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Find Investors and Finance Your Business with Equity CrowdfundingHello. Hello everyone it's great to be here. We will learn about crowdfunding. Let me jump right in and tell you about this relatively new phenomenon called regulation crowdfunding and how you can utilize this for your startup or small business to raise capital. First I will tell you about YM, so you know I am not just a random guy, talking about some new concepts but I am an entrepreneur that many of you that has the same experience of trying to raise money for the business. >> I am on the left, Sherwood Neiss I am one of three people that went to Washington with this idea to utilize the Internet to raise capital for startups and small businesses, prior to doing this I was the CFO of a startup by the name of flavor RX, we grew this idea from one pharmacy in Washington to 40,000 across the country got I know what it is to take an idea and turn that into a business, I know how critically important it is to have capital to scale the business and I know what it is like to exit a business. Under the old school method I raised millions of dollars for this company by going to accredited investors, venture capitalists and raising money, I was wondered why can we go to the crowd, why can I go to the customers that call me when they get their kids to take their medicine and say, how can I become an investor in your business and take money from them to be a shareholder rather than go to a met -- a bunch of venture capitalists. In 1933 laws were written to help prevent people from being scammed in these laws prohibited people like you from soliciting people that were not rich from investing in the business, they prohibited you from using any form of communication like the Internet, from communicating with people about these investment opportunities. That was great back in 1933, when we did not have any transparency, but why can we do that today? The answer was, because the law has not changed. Rather than complaining about the law as it was, my peers and I crafter framework to update the security law and we went to Congress, we had bipartisan support we had the bill introduced into the committee and it passed the house The White House came out with a statement of administrative support from President Obama saying this is something Congress should get behind, it passed the house and then it went to the Senate where he became part of the job act, one of the highlights of my life was sitting in the Rose Garden of the White House where President Obama signed this bill into law and took this idea that we had to allow people like you and me to go online and raise money for people that we know. After this we rotable called crowdfunding investment for dummies, we work with the World Bank and within it are at the moment thank and will work in 42 countries around the world with people that are trying to figure out how to leverage this new form of capital via the Internet. Today I will tell you we come with experience, people that wrote the law and the book and where all to printers that are raised money via crowdfunding in the old-school methodology. The topics of discussion today what is crowdfunding, which crowdfunding is the best for your business, how to evaluate an equity platform, keys to a successful campaign and how to attract investors, and the impact of raising money via equity crowdfunding for your business. It is important for us to really step back and understand what is crowdfunding and the different types there are, when people say why do not -- you want to understand the options , crowdfunding is a form of raising capital. The traditional way that people would go around raising money that everyone is familiar with is you use your personal money, a credit card to financial business and if you're lucky go to a bank and you get a loan. Or you go to investors if you have an idea that is worthy of getting investment from Angels, you would picture idea to them and hopefully get them to invest in your business and in turn they would own a piece of equity. That is the old-school way and it still exists that nothing has changed with this new form of crowdfunding. It fills a funding void that exists in the market. The new form of crowdfunding has five different flavors, equity, lending, ICO, rewards-based and donation, the donation and rewards were the first to to come into play then with the signing of the jobs act we had equity and lending come in to prominence, it's been around for a few years, and this ICO is starting to take off as an avenue for opportunity. What are these different types of crowdfunding's? The crowdfunding platforms themselves to go to raise money online can be structured to five types, equity, lending, ICO, rewards and donation, and equity platform allows individuals to invest in the company and they own a steak in that business, have shares in the business, they have rights and can vote. And even future profits of the company were to exit, across any platform that deals in equity gets financial return to investors that you can see equity lending, all offer that and seed investment is a great example of platform that raises money for companies online. Lending platforms instead of going to a bank and borrowing money from the bank, you go to one of these platforms and you put up your idea and the crowd loans you money. And then you repay principal and interest to the crowd via the platforms so you are not writing individual checks. You send one lump sum payment to the platform and the platform distributes that to investors and they distribute the principal and interest, funding circle is another famous example of a platform that has really