    The JOBS Act was passed in 2012 to make more capital accessible to entrepreneurs to boost economic recovery.  However, due to pro-longed regulation development by the U.S. Securities and Exchange Commission (SEC), it is now projected to take effect in May of this year.  While awaiting this new law, many states began passing their own versions of the JOBS Act.  In addition, the federal government approved the 506c (a modified form of the common Reg D private offering) and Reg A+ offerings.

    So which is better and does it matter?

    Each type of crowdfunding has a number of limitations and conditions that may make it a better choice for a particular business.

    Differences include:

    • Complexity (reflected in time and cost to obtain government approval and conduct raise)
    • Costs (fees, time expended in preparation to raise capital and time expended in the capital campaign by an organization leaders and any service providers)
    • Dollar limits (the maximum amount of money that may be raised)
    • Participation (the ability to and number of both accredited and non-accredited investors that may invest)
    • Escrow (requirements for holding investment dollars until a minimum goal has been reached)
    • Intermediaries (requirement of use of a licensed service provider to promote a capital raise and facilitate the investment transaction
    • Use of Proceeds (requirements on where money may be expended that is raised through a campaign)
    • All of the legal and regulatory differences may be of little importance when compared with the marketing factor of where the investors reside.  Some people believe that crowdfunding at a national level is superior because the national population is clearly larger than the population of an individual state.  State laws limit investing to residents of that state.  Other people believe that nearly all investors will come from local markets, making a state crowdfunding campaign as good as or better than a federal crowdfunding campaign.  This may be particularly true where one of the themes of the investment campaign is to ‘invest locally’ to support businesses within one’s own community.
    • In some cases, it is possible to take advantage of both state and federal crowdfunding, which may leave only the question of which one comes first.

    Karl Dakin will be a presenter at ComCap 16.

  • February 11, 2016 9:29 AM | Anonymous

    To celebrate its second year of operations, the Colorado Capital Congress has started this publication as the first in a series of updates that will provide information about the Colorado Capital Congress PBC, its activities and the capital industry in Colorado. 

    Invest Local

    Invest Local announced that its investment crowdfunding platform is open for business.  http://www.investlocalcolorado.com.  

    To help everyone interested in investment crowdfunding, Invest Local offers an online questionnaire.  http://www.investlocalcolorado.com/services/.  Any organization may complete the questionnaire and receive quick feedback.

    In addition, a set of Investment Crowdfunding Common Questions & Answers has been created and is available for download.  Just send an email to karl@investlocalcolorado.com

    To determine if you are ready to conduct an investment crowdfunding campaign, Invest Local is offering an Assessment service.  For a fee of $500, a representative of Invest Local will walk your organization through a punch list of information, documents and forms necessary to design, craft and complete a campaign.  You will receive a written report that includes a list of remaining tasks and a referral to service providers who can help.  To arrange an Assessment, send an email to karl@investlocalcolorado.com

    Finally, Invest Local is designing a service provider referral system.  The completion of an investment crowdfunding campaign encompasses a wide range of skills and capabilities which are rarely found within a single organization.  Invest Local is vetting a list of attorneys, accountants, bankers, web developers, video producers, copyrighters, communications specialists, social media and other experts who can help with investment crowdfunding campaigns.  When ready, a directory of these service providers will be available on the Invest Local website.  Service providers interested in being selected for this directory should send an email to karl@investlocalcolorado.com

    Colorado Capital Congress Crowdfunding Campaign

    The Colorado Capital Congress is now conducting an investment crowdfunding campaign.  http://www.innovationews.com/Colorado-Capital-Congress-to-hold-live-demo-of-investment-crowdfunding-Feb-18/.   It seeks to raise $100,000 through a limited offering.  To date it has raised $8,625 of this goal.  It you are interested in investing or you just would like to see a live crowdfunding campaign, go to http://www.coloradocapitalcongress.com/investment.  After demonstrating that you are a resident of the State of Colorado (SEC rule), you can obtain a set of documents that includes the Offering Memorandum, Form RL and a Subscription Agreement.

    The investment crowdfunding campaign of the Colorado Capital Congress is being conducted to raise funds to pay for the costs of publishing two educational programs on the topics of Customer Crowdfunding (how to conduct an investment crowdfunding campaign) and Main Street Investing (how to invest in local businesses through investment crowdfunding).  Each educational program will be presented in the form of a book, a workshop and a video webinar. 

