CROWDFUNDING: FINANCING YOUR SMALL BUSINESS

By Reality Crowd TV Media Corporation

Presenter: Manolis Sfinarolakis, Founder, Reality Crowd TV Media Corporation

AGENDA

Introduction to the Seminar Speaker (5 Minutes)

What is Crowdfunding? (5 Minutes)

The 9 Stages of Crowdfunding (5 Minutes)

What’s Your Business? (10 minutes)

Donation & Rewards Crowdfunding (10 Minutes)

Equity & Debt & Royalty Crowdfunding (10 Minutes)

Successful Crowdfunding Examples (15 Minutes)

Interactive Session: Group Discussion (15 Minutes)

Interactive Session: Audience Business Consultation (45 Minutes)

INTRODUCTION TO THE SEMINAR SPEAKER

Manolis Sfinarolakis, Founder, Reality Crowd TV Media Corp.

Member of Crowdfunding Professional Association (CfPA), Crowdfund Intermediary Regulatory Advocates (CFIRA), and National Crowdfunding Association (NLCFA)

Multiple speeches given on the topic of Crowdfunding in states across the U.S., including Connecticut, New York, Georgia, Denver, Seattle, Texas, Washington D.C., and Florida

Insurance Industry experience with The Hartford Insurance Group within the Internal Audit Department. Received SEC Press release on October 23rd on Title III Equity Crowdfunding.

Big 4 Accounting Firm experience with Deloitte & Touche. Auditing S-1 documentation for broker/dealer that raised 1.2 billion during IPO.

BS in Business Administration, Concentration in Accounting from University of Connecticut

WHAT IS CROWDFUNDING?

“Crowdfunding is converting social capital into actual capital through the internet.”

THE 9 STAGES OF CROWDFUNDING

Successful campaigns take at least 3 months of pre-launch activities before they launch their project (to go into detail later in the presentation):

Business Planning

Intellectual Property

Social Media

Public Relations

Campaign Strategy

Networking

Team Building

Website Development

Profile & Video

WHAT’S YOUR BUSINESS?

DONATION CROWDFUNDING OVERVIEW

Used mainly by charities, medical emergencies, or natural disasters.

Top websites used for donation based crowdfunding: YouCaring.com

DonorsChoose.org

No rewards offered, straight donation.

Must have a compelling story that inspires action.

Highly dependent on social capital and relationships.

Amplified by PR and Social Media execution ahead of time.

If 501(c)3, tax benefit to the donors.

REWARDS CROWDFUNDING OVERVIEW

Contribution in exchange for a reward. Used by many different non-profits, businesses, artists, film makers, and entrepreneurs. The crowdfunding of choice for Startup companies. Capital raised without giving up equity / taking on debt!

Top websites used for rewards based crowdfunding: Kickstarter.com

IndieGoGo.com

Highly dependent on social capital and relationships.

PR is most important, followed by social media.

Video must be top notch to tell a compelling reason why they should invest in the person’s project, especially if it is a for profit enterprise.

Must reach 30% of funding within the first week of the campaign (90% success).

EQUITY CROWDFUNDING OVERVIEW

Investment in exchange for equity. Title II, Title III, and Title IV of the 2012 JOBS act.

Title II allows for the general solicitation of Accredited Investors for investment in small businesses via the internet / crowdfunding websites.

Title III will allow for the general solicitation of Un-Accredited investors for investment in small businesses via the internet / crowdfunding websites.

Title IV allows for general solicitation of both Accredited and Un-Accredited investors, however, it is state by state crowdfunding and takes months to close.

Top websites used for equity based crowdfunding: Angellist.com

Realtymogul.com

DEBT CROWDFUNDING OVERVIEW

Investment in exchange for bond. Title II, Title III, and Title IV of the 2012 JOBS act.

Title II allows for the general solicitation of Accredited Investors for investment in small businesses via the internet / crowdfunding websites.

Title III will allow for the general solicitation of Un-Accredited investors for investment in small businesses via the internet / crowdfunding websites.

Title IV allows for general solicitation of both Accredited and Un-Accredited investors, however, it is state by state crowdfunding and takes months to close.

Top websites used for debt based crowdfunding: Patchofland.com

LendingClub.com

CircleUp.com

ROYALTY CROWDFUNDING OVERVIEW

Investment in exchange for future revenue (royalties) of the company / individual.

Both secured (collateral) and unsecured (based on trust).

Top websites used for royalty based crowdfunding: UpStart.com

Empowrr.com

Bolstr.com

Royalty based crowdfunding is not only focused on the business, but rather, the confidence in the management team running the business. They are investing in the future prospects of YOU.

SUCCESSFUL CROWDFUNDING EXAMPLES

Case Study: The Pebble Watch: https://www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-android

SUCCESSFUL CROWDFUNDING EXAMPLES

Case Study: Chups LLC: https://www.kickstarter.com/projects/2029729541/a-ketchup-revolution

SUCCESSFUL CROWDFUNDING EXAMPLES

Case Study: Bohemian Guitars: https://www.kickstarter.com/projects/366997931/bohemian-guitars-oil-can-guitars

STAGE 1: BUSINESS PLANNING

Must have a business plan for your business and must be willing to disclose it if you are looking to do Equity, Debt, or Royalty based crowdfunding.

Software tool: Funding Roadmap

Login site for demo: Funding Roadmap

This stage really gets you to understand all of the necessary pieces to the puzzle: What resources are at your disposal?

Who can you ask to help you with your campaign?

How many contacts, both in social media, email, and phone do you have?

Do you know any media outlets, bloggers, newspapers, that would be willing to help?

Is there budget that you have to get the help you need if you can’t find others in your immediate circle?

Why does my business exist? What is my mission? How can I inspire others to help?