been scaled dramatically , billions of dollars. ICO is this new world we are and investors invest into a specific project, and they receive a digital token in return, the token could represent utility or equity in the company, utility tokens are providing you with services in the business and these tokens can be traded on exchanges. There's a lot to this I can't go into it because it's an entire course, it is an avenue that companies have a sophisticated team that understands and they have done this before and they are successful at raising millions of dollars. >> This is a great example of an ICO, on the blotchy network that allows people to invest in other companies by smart contracts. The fourth one is a rewards-based crowdfunding, you be familiar with this because it's kick starter, it allows people to back people that have ideas that and so if you're a band or you have some are related project that you want to get funding for you to put the project up here and people will give money, they will donate in essence because no financial return is here, and then if you figure funding target, the money goes to you. Indigo is another platform they do have keep what you get funding and allows you to keep whatever is raised on that. Kick starter has a bar that lets you hit a minimum target for you to get the money. The last one is donation, this is where individuals are donating to someone else that needs money and so you see the slot on news, someone has an ailment, someone passed away, you need to fund some kids school trip somewhere, any type of charitable artistic, endeavor where there is zero financial return expected, this takes that bake sale type of endeavor online and via platforms like go find me a allows you to raise money, with donation reward will not be raising as much money as you can in your equity and lending or ICO space. You need to keep in mind how much money you need to raise for your business and it is not that much and people not looking for financial return, I will probably stick with rewards and donations, if you have something that hasn't exit potential investors might be able to participate in exit that I would look at equity . If you need to borrow short-term capital from your friends and the bank is not doing that, lending is a great thing. What are the pros and cons related to the different types of beneficiaries? >> The people that are backing the campaign and the companies and the people that are seeking the money from the investors, for an equity type of crowdfunding, for investors clearly there's a financial return. There's an effect -- incentive for them to participate in the exit, for the people that are seeking that money it allows you to fill the funding void and allows you to get capital where you could not get that before, and participate in the secondary market that exists for the equity exchanges. The cons related to equity crowdfunding are it is only limited to companies that have an issue of equity is not suitable for consumer lending, if you're doing equity at the same time do lending you cannot do a crowdfunding campaign separate from equity but the equity is equity, if you are a company and you are raising money via equity keep in mind you're giving up ownership in your business. If you do not want to give up ownership equity crowdfunding is not something you want to do and of course if you are of lesser breast equity crowdfunding -- if you are philanthropist equity crowdfunding is defined incentive by the financial return to get the interest on top of the money that is Lance, is highly suitable for consumers, there are options on the second or exchanges where you can trade the debt that is owned so that is something for people that have issued debt, for the investors though there are limited to diligence so if you're raising money online the diligence that is carried out by a bank or group investors is not quite the same and you need to keep in mind that you are responsible for doing the diligence on the company before you put your money at risk your This is not suitable for philanthropy or charitable causes. This is only for businesses that are retail and have bricks and mortar and customers in cash flow. If you are issuing ICO, this is great because it is for investors, you can access future products with utility tokens, you can issue a Kodak point and allows you to prepurchase the ability to buy pictures online or if you own a picture you want to license it this is a way for you to put it out there, have people by license to it via token so it is a distributed network. It allows you to expand the usage of your company. It is suitable to fund equity with security token so you can see the same thing that you doing in equity, that you are doing this with a token and it is the same thing, they are regulated the same way, that is something to keep in mind. Requires token economics on behalf of the issuing entity, if they are not they are, you not raise any money at all, there's a lot of volatility with these tokens in the market itself. It's risky for investors. This is not suitable for landing to the secondary markets that are under development, the regulation is not therefore investors and the regulators coming down on this, there are a lot of risks that are issuing tokens on these exchanges and there's a lot of risk for investors that are investing in these tokens. It is in the early stages. Rewards, gives you the potential future nine financial rewards such as goods or services, it is suitable for me to see entrepreneurs and startups with a physical product that you have the product you need to test the market and you can go to Mark and see if there's market appetite for your product, there is no exit options for