twitter-icon facebook-icon linked-in-icon

banner2

News Room

11/15/2013 McKinsey & Co - Why crowdfunding appeals to the Middle East
12/30/2013 KQED Radio - Richard Swart - A How-To Guide to Crowdfunding 12/20/2013 Gulf Times - Silatech Hosts Seminar...

5 Reasons This Small Country Could Win Big With Crowdfunding?

…and what country is it?

flag

  1. They have ‘Kasmoni’ a rotating savings and credit system for people who don’t have access to the banking system. (a kind of traditional crowdfunding) 

  2. This country experiences the same problem we see all over the world with a lack of access to funding for small businesses and start-ups – and they want to do something about it.

  3. There is strong ties to Holland, a country that is already using debt and equity crowdfunding, to help entrepreneurs and create jobs.

  4. Entrepreneurship and small business ownership come naturally to this ethnically diverse society.

  5. There is high social media usage and a willingness to connect with broader communities online – including the diaspora. (people from this country that live abroad)

What country is this? Suriname! Is the small Dutch speaking nation on the north-eastern side of South America. I traveled there to deliver a series of lectures and speeches on the value of entrepreneurship and the potential of crowdfunding to create jobs and inclusive economic growth. I had the chance to meet with business leaders, academics, students and entrepreneur’s in a series of events hosted by the U.S. Embassy in Paramaribo, the capital.

IMG_0874

FHR School of Business

I was there on behalf of the U.S. State Department for Global Entrepreneurship Week and was happy to be greeted by engaged and interested audiences at the various events around the capital. I learned that Suriname experiences the same challenges in getting funding to the most promising small businesses and entrepreneurs that we face here in the US. Because Suriname experiences many of the same problems that we experience with funding entrepreneurs, they were interested in hearing what I had to say about democratizing access to capital for all worthy small businesses. People there are working hard to help entrepreneurs create jobs and build better lives for themselves and their community. They want to learn as much as they can about what we are doing with Crowdfunding in the U.S. – not because they want to implement the same system of crowdfunding there, but because they want to take our lessons to create a uniquely Surinamese solution to the problem. The diverse country is full of opportunity for its people who are working hard to expand entrepreneurship and jobs. 

R Mitchell STVS Jrnl 20nov14 Suriname TV News   YouTube

Interview with STVS Channel 8

Because the ideas behind crowdfunding are so familiar to people in Suriname, and there is heavy social media usage there, they are well positioned to be leaders in crowdfunding by getting community based capital to small businesses and entrepreneurs in the country. I realized how much interest there was by the media coverage which included a piece on the evening news and a front page story on the national newspaper. I spoke at three universities and met with business leaders who are interested in what crowdfunding has to offer.

A highlight was the chance to meet with Apura NetWorks which is an online ecosystem for Suriname and its people abroad. They connect Surinamese people from around the world with each other with their technology and are now launching a crowdfunding platform to give the diaspora and those interested in Suriname the opportunity to support project’s in the country. They could make a huge difference for Suriname.

Apura is the first crowdfunding platform in the country but probably not the last. Suriname has many of the key ingredient needed to create a thriving crowdfunding ecosystem. (and some obstacles) Could they be the next leaders in the crowdfunding revolution?

 

Robert MitchellRob Mitchell heads up Success With Crowdfunding and is a Partner at Crowdfund Capital Advisors. He’s passionate about democratizing access to funding for small businesses and entrepreneurs, both at home and abroad, and is focused on helping them create successful crowdfunding campaigns. Rob Mitchell is part of the team responsible for the crowdfunding framework (Title III) of the JOBS Act signed into law by President Barack Obama. He is a serial entrepreneur who speaks frequently at crowdfunding and entrepreneurship focused events around the world. Recent speaking engagements include Stockholm School of Economics (Riga), Stanford University (AMENDS Conference), UC Berkeley (Berkeley Method of Entrepreneurship Boot Camp), Corvinus University (Budapest), and FHR School of Business (Paramaribo, Suriname). Robert is also a contributing author of ‘Crowdfunding’s Potential for the Developing World,’ a report written for the World Bank by Crowdfund Capital Advisors and is t

Use equity or debt crowdfunding to give Ebola funders a vested interest in the outcome

