Thursday, November 3, 2011

Crowdfunding Startups has long been a dream deferred. But it's finally happening.


Crowdfunding startups has long been a dream deferred.

But it's finally happening.


Canada will soon have their own version of this type of internet group or crowdfunding initiative thanks to Nanaimo Green Developments and an International Angel Investor funding a 15 million dollar land development and preservation project on Vancouver Island, Canada,  near Tofino. CW11/11/11/11:11:11

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kickstarter infographic
There are lots of trends people have been talking about in tech financing--"superangels"; delayed IPOs; secondary market sales; and more.  But so far, few people have been putting the dots together: the entire financing landscape for companies is changing.  And, excitingly, it's increasingly not just technology companies.  There are many new financing options for growing companies that weren't available a decade ago.
Here's how we break them down (we'll visit each one in turn):
  • Crowdfunding
  • Accelerators
  • Super-angels
  • Late-stage private equity
  • The long-delayed IPO

Crowdfunding

kickstarter infographic
Projects funded by Kickstarter (click to enlarge)
Crowdfunding startups has long been a dream deferred. But it's finally happening.
Direct crowdfunding via equity financing is still a big no-no, because SEC rules make it difficult for non-accredited investors to invest in startups. But exciting things are going on.
One of the most exciting such examples is AngelList, a "Match.com for investors and startups" that lets startups vie for capital from angels and (increasingly) VC firms. AngelList has seen torrid growth on the back of rising early-stage valuations in Silicon Valley. And it has also been expanding horizontally and geographically.
There are non-tech companies listed on AngelList, along with companies from around the world. AngelList is not technically crowdfunding--it just makes it easier for startups to get accredited investors' attention and get funding--but it is certainly an early step in that direction. (We interviewed AngelList co-founder Naval Ravikant here.)
Another exciting example is Kickstarter. Kickstarter is a startup that helps creatives of any kind raise funding for entrepreneurial projects. Entrepreneurs on Kickstarter don't sell equity in their companies--they basically seek donations or pre-payments for perks. So, if you want to self-publish a book, you might set a target goal of $10,000, promise an autographed special edition to those who pledge $100, a regular special edition for those who pledge $50 and a regular book for those who pledge $20. Once the number of pledges hits your goal, people's credit cards are charged and off you go. Kickstarter helped raise $8.8 million for entrepreneurs in September and is fast-growing, with many projects exceeding their goals as the great infographic above from BloombergBusinessWeek shows (click to enlarge).

Canada will soon have their own version of this type of internet group or crowdfinding initiative thanks to Nanaimo Green Developments and an International Angel Investor funding a 15 million dollar land development and preservation project on Vancouver Island, Canada,  near Tofino. 

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