backers that are in here so your pre-purchasing a product if the company were to go on and receive venture capital financing you would not own any equity or ownership in the business, as an investor you are buying the product so for them to get to experience the joy of helping a company become the business but they don't read any benefit from future outcomes. There is limited suitability to fund small businesses, it is great to find a product itself and test the market but if you need to scale a company you will not do this to rewards-based funding, it is not an option really for consumers or charitable products. The last one is donation based funding, it provides visibility for philanthropy and charitable causes it is suitable for philanthropy , there is zero exit opportunities for investors, if you have a complex idea, you are not raise any money via donation crowdfunding. I will insert here, whenever you're raising money online for any of these scenarios, the less complex that you make it more easy it is to understand and the more people get behind them because they know exactly what the product is and who you are what you're trying to do with the money and they can put money behind the idea. Which type of crowdfunding is right for your business? You have to look at the type of business that you are, and what you are providing to investors in the scenario, let's look at the first one under for SMEs if you are a small business, and you're really trying to find out which type of crowdfunding can provide funding to SMEs, lending is where it is because if you are small business you probably have customers and cash flow so equity -- investors are looking for the exit the rewards might work for you because you're trying to get people to invest in the product that you have so it's good but it might not be perfect and donations do not make sense because your funding a business and people do not give money to people that are going to profit off of their money and give it to people that you do for charitable causes. That's why if you look at the SMEs, we think the lending is the right space for you in the crowdfunding arena. Can help you with job growth and creation, and will provide increased awareness about a company and its products, if you are a startup and you're getting going, and you are idea that you have a good team, you have the concept and you need to scale the business now, there is some one that could buy that product down the road, where do we go for money? When we look at this itself we think equity and rewards are the two places that you want to go if you are a startup, if you are startup with just that proof of concept rewards is a great way for you to test the product and the marketplace, because you want to prove that there is validation behind her startup so you could do a rewards campaign and raise money to pre-sell inventory, if it is a technology related product and its is where equity is great with a lot of these companies, equity is great for you have an exit potential, it is not going to work for you if the investors do not know they can get out of your business and five years, this is for companies when you're pitching your idea to then you can say we will sell his business five years down the road and you have an exit. That is where people invest in crowdfunding, if you are startup in the tech business this is great for you they can help you contribute to innovation and job creation and it's in line with the startups means and wants. If you are a consumer, and you're saying I need to consolidate some that got I want to get some money for a small project, something like that then lending crowdfunding is right for you but we were not big into that because that is about the consumer type of crowdfunding. If you're a nonprofit listening right now, this is about equity but donation is where you want to focus because you're raising money for your nonprofit endeavor equity and lending would be out of the question because people are not investing in a nonprofit or loaning money to nonprofits. Investors , we look at that from the people that are looking for money now need to look at the from the people that are back in these projects you have your investors and your contributors, investors are investors they are seeking return on investment they want to have to know what is it for them so when you look at different types of crowdfunding equity and lending are where those investors are focused, ICO is where some of them are focused, the regulations is not fully exist in the marketplace there's a lot of risk so early on, and the regulators are coming down on some of these ICO's, we do not put that anywhere in the rewards donation based, the contributors, people that are giving money without expecting anything in return, the rewards and donations are right they are, -- they are right there. If you like investors and contributors and the amount they put in I will tell you for equity crowdfunding it's about $1000 per investment, when you look at donation and rewards it's about $80 worth of commitment so there's a difference in the amount of money that people bring to the table when they look at giving money to someone with a good idea or investing in a business. That is how you should look at how you choose what type of crowdfunding is right for you, but how do you evaluate the different platforms? You can look at this, these are the dimensions under which we evaluate and the criteria for each of them, we have four different dimensions the company profile, platform features of financial indicators that safeguard measures. With the company profile itself will kind of track right you have what presence do they have? What financial background have they