    Within its crowdfunding campaign, the Colorado Capital Congress offers to investor candidates a benefits package as a supplement to a classical return on investment.  This creative approach to investment crowdfunding demonstrates how to gain the investment of a small dollar, non-accredited investor by offering value in the form of money savings, privileges and preferences whose value may exceed the value of any return on investment and may exceed the value of the investment itself.  

    Workshop on Customer Crowdfunding

    The Colorado Capital Congress will be presenting its next workshop on Customer Crowdfunding on the morning of February 18 at Colorado Lending Source.  This workshop, presented by Karl Dakin, will walk organization leaders through investment crowdfunding basics, key management decisions, planning and the development of a benefits package.  You can register for this workshop at http://www.coloradocapitalcongress.com/events

    The fee to the general public to attend this workshop is $250.  Members of the Colorado Capital Congress may attend for a price of $200.  While the Colorado Capital Congress is conducting its crowdfunding campaign, investors in the Congress of $125 will get a free pass to the workshop and 5 Units in the royalty pool.

    Book on Customer Crowdfunding

    With the first dollars from its crowdfunding campaign, the Colorado Capital Congress has started work to publish a book on Customer Crowdfunding.  Zipline Performance (http://www.ziplineperformance.com) has been engaged to produce the book.  Authored by Karl Dakin, the book will include a fictional narrative about a local brew pub and its experiences in successfully completing an investment crowdfunding campaign.  All investors in the Congress at any dollar level will receive a free copy of this book.

    Briefings

    The Colorado Capital Congress presented a briefing on the Basics of Crowdfunding to Creative Connections on February 5.  Karl Dakin joined with Stan Yan (professional comic book author) to share information about product and investment crowdfunding.  http://www.thereviewcolorado.com/creative-connections-members-learn-about-crowd-funding-first-friday-meeting.  A video of the presentation may be viewed here: https://youtu.be/3gEPb1-bOMM

    Since January 1, the Colorado Capital Congress has provided briefings to Midwest Regional Bank, Clean Tech Community and TIE Rockies.

    The Colorado Capital Congress offers to provide briefings without charge to civic, charitable, community, professional and private organizations.  To arrange a briefing for your organization, send an email to karl@coloradocapitalcongress.com.

    Upcoming Events

    The first Colorado Impact Days will be held on March 2-4th.  Foundations will participate in this unique forum where they will learn how to make ‘program related investments’ and view 60 investment opportunities from Colorado.  To buy a ticket for the finale event on March 4th, go to https://www.eventbrite.com/e/co-impact-days-social-venture-showcase-tickets-21116100826

    Karl Dakin will be a key note presenter at the workshop on Social Enterprise Organizations to be held on March 10 in Colorado Springs.  More information can be obtained at http://www.coloradocapitalcongress.com

    Karl Dakin has been invited to speak at ComCap 16 in Hatch, Oregon on April 26-28.  This conference presents the latest advancements in investment crowdfunding.  www.comcapconference.com

    Membership

    Individuals and organizations can join the Colorado Capital Congress for an annual fee of $50 (students just $20).  Members in the Congress are entitled to discounts and participate in special programs.  Membership fees help the Congress in its efforts to improve Colorado’s capital ecosystem.  To join the Colorado Capital Congress, go to http://www.coloradocapitalcongress.com/membership

    Other News

    There are lots of things going on in Colorado.  If you have an event or activity that you would like to share with our audience, please send it to karl@coloradocapitalcongress.com


  • February 01, 2016 8:19 AM | Anonymous

    Investment crowdfunding may be different from classical investing.  The investor has an opportunity to not only recapture their investment and to earn a return on that investment, but they may also receive a package of benefits.  This package of benefits may have greater value than the amount of the investment and any ROI and it may serve as the primary reason for making the investment.

    To date, nearly all investment crowdfunding has involved accredited investors making investments in real estate using classical investment models.  The investor invests in a business or project with the expectation that they will get a return of their capital and share in profits generated from the success of the venture.  The focus of the investment decision is upon the projected amount of the return of the investment and the probability that the leader of the venture will successfully meet this projection.

    Investment crowdfunding may be structured differently to give the investor an added return in the form of benefits.  The use of investment benefits parallels compensation of a wage earner: the individual drawing a paycheck for their work may just draw a salary or they make also receive a benefits package.  An employment benefits package may include health insurance, vacation, education, a company car and other items of value.