The following was posted on OpenIdea by Sherwood Neiss
Ideas are great but they are nothing without money. Money solves one part of the problem, funding, but not the other, engagement. Crowdfunding has proven it is possible to engage a community of interest in the solution to a problem with funds. Debt & equity crowdfunding is showing that funds given in the form of an investment turn donors from passively involved to actively engaged. This means they become a marketing engine, help to sell a product/solution, help iterate on an outcome, and/or provide introductions to other key players - all because they have a VESTED interest in the success of their investment. This crisis could benefit from incorporating the crowd for their funds and to engage them as investors rather than donors.
How could it work 
Debt Scenario: 
1) Crowdfunding campaign to fund a cure 
2) Funds pledged are given as a convertible loan 
3) If a cure is found, any sales from the product will go to pay back investors 
4) Perhaps put a cap on the return (eg: 10x) 

 

Equity Scenario 
1) Crowdfunding campaign to fund a cure 
2) Funds pledged are given as equity 
3) If a cure is found the profit from any pharma who buys the solution will go to pay back investors 

NOTE: Both scenarios might require a US or UK Entity be the one that receives the money as they have the most established debt and equity crowdfunding markets.  Governments and regulators would have to collaborate under a special "Eboala Exemption" 
 

How Craigslist could get rid of 99% of fraud but is too lazy to do so

Screen Shot 2014-10-01 at 12.20.34 PMBeing on the forefront of all things crowdfunding, we get to see how new technologies are solving old problems. One of the areas where I bet we will see ‘less of a big’ problem is fraud when it comes to the private capital markets. Sometimes we hear stories of people investing in a business they heard of through a friend of a friend only to find out it was a scam, the company didn’t exist, or it was a shell business formed to steal money from unsuspecting investors. More often than not, these investors lose out on their money because it is impossible to track down the perpetrator.

The reason these scams take place is there is usually no one vetting the scammer. This is a problem technology companies like Early IQ (in full transparency we are an advisor to Early IQ) are solving. Early IQ has figured out how to detect fraud with almost 100% accuracy. The system works by requiring that individual’s self-disclose certain information up front that is then verified. Their team, databases, and algorithm then go to work to see if they are a real person, at a real address, with a real phone number so that if anything goes wrong the police know where to get them. 

With Early IQ, investors that want to invest in businesses that have been through an Early IQ fraud detection don’t have to worry about a potential shyster taking off to the Cayman Islands with their investment. This doesn’t guarantee that the business will be a success, but at least we’ve removed one of the biggest problems in the private capital markets, identifying fraudsters before they have a chance to commit fraud.

This got me thinking, what if Craigslist were to require everyone listing an item for sale or an apartment for rent to go through the same background check. How much fraud could be reduced on Craigslist if everyone selling something there had to have a badge certifying that they have a clean slate? And to prove it, you could click on the badge and it would take you to a website like Early IQ’s to confirm they performed the background check.  How much money would be saved from trusting buyers or renters that have been taken advantage of by unscrupulous scam artists?

I bet a ton of money and here’s a personal reason why. I listed my condo for rent this past spring on Craigslist. Some shyster took pictures of my pictures and started renting it as a short-term rental in a different area on Craigslist. He used a story that he was my tenant and was subletting it because he was transferred on assignment to Alaska. This was a total lie but he used my name, pictures and listing to build credibility.

More than 5 people eventually saw my real post and called me to say they lost money to this guy! They each sent him a deposit and never heard from him again. One poor soul showed up at the condo to MOVE IN for 3 months only to find out she’d been scammed.  I have no idea how many more people were taken advantage of.

Here’s another real life example.  I have a friend who runs a specialized online horse tack store and received a large order to be shipped to Argentina (not too crazy as this sport is popular there), but the "customer" required that he use a specific freight forwarding company rather than UPS.  Turns out that company didn't exist. Imagine if he had required an Early IQ check on the freight forwarding company? 

The analogy in B2B is that most if not all large corporations require new vendors to complete a vendor information application - generally run them through a BBB check and a credit check.  But for smaller companies and smaller vendors, it's not practical or particularly effective.

But think about all the fraud that could be deterred and money saved if Craigslist just required all buyers and sellers to be verified?  Think about the confidence people would have in Craigslist as a real marketplace if they knew they could track down and hold a fraudster accountable?

The technology and businesses like Early IQ are there. The reality is, Craigslist is just a “listing service” and “buyers need to beware.” Easy enough to hide behind that but if they really want to establish a credible marketplace as the crowdfunding industry is doing by verifying that the sellers of securities in businesses are real people at real addresses with real companies, perhaps companies like Craigslist need to incorporate some of these new technologies into their own business models?

What I learned at 4am going to the Miami Airport

Sometimes it takes me a while to really hear something and process it.  This was the third time and it finally sunk in.  A different side of the Uber/Lyft phenomena:  The Driver.  Woodie and I were headed to the Miami airport, for yet another flight, and we were chatting with the driver.  About half of the time when I'm in an Uber/Lyft the driver seems interested in talking and if so, I usually ask a few questions about how long they've been driving, how do they like it, what were they doing before, etc.  