built? What kind of honesty integrity and reputation exist for the company and how competent are they incapable at hosting these campaigns and bring the money to the table? The platform features, you need to look at the maturity of the platform that is easy to navigate, but kind of reporting functionalities do they have to do they provide training and sub work? How do they communicate with you and what kind of communication features do they have to allow you to to medicate with the backers of the campaign? What kind of channels are they on? You need to understand where the people that are going to back these campaigns can come to learn about the campaign, the financial indicators are important, you want to go to a platform that has been around for a while, you want to know if they are going to be in business going forward and they were not go out of business why they are hosting the campaign, you need to see the growth potential that have been through where do they fit in the competitive landscape, there's not just one or two platforms depending on which tier you're in which type of crowdfunding you look at it could be 50 or 100 type of platforms got you to compare the fees and costs, there are different platforms that have different fees and they can -- you want to understand what the fees are for running the different types of crowdfunding types and platforms got you want to check and see the revenue if you can about that platform so you know the economic health of the platform itself and you want to know any social benefits of that platform. >> The last one , you need to think about the world we live in which is cyber security, the platform and the safeguard measures, people are going to be giving information about themselves, it will talk about personal information and financial information so what kind of safeguards do they have on the data, the money that is committed to campaign, what kind of business continuity plans do they have in place in case the glut of business, if you are borrowing money from a crowd and you are repaying that by the platform if that goes out of business how do you start keep on getting the money and interest back to the investors, what kind of CyberSecurity safeguard measures they have, how do they prevent disclosure of information so we're not going into this in detail but it is something you need to look at when you are evaluating all the platforms themselves to make sure you're picking the right platform for you. Let's do a polling question, it would be interesting to learn from you if your business is looking at crowdfunding to raise money, what type of business is closest to you, are you a retail business that sells directly to customers, are you a business consumer service, are you a business to business service, or providing a technology service to other businesses, and you want to use crowdfunding, are you a software or technology company that is developing software that could be used for consumers or for business -- entertainment is broken out into its own category but you'll be shocked at how many entertainment related endeavors are out there that people are looking at raising money for , or are you other. Maybe something that is in medical or energy-related. Let's take a few seconds to see where we are. >> If you have a restaurant and you can be purchased by another chain, you have the exit potential, the equity crowdfunding could be right for you. >> Let's jump into some of the keys to a successful campaign. This slide , putting together a successful campaign is not just listening to one thing like this, this is an intro to the entire thing, you need to study campaigns so you can learn about why these people raise as much money as they do, that is how you will build the best campaign for your company, to find the company that matches what you do and then mimic what they do, at the end of the day these are the tips that I will give you right here, you need to have a compelling story and video, in the video so your vision, ability to execute, in a short and concise manner. The reason this is number one on this list, when people come to crowdfunding platforms and the cold look at your crowdfunding campaign, you will have a written section about what you do, the problem you solved, information about your team but you have a video, and the video is what everyone will watch when they want to find out what your campaign is about and if you cannot get across in the video within a short period of time what it is that you do and why you are the right person, no one will finish watching the video, no one will put any money in your campaign so you want to spend a lot of time and money because it will not be cheap to put this together, put together a compelling video. The timeline strategy and the team is critically important, putting together a campaign we build the database and we'll talk about that, I collect information on every offering we have interviewed a lot of the companies that are successful to learn from them, and what we have learned is they spent a lot of time putting these campaigns together, it was not a 10 day endeavor it was more like a six-month endeavor that was broken down into milestones, they had a team an internal team of people that were focused on putting a campaign together from inside the company and they had an external team of people if you're doing equity crowdfunding are selling shares in your business, that means you to understand the responsibility that you have with distributing equity in the company so you better have a law firm that represented you better have in the accounting firm the video will be important you will need a videographer, you need to have the team put together, that helps you