    Investment benefits may take several forms:

    • ·         Availability of a previously unavailable product or service
    • ·         Discounted or free products or services
    • ·         Increased foot traffic or economic activity near a business or shopping center
    • ·         Opportunity to resell products or services
    • ·         Recognition
    • ·         Participation in events or other special privileges
    • ·         Solving a social problem
    • ·         Improving the local community
    • ·         Support of a local charity
    • ·         Creating jobs within the community, including personal employment
    • ·         Payment of taxes to local government

    Many of these benefits may be realized without making any investment.  People and businesses who belong in this group are ‘stakeholders’ in the success of the organization, whether it be a small business, a social enterprise or community project.

    An organization seeking investors through crowdfunding may simply educate investor candidates of these positive consequences that may spring from their investment.  This is the approach commonly used by social enterprises in seeking support of impact investors.

    An organization may specifically craft a package of benefits that may be available only to investors.  This package serves as a greater incentive to invest.  Depending upon the value of the package, an investor may gain greater value from the package than from the return on investment.  In fact, a well-designed benefits package may enable the organization to structure its investment offering to reduce the interest, equity or royalties that it must give up in order to gain the investment.

    The organization may craft a series of benefit packages targeted to different investor groups based upon their preferences.  Instead of an offering that is one-size-fits-all, with the return on investment being the single feature, an organization may cater to a wider range of investors with custom or semi-custom offerings.  This is important as the focus on raising money through investment crowdfunding shifts from accredited to non-accredited investors and the size of the average investment is greatly reduced.  The motive for investment will shift from getting rich to getting good value.

    This new approach to designing an investment opens up opportunities for everyone to support local businesses and invest within their own communities.  An investor may not only buy products and services from a local business, but they may participate in the success of that business in many ways. 

    Businesses should talk with their customers and members of their community in order to learn how to best craft one or more benefits packages that will assure the success of their investment offering.

    The Colorado Capital Congress will be presenting the inaugural workshop on Main Street Investing this Thursday morning on February 4 at Colorado Lending Source.  The workshop will explain how to evaluate an investment crowdfunding offering.  Admission is free for this first workshop.  To register, go to http://www.coloradocapitalcongress.com/events.


  • December 08, 2015 9:30 AM | Anonymous

    Investment crowdfunding offers a benefit beyond simply raising capital.  It can also be used to create brand awareness and to generate sales.  Over the life of a business, these benefits may outweigh the value of money raised through the campaign.

     One example is the establishment of a product or service as an incentive to invest.  The product or service is packaged or bundled together with an investment of a set dollar amount.  The result is that an investor receives the investment and the product or service for a single price.  Depending upon how this bundle is designed, it may create substantially higher benefit to the investor than the investment standing alone.  It may cause a sense of urgency to invest if there are a limited number of bundles available.  It will expose the investor to the value of the product or service, making the investor a customer.  It will set the table for the customer/investor to promote the products and services of the business within his or her personal and business networks.

     As an illustration, the Colorado Capital Congress offers as one of its products and services an educational workshop entitled Customer Crowdfunding - four hours of densely packed experience and knowledge about how to strategize a successful investment crowdfunding campaign.  The next presentation will be this Thursday on December 10 at Colorado Lending Source.  http://www.coloradocapitalcongress.com

    From a marketing perspective, promoting and selling the workshop presents many challenges.  These challenges include identification of prospective attendees, conveying the message of value to be gained from attending the workshop and in closing a sale.  Additional challenges exist because of the distractions of the holiday season and the high volume of information being circulated about crowdfunding.   

     By including the workshop as an incentive within an investment crowdfunding bundle, the workshop will be brought to the attention of prospective investors who are not already customers.  All of the time and money invested in obtaining investors is also directed to creating new customers.  Every press release, email, luncheon, pitch event and the website used to raise capital can serve the dual purpose of creating customers.

     When a qualified (in this illustration a resident of Colorado) reaches the shopping cart on the investment platform, they will be presented with a variety of incentives that are associated with different levels of investment.  In many cases, the same level of investment may have more than one choice of incentive.

     As a further illustration, an investment of $125 will qualify to receive a free pass to the workshop on Customer Crowdfunding.  The price of the workshop pass, standing alone and not bundled with the investment, is $250.  The prospective investor is now focused on the service – the workshop – and must consider its value both independently and in the context of making an investment. 