When we asked the driver our first question about how long he had been driving for Uber/Lyft, he responded with "Uber has changed my life...Lyft has too."  I had heard 2 other drivers say this in the past, but not with the same emphasis has he did.  We asked him to tell us more.  Essentially it was this:  He came to the U.S. 20 years ago and and worked a steady series of security jobs making barely above minimum wage.  A few months ago he was working at a quick service restaurant and security at the same time.  A few months ago, he started driving for Uber/Lyft, and he had just quit his other two jobs the day before he picked us up.  He said again "It has changed my life" and talked about how much he enjoyed driving, meeting the nice people who used the service and that he was now able to start saving some money to start his own business one day.  The pride and joy in his voice was palpable and impossible to forget.  

I look forward to a time when thousands of business owners can talk about about how crowdfunding changed their lives, or the life of someone they knows...the ability to work hard, get funding from your community, and start a business.  Woodie and I are passionate about creating new ways for businesses and entrepreneurs to start businesses.  That is one of the reasons that by the end of this year, we will have flown a combined total of over 1,100,000 miles over the last 3 years to create this opportunity for people in countries around the world.   We will continue to do so, because we must if we are going to create enough jobs and business opportunities to stabilize economies/regions and engage populations in driving their own economic destiny.  

Asia Turns Up the Volume on Crowdfunding

Recently I was in Singapore to speak at the Crowdfunding Asia 2014 event and lead a panel discussion. The event was very well organized and had many interesting and engaging speakers including the Minister of State from Cambodia, the Secretary General of the Stock Exchange of Thailand, Doug Ellenoff of Ellenoff Grossman and Schoel, and Paul Neiderer of ASSOB.  The roughly 200 attendees came primarily from Southeast Asia but also included crowdfunding industry participants from China, Taiwan, Japan and Korea. Screen Shot 2014-08-25 at 2.54.06 PM

If you have not been to Singapore, I highly recommend it for a number of reasons (business environment, support of entrepreneurship, etc.), but for me #1 is the food.  Food in Singapore has influences from the entire region and they come together (and/or remain separate) in lots of amazing ways.  Even if you just have 48 hours, you can enjoy yourself on a stopover. (ok...ending the unpaid Chamber of Commerce message).

A few takeaways to share from the event and the meetings and conversations during the event.  

  • Several countries in Southeast Asia are moving quickly to finalize their regulation on equity (and in some cases equity and debt) crowdfunding.  We are working directly with 2 of these countries and will be able to discuss more on this in the coming weeks/months.  
  • There was a significant focus of the conference on Women in Crowdfunding and Women Investing in Women.  This is a huge issue globally and is one of the reasons why we published a paper on the value of crowdfinance for women/minority owned businesses was referenced by 6 different speakers at the event.
  • CCA has been invited on our 12th mission for the US State Department to Hong Kong September 15-18.  These missions are always fascinating as a way to do a quick and deep dive into an entrepreneurial and funding ecosystem in a country.  We'll provide a a heads up on the schedule when it is available, and a summary following the event.  
  • Crowdfunding as a possibility in Cambodia?  Yes, in the future ... possibly near future.  The team from the Cambodian government that attended the event was laser-focused on what they can do to develop their economy and create jobs.  With smart phones and tablets now for sale at $100, and soon less than that, greater and greater numbers of citizens have social Web connectivity.  The generation born after 1980 is taking power in the country and they are moving quickly to modernize and build entrepreneurial capacity and skills.  While challenges abound, I do believe this is a country to watch because it has interesting potential.  
  • In countries in Southeast Asia that have majority or minority Muslim populations, it will be interesting to see the extent to which Islamic Finance compliant platforms emerge.  
  • Crowdonomic continues to charge ahead in Singapore and I look forward to talking with their CEO Leo Shimada in mid-September when I'm back in Kuala Lumpur, Bangkok and Singapore.
  • Taiwan has the largest rewards-based platform in Asia - Flying V.  I had the chance to sit down with its CEO and Founder Tim Cheng and learn the great things he and his team are working on and I'm looking forward to lending a hand to their efforts early next year.  
  • I also had the chance to sit down with the Founder and CEO of e27, the leading tech blog in the region.  Their site is a great way to learn a bit about this fast growing tech scene and if you are in Bangkok in mid-September, check out his Eschelon event...it will be great.  http://bangkokstartup.com/2013/08/01/echelon-ignites-thailand-in-september/