Written on April 10, 2012 by admin
One of my favorite parts of Extreme Entrepreneurship Tour events is the Q & A panel. This is where the students in the audience can ask questions and get real feedback from successful young entrepreneurs.
The most popular questions revolve around getting capital.
I know, as young people, we create barriers that stop us from ever starting something we are passionate about. For instance we may believe we are:
- Not good enough
- Not smart enough
- Not old enough
- Not creative enough to come up with ideas
But the biggest barrier we place on ourselves is that we assume that since we do not have any money we cannot start a business.
This is not true. It scares me to know how many students out there never take action simply because of their financial situation.
Some pretty exciting news happened last Thursday in our government that I think you should know about. It will help you realize that not having money is a poor excuse for not taking any action.
On Thursday, President Barack Obama signed the Jumpstart Our Business Startups (JOBS Act), a bill that makes it easier for startup businesses to raise capital partially via crowdfunding. The bill makes it easier for startups to stay private or go public depending on the company’s agenda. The JOBS Act shows that our country is looking for entrepreneurs to start businesses and boost the economy.
What this means for you?
The ‘crowdfunding’ piece of the bill is the part that is receiving the most attention and also the part that is most relevant to you. Now, if you have not already created another tab on your web browser to search what ‘crowdfunding’ means here is little insight…
Crowdfunding allows you to raise small amounts of capital from large pools of non-accredited investors. This is significant because in the past you could only raise money from accredited investors who would of had to make over $200K a year or have over $1 million in assets. This made it challenging for people to raise large amounts of capital if you don’t have accredited investors in your network. Because of the boom in social networks and online marketplaces, the internet can provide any user with more than just friends. They can provide people with financial backing… literally. Websites like Kickstarter.com and IndieGogo.com allow entrepreneurs to raise up to $1 million annually, as sanctioned by the new legislation.
Coffee Joulies, a company on our Empact100 list, created a product that turns and keeps coffee at the right temperature faster and for longer periods of time. They used Kickstarter.com to raise the funds needed to produce this product. Their goal was to raise $9,500 but because they received attention from the coffee community, they received over $300,000 to start their business. Below is their Kickstarter video. Watch the video to see a great example of how the Crowdfunding process works and can help you raise money.
How can you take advantage of crowdfunding now?
Crowdfunding provides a funding source for you that can help you get out of your business plan stage. Imagine what a couple hundred or thousands of dollars will do for you and your business. It would allow you to start, move to a bigger location, hire another employee, or produce your product/service. Having a crowdfunding arm to your funding strategy is a great way for you to not have to spend money from your own piggy bank.
Crowdfunding is also a great way to test your product idea. If you get a large amount of supporters on your page then it shows that you have something people want. A business that is crowdfunded shows me that the product is viable and will work because it means that people are willing to give you money before the product is even created.
Here are some blogs and tips that you can reference when starting your first crowdfunding campaign.
Once you have posted your idea or product to a web-based crowdfunding platform share the link with us by tweeting your page to @roadtour. We would love to support and help. Good luck!
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