achieve the goals you want to achieve without taking about the timeline that is going to take, and what to have the right team to get things done. You need to pick the right type of crowdfunding matches investors needs, let me repeat this again, if you are a startup or a tech company that can be sold to somebody else, someone else, another company, you have an exit Equity is where you want to focus that if there is no exit if you just raise money and you need to raise money for your business but you know you cannot sell your business to anyone else, do not try to pitch equity to an investor, they are smart enough to know there is no exit for them and they will tie up the money you need to look at that crowdfunding for your business, be smart you do not want to be a full and say, I want to sell Gideon my company when there is no exit, you do not have to sell exit equity in the company if you have a great idea that has an exit. Maybe you do not want to give up ownership in the business or share any of the future profits that is fine. You can use that for crowdfunding for retail business, you suffer companies that is a tech company, all the different avenues but make sure you have cash flow to be able to repay that debt, and the investors will know whether or not you have cash to be able to support the payment, do not feel full either and say I want to borrow money in our repeat it back over time if in fact your investors, you have no ability to repay back the cash over time, because you have no cash flow. Next is the marketing plan and know your crowd, it is not about putting the campaign together, it's about who you know that is going to fund your crowdfunding campaign, we've done a lot of research into statistics about what leads to a campaign, the reality is if you have your third-degree people are backing these campaigns, the majority of the capital is going to come from people in your first three conductivities so it is not that you put these campaigns out there and people you do not know will come in and fund your idea, we live in an attention deficit disorder society known is on these platforms looking at campaigns to randomly put money behind so you better know your crowd in the means you need to have a social network outreach, a marketing campaign for which when you're campaigning you actually reach out to the people in your network and say, where raising money online this is where you can find more summation about us this is where you can invest. It is important that you set expectations, I have a link to our regulation data dashboard, if you type in crowd fund capital advisors and data into a Google search, you will find a dashboard that has a lot of valuable information on all regulation crowdfunding campaigns got you need to understand you cannot raise hundreds of millions of dollars by this, we created this Avenue to raise up to $1 million online is because the funding board that exists was between $25,000 and $250,000, set your expectation knowing that this is what I want to raise via equity crowdfunding equity if you will do that under regulation crowdfunding, keep in mind investors are not stupid, the valuation that you have your company if you're going to be raising money via equity crowdfunding needs to be a realistic thing, if you are startup with an idea and you think it's a $50 million valuation for an idea I guarantee you you will raise no money Average valuation for companies right now across the board in crowdfunding is about $7 million, set the expectations starting right there, it is broken down by industry so the average varies by industry, so look at the data so you can learn what the average valuations are in my industry, region and companies that raise $1 million off the bat did not raise $1 million in all industries, you need to understand what is the average rate that is done in each industry so you can send your expectation as to what you want. This is going to take a lot of time and energy effort on your behalf. You will be putting this campaign together and then number six is communicate during the process , you will be successful with a campaign if you are not spending a lot of time communicating with the crowd and answering questions. What are the benefits to raising money online? Reduces the funding gap for you, you can get capital where you cannot get up forgot to provide investors with a new way to invest, that you can raise money from your friends and family, it fosters local innovation, local companies that do not qualify or Silicon Valley capital to get money locally now, it allows for diversification and job creation which is phenomenal for support , it takes a product in to a transparent area and if you are in an area or region that is not known for something that allows you to position the region at the digital for fun so if you're a government official listening to this in the local area, you have a core competency, you should be looking at crowdfunding for people in your region C can help promote them online and will position you at the forefront for those companies. A couple of other things, there's the crowd equation, we built a database that collects all the information, we incorporated all the data and reduce that down to this formula, the formula allows us to determine whether or not a crowdfunding campaign will be successful at hitting the target, we have created a webinar series about this so if you actually at the beginning if you selected you with receive more information about crowdfunding from us, you can learn more about the crowd equation. >> How can you raise $1 million for your startup or small business? There is a way in which you can raise $1 million and we can help you. The crowdfunding data that