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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...

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 will be great.


3 Ways Crowdfunding Can Foster Open Source Pharma








Nestled among the beautiful scenery of Lake Como, Italy with pristine lake and soaring evergreen mountains a group of 23 hyper connected individuals from biotech, NGOs, non-profits and global funds gathered to answer the question "How can we use the 'evolving collaborative economy' to treat diseases in very effective ways without destroying incentives?"

It was apparent to the attendees that process for drug discovery and development is broken.  These problems include:

  1. Scientists who are afraid of losing their intellectual properties (consisting of molecules, compounds and libraries) are not sharing them, and this is inhibiting innovation.
  2. A lack of collaboration among scientists means repeating costly errors and duplicating unnecessary research.  This ends up increasing the length of drug discovery, only leads to incremental improvements, and furthers the "drug development is a costly initiative" theory.  And
  3. The lack of funding is falling short of what is needed to move from drugs from Phase II to Phase III clinical trials -- the point at which drugs go from 'proof of concept' to 'human consumption.'


These individuals aren't focused on the problems but the solutions. "Open Source Pharma" (#OpenSourcePharma) is the idea where the process of drug discovery is brought online, everyone collaborates, time and costs are reduced, solutions to developing economy and small market ailments are addressed, and the world wins.

Luckily the biotech industry understands the power of collaboration because crowdsourcing, where people are invited online to collaborate in solving a curated problem, is rapidly evolving as a tool among scientist to foster innovation.  Data points to the fact that crowdsourcing has proven to lead to better solutions faster. However there are still many problems to be resolved.  These include the time to take drugs to market and funding.

Crowdfunding is sweeping the globe as a solution to the funding void in many industries.  The funding void is the most difficult money to raise between one's own personal cash and that of venture investors who tend back projects that have a greater likelihood of being viable with their investment.  Crowdfunding is the ancient practice of 'friends and family' financing brought to the Internet age where websites list fund raising campaigns and individuals use their social networks to solicit contributions. Crowdfunding saw its emergence around 2009 with artists using it to raise funds for their concerts or projects.  Today companies are using crowdfunding to pre-sell products, raise equity funds or borrow money from the crowd on more favorable terms than the banks.  In 5 short years, it has  grown into a multi billion dollar industry.n 1425 colore

Crowdfunding isn't a panacea. Taking into account all forms of crowdfunding, less than 35% of initiatives are successful with their fundraising.  However, it does increase the opportunity for individuals' to access capital where the traditional financiers have either shown no interest in funding or have stepped out of the equation.  Depending on the type of crowdfunding it requires that certain technology, social, cultural, regulatory pieces are in place.  Globally an entire industry has sprouted to support crowdfunding.

Here are 3 ways the nascent Open Source Pharma community could use crowdfunding to further its goals:

  1. Host a crowdfunding campaign with the goal of launching the Open Source Pharma initiative.  Set a realistic goal to create a minimum viable organization that leverages a community of engaged supporters but understands the need for a central organization to represent them as the voice of the Open Source Pharma network.
  2. Figure out if the organization is best suited to buy, build or white label its own crowdfunding platform.  It is critically important to understand that crowdfunding platforms are complicated websites with major technical needs.  The Open Source Pharma initiative needs to support scientists at all stages in development.  They should promote innovate crowdfunding terms that include donation at the earliest/riskiest stages to engage both communities of affected people and communities of scientists.  At later stages of development these platforms should leverage equity and revenue based financing to further incentivize people should be promoted.
  3. Seek matching funds or create an X-Prize type of reward to further encourage collaboration and move development through the pipeline.  Reward people along the way and promote multiple smaller campaigns rather than one large one.  This will continually engage backers along the development lifecycle.


These are a few of the ways that will get the Open Source Pharma movement up, running, promoting crowdfunding, and fostering innovation.  There are many more.  Crowdfunding works because it engages the community where they have interest and provides not only money but a voice to the initiative.  It is 'open source financing' and can be a huge benefit to Open Source Pharma initiative.  It needs to be carefully curated though.

Are US Crowdfunding Regs in Line with other Global Players?

 Are US crowdfunding regulations in line with other Global players? And which markets are leading crowdfunding and what can be learned from them?  Two very important questions to consider when understanding how crowdfunding is evolving globally.  Here are our thoughts:

US regs are NOT in line with other global players.  The new UK rules were seen as favorable by Crowdcube and we continue to believe that the UK is a great example of the success of a moderate regulatory regime that leverages the value of the transparency that is created by crowdfinance (both debt and equity).  Regulators get transparency and better data monitoring than was ever possible before in the private markets and lenders/investors also benefit from both the transparency and real time engagement with their investments.  Australia has also issued some new draft rules that make CF easier there as well:

The EU's statement a few months ago was split between wanting to regulate, but also understanding that overregulation could kill the industry.  As of May 1, 2014  Italy's highly, highly restricted form of CF has only been successfully completed by 1 company in the 9 months it has been available.  

The short version is that where CF has been given a fair shot by regulators, it has generally worked with extremely low levels of fraud and/or default.  The US rules (if issued as the draft rules are written) will significantly reduce the utilization of this powerful new tool in business finance.  This will enable other countries to continue to move ahead in strengthening their entrepreneurial ecosystems.  

Lessons Learned?  Strong communication and collaboration between the industry and the securities/banking regulator creates an industry that best serves the needs of both investor protection and capital formation.  A regulator that enables CF to function with prudent monitoring enables the regulator to modify regulation when needed, based on actual experience, not based on fears that are not based in fact.  

