2,800 crowdsourcing and crowdfunding sites
One of the leading crowdfunding platforms in the U.S. launched this week, even though it's not officially facilitating any crowdfunding for another 7 months. crowdfunder opened its digital doors to the public a few days ago, encouraging startups interested in raising investment from the crowd next year to start promoting and networking now via the platform.
Until then, crowdfunder is holding a series of launch contests in which startups will compete, build buzz, be evaluated by a panel of judges and ultimately one startup will receive a $25,000 investment prize.
The first contest, Crowdstart LA, is already underway and centers on the Los Angeles startup community. More contests are planned for Las Vegas, New York, Silicon Valley and other key markets.
I contacted crowdfunder co-founder & CEO Chance Barnett and asked him for a few more details on the launch and contest:
Eric Mack, Crowdsourcing.org: When you say the platform is open to the public as of this week, you're referring just to the contests? Or is there some other functionality that's also online now?
Chance Barnett, crowdfunder: There is an entire platform that the contest is being run on where companies create fundraising profiles to pitch angels, VCs and interested crowdfunders. Examples: MISSION.tv andOneGoodLove.
The crowd votes on these companies, and gives them ratings, by choosing to press "I Would Invest." Each of these counts as a vote cast by the crowd. This allows the selection of the top companies who get to attend our live event and pitch our judges to compete to win $25,000 in funding. The crowd will be able to follow along and support and follow these companies all throughout the contest.
Essentially, our platform powers the crowd engagement and selection of companies for the contest.
Here is a more complete list of specific functionality that exists on our platform:
Social + Identity: People invest in people, not just ideas. In fact, INVESTING in a company via crowdfunding is VERY different than DONATING to a company, which is what happens on all the other crowdfunding platforms today.
A key part of investing is vetting the founding team. We have created a social platform that doesn't just take project postings like existing crowdfunding sites, but allows you to actually see the entire team, advisors, supporters and get access to real business documents once granted private access to them by the company.
crowdfunder provides for each company founder and the team to have individual user profiles that can be connected to the company. These personal user profiles are connected to Facebook and LinkedIn profiles, automatically importing work experience and helping would be investors to identify existing relationships - showing a kind of investing social graph.
Public & private profile/document access: A key concern for startups and businesses raising money is to protect more sensitive information about their company, while also publishing enough info to attract investor interest. We have a set of public information as well as private documents that would be investors have to apply for in order to access. Company founders can see and approve or deny requests for private access, and can vet each would be investor's profile to make sure they're comfortable giving them access.
Ratings: We're allowing the crowd to help vet and rate companies. A key vision we have for the future is that crowd intelligence can and will a) help identify great investment opportunities; b) create collaboration and engagement above and beyond just funding, and; c) weed out fraud. We created a ratings system that is initially based on the key areas that dictate success or failure for early stage companies, as it relates to whether or not you might want to invest in the company at an early stage. These ratings are also key for our crowdsourced startup contests we are running at launch as well.
Follow/support model: You can follow people or company founders on crowdfunder, and you can 'support' companies. Doing so keeps you updated on the latest activity via a feed of activity, as well as updates that companies can post.
Automation of key components of the deal/offering: We have removed this portion of the platform for companies at the moment. We are being careful not to perform functions that the SEC would not want us touching until crowdfund investing goes live in January. This portion of the platform helps automate key parts of an investment offering- term sheet, financials, agreements, etc. For now, companies will find this final section of their profile creation inaccessible until a later date.
This is an intial set of functionality. crowdfunder will be iterating and improving the product with releases scheduled over the coming months leading up to the January SEC Rulings when crowdfund investing goes live.
You've already signed up some investors who have made "pledges" to startups that you've also registered. What happens to those pledges when the JOBS Act provisions turn on?
When the JOBS Act (goes into effect), we can't ask those people to be committed to actual investments at this time. That's against the law. However, the people who pledged personally chose a specific amount that they would be open to investing in crowdfunded companies on our platform, once crowdfunding is legal. The pledges aren't commitments to investing, but did ask a specific question of each individual of how much money would they invest - which brought us to $17MM.
Can you tell me more about the live event the top companies will compete at?
The live event will be held in Los Angeles on July 10th in front of the Southern California startup community, the press, and many top Angels, VC's and entrepreneurs. Judges: http://crowdfunder.com/crowdstart-la-judges
There will very likely be investment offers made to companies above and beyond the $25,000 investment prize put up by Right Side Capital.
The LaunchPad LA accelerator has also agreed to give the prize of an exclusive one-on-one interview with their partners to win acceptance + funding in their next class of companies.
We will have the community/crowd commenting on and rating the companies at the event while the companies pitch and the judges give feedback.
A key part of our goal and mission is to foster real online interaction and collaboration on our platform across the LA Startup Community. Rather than imagining that our platform disrupts or displaces existing communities and eco-systems for entrepreneur talent and investors seeking the talent, we will be empowering and bringing together these communities for the first time, also allowing the crowd of non-accredited investors to participate.
We are believers in the value and power of crowd intelligence. Hence, we are allowing the crop of startups to be initially selected by the crowd itself, and rated by the crowd on our 5 category/5 star ratings system.
In the future, the promise of crowd intelligence to help each individual investor make better investment decisions is a key goal.
How are you creating and engaging a community to vote?
We have over 4,000 people who have signed up to be crowdfunders (explore companies, and potentially invest in the future when legal).
If you go on our platform, you'll see the multiple ways that people can engage and vote - they create their own profile, connect and follow other crowdfunder or company founders, and Support companies by clicking the "I Would Invest" button to cast their vote for them.
We have designed our platform with a deep layer of social connection so that you can see more than a company pitch with video, but you can dig deeper into the founding team, advisors and supporters. Those who join the site can automatically connect their LinkedIn and import their work experience (help people vet founder/company), and connect their Facebook account. This allows people to have a truer and richer identity on the platform and foster real connections and engagement of entrepreneurs to investors/crowd.
The JOBS Act, and crowdfunding rules when they come online in January 2013, will create one of the most powerful revolutions in the world of early stage investment and finance that we will ever see in our lifetime.
Rather than jump in to the donation crowdfunding space, we are squarely focused on allowing INVESTMENT via crowdfunding on our platform. Investing is a much different process and activity from donating like you do on the other crowdfunding platforms. Our platform is perfectly suited to dig deeper and actually vet and invest in founders/companies.