In the long awaited return of the PMA Podcast, Jason Camps and Tucker Max discuss the rise (and fall) of Reddit Notes, the regulatory obstacles keeping crowdfunding down, and the future of startup incubators.
People say a lot of stupid shit on Twitter. Most of it isn’t worth a response… except when a major industry player retweets it.
Nas is cool and all, but call me when Run The Jewels has a syndicate.
— Adam Sharp (@EI_Adam) November 13, 2014
AngelList, the clear leader in equity crowdfunding/online angel investing, retweeted the above to its 150K+ followers. I can understand their desire to promote Syndicates (especially those headed by celebrities). What I don’t understand is their choice to implicitly endorse the idea that Nas is a “good picker”.
Actually, that’s bullshit. I know exactly why they did it. My problem is AngelList knows people shouldn’t jump to conclusions based on a single data point.
Of Nas’ other investments listed on the Syndicate page, I’ve only heard of 2*: Dropbox and 500 Startups. Now, is this observation worthy of a conclusion in itself? No. But it’s a starting point for a discussion. It takes a little bit more information than a “he invested in dropbox” and a lot more thinking than “none at all” to decide whether or not Nas is a “good picker”.
I know it’s tempting to reduce complexity and tell a simple story that fits in a tweet, but that does everyone a disservice in the long run.
Humans delude themselves by telling stories. Our brains evolved to look for patterns and extrapolate as a survival mechanism. This works well in nature, but it probably won’t produce the best results for an angel investor.
Just look at another industry that promises exciting, big, and fun financial gains to see the disasters that come from misusing trends and cherry picked data to produce enticing soundbites.
I don’t expect too much from any company desperate to promote themselves on the internet, but AngelList should hold themselves to higher standards than Vegas touts.
*A cursory search of the internet tells me he’s also invested in Rap Genius and Lyft. Even if he didn’t do those through AL, maybe they should think about highlighting them because people have actually heard of those companies… Unlike many of the (alphabetically listed) companies that appear on the page. I dunno. Maybe they’re buried under the non-expandable label of “and 25 more”.
In this episode, Jason Camps and Tucker Max talk about MotionSavvy’s fundraising efforts on WeFunder and explain why deaf culture is a lot like New Jersey.
- LEAP Motion
- MotionSavvy Is A Tablet App That Understands Sign Language (TechCrunch)
- Investing in the Unknown and Unknowable
In this episode of the world’s #1 equity crowdfunding podcast, Jason Camps and Tucker Max break down Pono Music’s equity raise on Crowdfunder.
Links from this episode:
- Pono Music on Crowdfunder
- Pono on Kickstarter
- Pono’s Seed Round that Crowdfunder fails to mention
- Matthew Lesko on why FREE INTERNET MONEY is better than government grants
- Free Lossless Audio Codec (FLAC)
- Liquidity Preference
In this episode, Jason Camps and Tucker Max discuss “entrepreneurship” opportunities in a retail crowdfunding/shared economy world, some proposed JOBS Act Title III rules, and the truth behind most conspiracy theories.
In a special solo episode, Jason rambles about the Kickstarter potato salad guy, Hearo.fm’s SeedInvest raise, and the sad state of equity crowdfunding writing online.
Links from this Episode:
- The Potato Salad Kickstarter
- Tucker’s brownie Kickstarter story
- Hearo.fm Tunes into SeedInvest for Crowdfunding Campaign
- Fred Wilson’s post about USV’s investment strategy
- The Magic Bullet of Crowdfunding
- Crowdfunding is not Investing
- The WeFunder tweet that offended Jason so much
- WeFunder’s “ebook”
In a significantly more positive episode, Jason and Tucker discuss founder personalities, 50 Shades of Grey, and the different ways crowdfunding will impact the future of business and investing.
In this episode, Jason and Tucker review the major equity crowdfunding portals in the United States: AngelList, WeFunder, MicroVentures, FundersClub, CircleUp, SeedInvest, Fundable, Crowdfunder, Rock the Post, and EarlyShares. The show starts out fairly positive, but ultimately turns into something that might be described as the Crowdfunding Playa Haters Ball. Sorry, not sorry.
If you follow news in the crowdfunding world, you’ll notice that there seem to be A LOT of equity crowdfunding sites out there. The truth is only a few of these sites matter to us in the United States. There’s not much going on in the equity crowdfunding world as we wait for the SEC to finally approve Title III of the JOBS Acts. So, sites like Crowdfund Insider are forced to dig deep for relevant content. They play up actions by equity crowdfunding sites in the U.K. and pretty much any site in the U.S. that emails them. While a study of the progression of equity crowdfunding in other countries may help us better understand how equity crowdfunding will play out in the U.S., news about new listings on U.K. platforms or new regulations from other countries shouldn’t have much interest for potential U.S. investors. In terms of relevant U.S. news, not every site is worthy of attention. Only a few have the teams and traction to succeed in the new regulatory environment. If you’re reading a story about equity crowdfunding in the U.S. and it’s not about one of these sites, you’re wasting your time.
“AngelList, a four-year-old startup based in San Francisco, is starting to open things up with a social network for the kind of people who create and invest in social networks. It’s a Kickstarter-like online forum where startup founders post their ideas and meet investors who fund risky, early-stage companies. In 2013, 500 startups raised $125 million through the site, including transactions ultimately closed offline, says Naval Ravikant, AngelList’s co-founder and chief executive officer. [Naval] Ravikant, suddenly one of the Valley’s highest-profile power brokers, says his company’s mission is ‘to make startup investing transparent, efficient, and more open.’” Source.