I talked about, this is the dashboard, you can see right now $132,000 has been committed since industry went live two years ago, 136 136,000 people have backed these campaigns got over 1000 companies have tried their hand at crowdfunding, the average raise his $245,000 got 5200 jobs have been created and you can see where capital is flown , -- is flowing, you have California, Texas and New York leading and you can see all the states in the union are raising money online right now. If you're anywhere in the country listening to this, you should be thinking about this as a possible avenue for you to raise money. There are different platforms and they have different core competencies and industries, we -- I just wrote a piece that breaks down the different platform leader so if you Google Sherwood Neiss you will see any article that I have written about the crowdfunding and you can see that piece that analyzes the top platforms by capital raised, average commitment, industry itself. It is pretty interesting and the last chart is the top 15 industries by campaigns and commitments. You can see is a broad spectrum, people are doing personal services, yoga studios, you can use crowdfunding to raise money. >> Now that you have learned about crowdfunding what are your next steps? >> Did this get you energized enough to have you think about this ? >> Any questions? >> Thank you. We will have the Q&A portion of the webinar. I will be reading questions , please continue to submit your questions. In the time remaining we will address as many questions as we can. >> When setting up crowdfunding campaign at any kind, how do you get around sharing ideas about the business concept before officially launching, are their trade secrets? >> If you have something that is proprietary and you do not want anyone to know what you're doing, do not raise money online, this is not your Avenue for raising money, you need to follow the traditional way, having someone that had a proprietary formula business, it doesn't matter that you need money so go to the avenues that exist for you, people have ideas it's not about the idea it's about if they can execute on the idea, so I would not rule out crowdfunding just because you have some specific IP that needs protecting I would go and figure out how you can protect the IP and we were formula related company we used contracts that we tied our customers in the contracts and the vendors were not allowed to disclose that we did business with them so people did not know where he got the product made and customers were not allowed to use any other product, this is formula based so we could do that but you can be creative and protect your IP and still raise money. Tie up that type of stuff before you try to use crowdfunding. >> When is the appropriate time to start campaign during the startup process? >> Everything has to happen in parallel, i.e. quake crowdfunding to being on a five lane highway, you will be in all lanes at all times, the car is moving forward, I would not do this campaign until you actually have fought for the entire business model and you have a product or service and base, people are backing people that have tangible items. If you look at donation rewards, there are products that are out there and they know where the money is going, if it is a fundable idea and you try to get people around , it will be hard for you to be successful, the date is does not show that people with ideas are raising a lot of money, if the people have the product going through they have their team in place, and they are out there scaling the idea, there is no's money so I would make sure you have done the initial start to getting your company informed and your team together, and you have gone as far as you can with putting all that together because you're selling people on your vision and your ability to execute and if you have done none of the execution strategy, before launching, the people that are backing you will be looking at saying, you have not proven anything to me before so why should I pack you now so show them you have hit milestones that you have done some execution in terms of your company you for your put your campaign together. >> Can you crowdfunding without any ready cash available? Probably not. On the equity side, raising money cost money and you will need a team of people to help you put that together so you will need a videographer, lawyers, accountants, pay to put disclosures together, I do not know how you do any of that without hiring people that cost capital. In the donation space, yes. You can put a campaign out there without any initial capital up front, in the rewards it is tough because you are showing some return and in the equity space, impossible. >> Do crowdfunding investors like a small business owner versus multi-owners, do investors prefer a small business owner versus multi-business owners? >> We research a lot of these companies and called them and said are you a single founder, do you have more than one founder, how many female founders are on your team, what kind of minorities are on your tenet that's another major piece that I wrote it was fascinating to see that people that have a cofounder raise more money than people with just one founder, so it looks like the crowd likes to back teams, and might be some logic behind that, if it is just one person that has to do all the work, the crowd might think that is risky, if there is more than one person they say they can distribute the workload among a few people, they can delegate tasks, so maybe that is why they put more capital into them. We did not go out interview investors that back to campaigns, but we interview the campaigns themselves to learn about how much