We have created the CCA Balanced Regulatory Framework(TM) that enables the 5 constituencies that must be satisfied/included in a workable solution, to work through those issues together and form a regulated industry that creates prudent investor protection and enables streamlined capital formation.  To do this you must balance the needs of:

  • Protection for Investors
  • Capital for Companies
  • Transparency for Regulators
  • "Oxygen" for the Industry (enough regulatory room to compete, grow a profitable industry)
  • Engagement opportunities for the entrepreneurial ecosystem (NGO's multi-laterals, development organizations) - this is more vital in developing economies but also plays a role in developed economies. 


Crowdfunding and Climate Innovation - The Next Step in Funding Impact Investing

The future of Impact Investing and Crowdfunding was on display in Nairobi, Kenya last week.  At the World Bank/infoDev’s annual funding meeting their budget was divvyed up among the creation of Climate Innovation Centers (CIC) in Kenya, Ethiopia, South Africa, Vietnam and the Caribbean and new funding mechanisms to allow the Bank to effectively seed innovative via crowdfunding.

CIC’s are incubators training impactful, locally sustainable technology companies.  Examples include a biofuel gas stove company that  can reduce carbon emissions and black smoke disease and a household filtration system company that recaptures and recycles water allowing women to perform their duties while saving them hours from painstakingly carting water jugs on their shoulders.   DSC0127

The new funding mechanism, called crowdfunding, will use the Internet, technology and the social network to connect would-be entrepreneurs with diaspora money.  It will allow investors anywhere to identify a wellspring of opportunity in emerging markets, fund their entrance into incubators, and seed them with capital. The CICs will provide training in management, operational and financial systems, procedures and controls.  They will also teach entrepreneurs how to broaden their fundraising efforts via crowdfunding to solicit future growth capital from investors who share similar communities and homestrings.  These investors won’t be traditional institutional investors but Africans, Asians and Carabineers who live abroad and wish to remit funds into these investment opportunities from their sofas in Detroit, Michigan or London.

Crowdfunding isn’t just a fad, it is turning out to be a powerful tool to democratize access to capital globally.  Research conducted by the University of California, Berkeley shows that funding by the crowd operates in a rational manner (eg: no hype), removes the stickiness of the process (eg: brings documents online, allows multiple parties to diligence and vet at the same time, and facilitates the immediate transfer of information and cash).  The industry which only started to gain traction in 2009 is already a multibillion dollar industry that consists of entrepreneurs, fundraising websites, ecosystem players that provide vale added services and of course at the center investors.

For the CICs and other considering this path the next steps are creating education, training and a funnel of opportunities.  This requires the connection of stakeholders in the private sector who focus on teaching entrepreneurship and merging those principals with crowdfunding and accounting.  The stakeholders include organizations focused on building entrepreneurial capacity, crowdfunding education companies and tools that facilitate the accounting of businesses and their structures and processes.  Sherwood Neiss of Crowdfund Capital Advisors says, “This fits perfectly with our firms capabilities.  Our principals are all successful entrepreneurs, who have raised millions of dollars in the private capital markets, hosted successful crowdfunding campaigns and wrote the framework for the crowdfunding law.”

Crowdfunding solves pressing problems for both NGOs and developing world entrepreneurs.  It answers the question, where do I find capital?  It makes the impossible possible. It provides a continuum of funding and community engagement from product to process.  And allows investors to enjoy the greatest opportunity for economic value, which is created at the inception and historically limited to the very few. 

But crowdfunding doesn’t come without risks.  And these risks (lack of oversight, regulation, & policy) can be greater in the developing world.  There are ways to mitigate this risk.  It begins with standardizing the process, coming up with a standard disclosures, connecting these ideas to co-working spaces, incubators and accelerators that are sponsored by trusted brokers like the World Bank and regulating all this online, via websites that are registered and tied into reporting systems where investors can see how their money is being spent.

In doing so the perennial question of trust and accountability are answered.  This is about creating a value chain of opportunities and allowing investors to put their money where their mouth is.  Businesses that are successful may not only have access to capital, but strong local resources to guide them and a distribution network of customer and investors for their product. 

Not only are these technologies sustainable but the process by which they are funded is efficient.  Consider electricity.  There has been a movement in the developing world to decentralize and promote off-the-grid technology that create mini grids.  Rather than using mega public funding to finance nationwide electrical infrastructure that take decades and billions, we may now use crowdfunding to create mini funding events and have an impact almost instantly and at a subfraction of the cost.  And by narrowing the funding target business models are promoted that are appropriate for a particular village or region rather than tackling national issues. 

As countries move from donation or perks based crowdfunding to debt and equity crowdfunding policy will need to be addressed.  The financing policy environment will be extremely important. Policy controls whether companies can succeed. Where they can do business and how much they can charge for things like electricity.  Policy needs to be enabled that allows these crowdfunding ecosystem to flourish.  This was the subject of the World Bank’s report Crowdfunding’s Potential for the Developing World.

With $60B in remittances already flowing into Africa a year but often times being immediately spent for goods or safety concerns over hording cash.  Crowdfunding may allow diaspora communities to engage directly with locally sustainable businesses that are having an impact and creating jobs and economic prosperity.  Crowdfunding will address the gender inequality issue as more female investors back more female entrepreneurs and promotes economic inclusivity particularly for parts of the work that historically have been called “the bottom of the pyramid.”  The time is here, the World Bank is taking the next steps.  What is your country doing?