     If the prospective investor assigns no value to the workshop for any reason (already knows everything about investment crowdfunding, has already completed his or her crowdfunding campaign or is just looking to invest and never intends to conduct a crowdfunding campaign and does not know anyone who could use the pass) then the investor will look at the investment solely on its merits – the potential return on investment and the associated risk.

     If, however, the prospective investor assigns any value to the workshop pass, then the value of the investment bundle is increased.  If the investor had intended to attend the workshop and was prepared to spend the $250 workshop fee, then the investor may see the investment as a way to immediately save $125 off of the workshop price and get the investment for free.  Alternatively, the investor may view the price of the investment as $125 and consider the $250 pass to the workshop as free.

     Any value assigned by an investor to an incentive serves as an immediate gratification to the investor and an immediate return on investment.  The investor does not have to wait for the business to perform and succeed in order to get paid back his or her investment. 

     In the example of the Colorado Capital Congress, the investor has already experienced a 100% return on investment (ROI) – receiving a $250 dollar value on a $125 investment.  Any future distribution related to the investment will only serve to increase the amount of the ROI.

     From the perspective of the investor candidate, the investment proposition may be so great that the investor candidate must seriously consider the deal and may have great difficulty making a decision not to invest.

     From the perspective of the business, it gains an investor and a customer for the equivalent of a discount off the sales price of the product or service.  This outcome may be viewed as an extra benefit of a properly planned crowdfunding campaign or reducing the net cost of raising capital by sharing the costs of the campaign with the sales department.


  • December 01, 2015 8:40 AM | Anonymous

    Karl Dakin

    President

    Invest Local LLC

    Main: 720-296-0372

    KDakin@InvestLocalColorado.com

    http://www.InvestLocalColorado.com

    Invest Local LLC Opens First Investment Crowdfunding Platform in Colorado

    Non-accredited investment crowdfunding arrives in Colorado as Invest Local LLC offers crowdfunding platform services.  

    DENVER, CO—December 1, 2015—Access to capital remains a key challenge to starting and growing businesses, social enterprises and community projects in Colorado. Without capital there is less innovation, fewer new products and services and fewer jobs – all important factors in strong, sustained economic growth. 

    A new company, Invest Local LLC, is the first to offer crowdfunding platform services in Colorado that are targeted to investors that make up the 97% of the population who are non-accredited investors.    

    The company is acting as a value added reseller of services from FundPaas (http://www.fundpaas.com) - a California business.  “We searched out a crowdfunding platform that is adaptable to different types of crowdfunding, compliant with federal and state laws and regulations and which can keep the costs of crowdfunding affordable to the small business.  FundPaas met all of these criteria.  We look forward to working together with FundPaas in supporting thousands of Colorado businesses, social enterprises and community projects in raising the money they need,” stated Karl Dakin, President of Invest Local LLC.

    Under the new Colorado Crowdfunding Act, organizations raising money are required to use a registered intermediary such as Invest Local LLC to manage the large number of investors who invest in small dollar amounts. 

    Investment crowdfunding is a revolution within the capital industry as new laws and regulations at the federal and state level have removed restrictions on how money can be raised and on who can invest.  Investment crowdfunding fills the large gap in the capital industry for those organizations that cannot qualify for bank financing or meet the high performance requirements of angel investors.  These organizations are no longer limited to financial institutions and wealthy individuals, but can seek money from friends, family, associates, customers, employees and other members of their community.

    “The potential of investment crowdfunding in providing capital needed by Colorado small businesses is tremendous.  There are an estimated 4.3 million non-accredited individuals and over 700,000 businesses that may now invest through crowdfunding.  If each of these individuals and businesses were to invest only $1, they could fund five businesses up to the $1 million limit (unaudited financials) under the Colorado Crowdfunding Act.  That’s $5 million new dollars invested in Colorado.  If each of these same investors invest $100 each year - $1 each in 100 different Colorado businesses, that’s half a billion new dollars invested in Colorado – each year.  The positive impact upon Colorado’s economy is immeasurable”, said Karl Dakin.

    Invest Local LLC will soon begin listing crowdfunding opportunities on its website - http://www.investlocalcolorado.com.  Invest Local LLC will also begin supporting Colorado businesses who are directly raising capital through Limited Registration offerings.  Securities laws prohibit Invest Local from promoting individual crowdfunding campaigns, however Invest Local LLC will be active in general efforts to encourage citizens of Colorado to ‘Invest in Colorado’.  Organizations interested in raising capital through investment crowdfunding may complete a free survey on the website.