STAGE 2: INTELLECTUAL PROPERTY

Protecting your intellectual property is the most important thing you can do.

Intellectual property comes in the form of logo’s, trademarks, copyrights, patents, legal incorporation, etc.

Intellectual Property attorney’s can be very expensive.

Crowdfunding website that helps with no upfront cost intellectual property, if you end up going through their crowdfunding website: KarmaKrowd.com

State of Connecticut: Secretary of State Website

If you don’t have the resources, don’t let that stop you: If you don’t tell anyone about your business or idea…no one will ever know…Action above all wins out!

STAGE 3: SOCIAL MEDIA

Social Media 2.0: Converting Social Capital into Actual Capital Through the Internet.

Class focusing on this topic in its entirety is on May 20th, next week! Check out our meetup group for details here.

Important Considerations: Use management tools to help you schedule your content (Hootsuite.com,

Bufferapp.com)

You should only link to your site or other sites between 15 – 20% of the time. The focus should not be on Social Broadcasting, but rather, Social Engagement.

Have conversations with your customers and potential customers about every day issues. People want to see personality behind a brand. Not a broken record / spammer.

Build relationships and brand ambassadors that eventually will influence other people.

STAGE 4: PUBLIC RELATIONS

Message Map & Communications Plan.

Identifying keywords in your industry and searching for bloggers, newspapers, reporters, news stations, and radio stations who cover these topics.

Strategic Use of Press Releases to get more leverage about your company. Use of services like MarketWired.com. Instant SEO boost as 200+ other websites including Yahoo Finance, Market Watch, Reuters, etc. link back to your site.

Have a media kit ready when the time comes to pitch to journalists, reports, etc: Bio and inspiring personal story

Professional pictures

Statistics of your industry to make the job of the reporter easy to write about you

Your social mission and how your company benefits society

STAGE 5: CAMPAIGN STRATEGY

Think of a crowdfunding campaign like a political campaign. You must be active, visible, and persuasive. What ways can you as a business get the word out?

Tools to get the word out: Google Hangouts – Connect w/ people via internet video. Create a show to brand your

business

Live Events – host your own within your industry or network to join other events. Crowdfunding events are always looking for people who are actively crowdfunding to have as featured guests.

Industry Events – network with others in your industry or become an exhibitor at an event.

Existing Customers – will you decide to divert some of your revenue from existing customers into your crowdfunding campaign? That might just bring you the viral momentum you need to get to the 30% of funding in the first week!

STAGE 6: NETWORKING & TEAM BUILDING

Socializing your network: Provide the first token of value (explaining what crowdfundingis).

Add people to your crowd: You must become a lead generating machine by never leaving the site of a conversation without receiving their contact information.

Do as much as you can WITHOUT the funds: People are inspired to help you when they see the hard work and effort you put into your business / cause.

Crowdfunding Campaign job descriptions: Have an outlet established where you can bring people onto your team to help you: Social Manager

Community Outreach

Public Relations Manager

Reward your team with your knowledge: Everyone has compensation to offer to another. If you don’t have a budget, then share your knowledge with your team w/ time.

STAGE 7: WEBSITE DEVELOPMENT

Strategy: Ability to be the one stop shop to connect with you and your content across multiple platforms (join your crowd on social media, newsletters, etc.)

Landing Pages: Used to capture site visitor information (pop ups that ask you to fill out a contact form for a free piece of content, etc.). This allows you to connect with them and bring them into your crowd.

Pre-launch: Prepare statement of work for developer to realize that your primary objective is to capture information and connect through social media.

During-launch: Prepare statement of work for developer to realize that your primary objective is to drive traffic to your crowdfunding campaign.

Post-launch: Prepare statement of work for developer to realize that your primary objective is to continue to monetize through social, newsletters, e-commerce etc.

STAGE 8: PROFILE & VIDEO

Crowdfunding Campaign Profile: Must tell a compelling story through a combination of Video, Text, and Rewards. Clearly articulate:

Who & What of yourself, your team, and your business

Where & When of yourself and your business, as well as when donors can expect their rewards.

Why should anyone care? Make sure your video / profile captures your passion for your project.

How Much are you trying to raise and how will the money be used to bring your business forward. Be completely transparent with costs.

Video Production: MUST have a video and SHOULD be professional. A webcam without any editing may not be compelling enough to tell the story of your company and your personal journey. Campaigns with a video much more successful.

Feedback: MUST receive as much feedback about your video, profile, and rewards as you possibly can from unbiased sources (your mom loves you no matter what ). Additionally, model other successful campaigns.

Length of Video: 3 – 4 minutes in length. Must capture attention within the first 10 seconds (attention spans limited!)

STAGE 9: FULFILLMENT

Rewards: Take a full accounting of the cost of fulfilling rewards before you price the rewards for your contributors.

Free Rewards: Creating information products for lower level rewards is a cost effective yet valuable reward for your contributors.

Manufacturing: Take into account the cost to manufacture, prototype, and ship the rewards out to your contributors.

Timing: Give yourself adequate time to fulfill the rewards. If you are running into delays, keep an active dialogue with all contributors to ease their concerns.

Intellectual Property Concerns: Ensure that you have the rights to offer the rewards you are offering. Everything you offer must be appropriately protected!

INTERACTIVE SESSION: AUDIENCE BUSINESS CONSULTATION

Recap from each group of lessons and insights learned.

General questions on “how to” crowdfund.

Let’s talk about someone’s business and apply what we learned.

RESOURCES

Title II Equity Crowdfunding Final Rules: http://www.sec.gov/rules/final/2013/33-9415.pdf

Title III Equity Crowdfunding Proposed Rules: http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540017677#.Uti6DBBdV8E

Regulation A Proposed Rules: http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540518165#.Uti6IhBdV8E

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