entrepreneurship tips

Crowdfunding for entrepreneurs and investors is a hot topic — and it’s only going to get more attention in the near term, as the American JOBS Act makes Equity Crowdfunding a reality for those looking to raise business capital with this innovative model. Creekstone Consulting Inc. wanted to dig deeper into this phenomenon and has developed an industry white paper to help explain how business owners and investors alike plan to use Equity Crowdfunding to revolutionize business models.

• Read our white paper on Equity Crowdfunding. Measuring the New ROI: Return on Involvement

Some of our key discoveries from talking with business experts and representatives from crowdfunding platforms gave us insight into how creative people are thinking about using this model to their advantage — and why it’s so important for countries like Canada to join the USA and Europe and get on the Equity Crowdfunding bandwagon:

• Equity Crowdfunding lets companies relatively easily create strong engagement with their consumer base which can become self- sustaining. Investors can be consumers as well as “evangelists” helping the company promote itself.
• Investors may seek out this kind of engagement willingly, seeing value in being able to “be part of something they believe in”.
• The equity Crowdfunding model can be very effective both for start-ups in the “idea” stage as well as mature companies that already have revenue. All participants gave particular attention to questions surrounding the motivations of both companies and investors to get involved in equity Crowdfunding.

Here’s an excerpt from our white paper:

Lopez concurs that many of EarlyShares’ signed-up companies are intending to use equity crowdfunding for publicity. “I can think of one company in New York City with 150 employees and millions in revenue and multiple locations… they’re doing a $500,000 raise for marketing purposes. They’re giving up 5 percent equity to have 5,000 customers. They will be able to say they’re partly customer-owned, and you’ve automatically proved customer loyalty.”

That marketing bonus is sustainable: “If they own a piece of your company, they will naturally want to buy from you. You get money, customers with a vested interest and market validation for your product before you even launch it. You can’t get that from a survey or a focus group!”

Contact Creekstone Consulting to learn more about Equity Crowdfunding or to use our management consulting services for meeting a wide range of business challenges

I asked for comments on my last email concerning “how to create serial entrepreneurs and had some terrific insights provided by those who read the article. If you recall I wrote that there was no lack of entrepreneurial spirit north of the USA, but in some ways, Canada’s business environment doesn’t provide the best conditions for entrepreneurs to succeed. We provided some suggestions, like better-focused education and mentorship programs, as well as making it easier for entrepreneurs who do fail to fail fast but fail cheaply, so they can dust themselves off and get back at it or move on and work for someone else.

Some Comments on How To Create a Supportive Entrepreneur Landscape

Here are some of the reactions to our question about how to provide a more supportive environment for entrepreneurs:

Steven Jones, Vice President at Pulse Energy says the best way to encourage entrepreneurship is to help them overcome a communications gap and make an essential connection:

“It appears that there is a very large and pervasive communication gap between problem solvers (entrepreneurs) and problem sufferers (potential customers.) 

The result is an abundance of entrepreneurs focused exclusively on technology and business problems.  This is because entrepreneurs often come from a background of engineering or business education and that’s all they know about.  This means that there is extreme competition to solve the valuable problems in these limited domains.  Even worse, many of these problem solvers end up resorting to solving weak or unimportant problems (how many mobile phone games does the world really need?) (more…)