“‘We are not just giving startups dumb, quick, and easy money,’ said founder Nick Tommarello on stage at Y Combinator’s demo day. “With the power of the crowd, we are giving them an army of evangelists that feel a sense of ownership and are driven to help their startup succeed. WeFunder finds and features promising startups on the site to a community of almost 14,000 investors. Those people have the opportunity to put as little as $1000 into companies that catch their eye.” Source.
“Playing armchair venture capitalist has never been easier. For investors registered with MicroVentures, an eight-person crowdfunding outfit based in San Francisco, opportunities to invest in young tech startups arrive via e-mail. A link takes you to an eight-page summary of each company, laying out management bios, market size, competition and financials. You can also sign up for a webinar with the startup’s CEO. Or call up a MicroVentures broker who can speak for the company and relay questions to the founders. If you’re ready to commit, type in the amount you want to invest–usual minimum: $5,000–and click. The money sits in escrow until the deal closes. This may well be the future for helping accredited investors.” Source.
“FundersClub acts like a traditional venture capital fund in some ways, screening thousands of start-ups and funding 1.8% of applicants. But unlike that model, which requires funders to invest $50,000 to $250,000 in a deal, FundersClub allows investors to contribute as little as $2,500. And while traditional firms offer online tools to vet deals, they typically require in-person participation and paper documentation. FundersClub operates entirely online.” Source.
“Ryan Caldbeck and Rory Eakin founded CircleUp, their equity-crowdfunding portal, in 2011, before the word “crowdfunding” would be printed in news without definition, and long before the U.S. Securities and Exchange Commission would debate how to shape regulations necessary when one attaches to it equity stakes. Three years later, the company has carved out an impressively strong niche–connecting accredited investors to consumer-facing product companies–and is showing strong traction toward making those investments pay off for both parties.” Source.
“By early March, SeedInvest had completed 20 private placements, helping those companies raise $14 million. In one instance, a well-known venture capitalist referred his 300,000 Twitter followers to SeedInvest’s offering for a moped-sharing service in San Francisco called Scoot. Online investors ended up contributing $280,000 to Scoot’s $1.5 million campaign, which lasted just five weeks. ‘It not only shows you how powerful Title II is,’ [Ryan] Feit says, ‘but it shows you how powerful Title III will be once you open it up to all your customers.’” Source.
“Fundable works like a crowdfunded venture capitalist, taking in funding commitments from over 53,000 backers and disbursing them in small investments to hundreds of startups in a model very similar to Kickstarter or Indiegogo. If you see a company you like — perhaps Pixel Press, which enables anyone to build their own video games — you can choose to back that company. Interestingly, Fundable doesn’t take a percentage of the investment, but simply charges a small monthly fee. Investors can choose equity or Kickstarter-like rewards.” Source.
“Today, Crowdfunder has seen 40,000 entrepreneurs and investors on its platform, which includes 7,000 companies who have signed up, some of which have converted to paying accounts. A smaller portion of these accounts are active at present, as the companies generally pay the premium during their active fundraising process. Instead of taking a percentage of the funds raised, Crowdfunder instead charges companies a flat fee based on how much they’re raising, and other factors, like whether or not they want a featured position on the site.” Source.
“Founded in 2011 and launched publicly earlier this year, EarlyFund hosts both equity- and rewards-based campaigns on EarlyShares.com. BoatSetter’s offering is a hybrid model that includes rewards, such as commission-free boat rentals. Upcoming EarlyShares campaigns will feature equity investment offerings related to web entrepreneurship, real estate and music industry projects. Lopes said EarlyShares has a user base of 50,000 and about 1,000 accredited investors.” Source.
10. Rock The Post
“The crowdfunding platform also focuses aggressively on customer service, with its staff personally assisting each project creator (once approved) in the curation and crafting of their campaign. The team offers one-on-one consulting sessions, weekly, personalized email tips, and a variety of educational info, such as tips, guidelines, webinars, and tutorials to increase the potential for success. The platform charges a 5 percent fee for successfully funded projects, which is lower than if one were to use CrowdHut’s services (and the majority of crowdfunding portals). Rock The Post offers an integrated payments option, so that users can make transactions on the site itself, rather than being directed to a third-party website. Again, the startup’s main value proposition is the degree to which it’s willing to help its project creators reach their funding goals, trying to remove that impersonal air that can infect larger platforms.” Source.
11. Return on Change
“In fact, the former investment banker started his own social enterprise, New York-based Return on Change, an online funding platform for-profit high-impact startups–that includes cleantech and social enterprises, among others–in 2011, well before it was even clear that a law would ever be enacted at all. Certainly, Return on Change is not the only new site out there aiming to become a JOBS Act portal. But, according to Paul Geller, Thankster’s founder, the company may have an advantage, because it started well before most of its potential competition. ‘They’ve built up a lot of knowledge of this space,” he says. “They really went ahead and took a chance.’” Source.
These 11 sites are set up to be the main the players as the U.S. equity crowdfunding scene expands. In future posts, we’ll explore their relative features and benefits more in depth and take a look at some niche sites that could also make a difference.
Follow me on Twitter for more crowdfunding news.
In the first episode of the Poor Man’s Angel Podcast, Jason Camps and Tucker Max discuss Tucker’s history backing Kickstarter and Indiegogo projects and the problems with Kickstarter and rewards crowdfunding in general.