    Initially, the company will support intrastate crowdfunding campaigns under Colorado’s Limited Offering statute and the new Colorado Crowdfunding Act.  It will soon support federal 506c and Reg A+ crowdfunding campaigns.  And, it expects to support the JOBS Act, also called Series III, crowdfunding campaigns when they are authorized in 2016.  The platform can also support large scale product crowdfunding campaigns and charitable fundraisers.

    Invest Local LLC will act as a reseller of educational programs developed by the Colorado Capital Congress PBC (http://www.coloradocapitalcongress.com), a social enterprise working to improve the capital ecosystem in Colorado.  Programs include how to run a crowdfunding campaign and how to invest through crowdfunding.  The next program on raising capital – Customer Crowdfunding – will be presented on December 10th at Colorado Lending Source.  The next program on investing through crowdfunding – Main Street Investing – will be presented on December 17th.  A limited number of free passes to each workshop are available to community leaders.

    Invest Local LLC is developing programs to help economic development agencies, community organizations and professional associations in promoting investment in Colorado businesses.  These programs will focus on the advantages of investing in ‘Main Street’ Colorado over Wall Street.

     

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  • November 25, 2015 7:12 AM | Anonymous

    Designing an investment crowdfunding campaign is a special form of marketing.  The ordinary goal of a capital raise is to secure an investment.  However, the goal of an investment crowdfunding campaign is to secure and investment AND create a new customer – a two for one special.  To achieve this outcome, it is necessary to consider the benefits of investing and the benefits of buying a product or service from the perspective of the investor.  Offering an incentive package that offers just one or the other may fail.  The incentives must be stacked.

     Ordinarily, an investor is looking for a rate of return – the ability of the business to pay back the investment and something more.  Everyone would like to hit that home run where the investment pays back a huge multiple of the investment.  However, everyone just wants to get their money back over the alternative of losing any money.  High probability of success will often win out over high rewards.

     When an investor is seeking to make an ‘impact’ – the desired outcome changes.  The investor still would like to get their money back, but is willing to waive any kind of profit on their investment if the social enterprise is 'doing good' in their community.  This is the model used by Kiva, a great organization, in making non-interest loans around the world. 

     Still other investors go even further.  They will put their money at risk provided that the use of the money goes to a good cause.  This type of investment looks more like a charitable contribution.  It represents the new growing trend of foundations to make ‘program related investments’ or PRI’s in organizations with a common mission.  In these situations, the term ‘investment’ becomes more of financial support for a sustainable business model.

     A customer is making a different type of investment.  They are buying a product or service.  The product or service is expected to solve a problem of the customer.  Food will remove hunger.  A beauty product will make the customer look better.  A car will get the customer to work.  They don’t receive a benefit from the purchase unless the product works.  However, like an investor, a customer is looking for a good deal – a lower price, a discount, more features, etc.  Where two products are alike, they will pick the one on sale.

     If investors in a crowdfunding campaign can get all of the above outcomes by stacking incentives, a point will be reached where it is almost impossible for the investor to say ‘no’.  The organization seeking to raise capital will study their existing or prospective customers and design a package that will:

    • ·         Provide a product or service that works (a benefit)
    • ·         Makes the product or service available for free (a premium) or below market prices (a bargain)
    • ·         Demonstrates a strong business model that creates a high probability of pay back of the investment (stability)
    • ·         Addresses a problem in the community that affects people known to the investor (taking care of those around them)
    • ·         Collaborates with other individuals and organizations (part of a team)
    • ·         Creates job opportunities for the customer/investor or a member of their family or friends (integrity of working)
    • ·         Supports a charity or faith organization (taking care of the needy)
    • ·         Engages the customer/investor in the organization (social belonging)
    • ·         Demonstrates appreciation for the customer/investor (feel good)
    • ·         Rewards customer/investors who help the organization succeed (recognition)

     If an organization can create an investment package that can achieve all of these things, then investment should follow. Many successful established businesses do all of these things.  A study of your favorite business may serve as a guide in designing your investment package.

     The topic of stacking incentives will be included within a half day workshop on Customer Crowdfunding presented by the Colorado Capital Congress on December 10 and a half day workshop on Main Street Investing on December 17.  http://www.coloradocapitalcongress.com


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