money they raised in what the team composition was so I love the whole cofounder idea, it is really smart because it allows me to bounce ideas off of someone else and delegate and share responsibility with someone else. You know the whole workload is not falling on your shoulders. >> What is the tax implication of crowdfunding? >> If you are raising money by these campaigns are tax implications, if you are making investments into your company, that falls under a company's balance sheet so if you are borrowing money from the crowd or if the crowd is buying shares in your company, that's on the balance sheet and there's no tax duplications, per se, for you but if you're doing donation, rewards, there are tax implications of your selling product and you have to be responsible for taxable sales, and then you as the company if you are doing that crowdfunding there are benefits because you can write off the interest they pay to the crowd every month against your P&L still there are benefits to you that way. >> Is there a maximum available from crowdfunding? The project requires $46 million. Depending on different types of crowdfunding activities depends on you can raise that money, in regulation crowdfunding, which forces you to go on platforms and allows you to raise up to $1 million , you can only raise $1 million every year from the crowd in that crowd can be at your average Joe American or any rich American, if you know only a network of high net worth people you could do a title to equity crowdfunding platform, there is no Check on what you can raise but you have to know all those people that will bring the $47 million to the table people just do not show up with money and back ideas, people do not show up and back people with ideas randomly do not think this is a fishing expedition where you will throw a net out there and catch fish. The data does not prove that. You have to know the relationship and if you want to file perspective which is almost like going public, you can hire a law firm, and put together a prospectus and you could do a regulation D offering and in offering you raise up to $50 million accredited and retail investors. You will spend a couple of hundred thousand dollars putting that together, yes you can raise $47 million you have to spend a couple hundred thousand dollars but it is possible to do that online but you will bring your people to the table that you know and you will be working with a broker dealer and paying that the owner to find investors to your business and will be a costly endeavor. >> What does SME stand for? Small medium enterprise. Any company that passed the startup that is not a big business, your company and you been around for a couple of years, you have employees, you are a small business or you have 100 employees and you are doing $20 million in revenue, you are a medium-size business but you're not this 1000 employee company with $500 million in revenue. That is why we abbreviate that small medium enterprise. >> What if you do not have a network? >> I counsel a lot of people about this, what I say is if you do not have that network you need to build the network and how you do that, you need to start socializing your idea online, so you need to be blogging, or creating a following of people, if you have linked in and you're not using that, get that going you need to start a Twitter account and tweeting about things that are similar to what you're trying to address, write a blog post, you need to build the following of people to get them engaged in you and this problem that you have identified, and the solution you have and what you build that no work then you engage that no work and back to you if you have built that vacation channel and show them what you have done in terms of writing a blog post, they can see your execution, it is likely that you can convert those people and investors in your business but it will take time so you need to budget a few months building the social network before you put a campaign together. >> Any type of crowdfunding that has a higher success rate than others? Donation and rewards they have a 40% success rate right now, equity crowdfunding has a 60% success rate right now, when you look at your chances of going to a bank and how low the chance of getting a loan are from them, the equity crowdfunding turns out to be one of the best ways for entrepreneurs to raise money online, because it has such a high success rate, when you look at those campaigns and the data of the companies, take some of the workshops that we put together that utilizes God you can see they were very realistic in their valuations, they were realistic on how they what use the capital, they were you'll stick about the amount they raised, that's why they were successful. They were not doing the fishing expedition and they did not have crazy vacations on valuations or the amount of money that they needed. >> Is there a best region in terms of great backing for crowdfunding doesn't have to be within the U.S.? Can it be global? >> In the United States you can see California is funding the most campaigns, Texas funds the most average amount per campaign, yes, the data shows there are different parts of the country that back projects but the reality is I don't think it has anything to do that, it has to do with your network. This is not about going to the regions where the money is flowing, the entrepreneurs in California just get that and they are raising money online, they have strong networks, this comes down to crowdfunding you cannot crowdfunding it if you do not have a crowd, it doesn't matter which region you are in anywhere in the world, it matters what you're trying to do and who you know. >> What do you suggest is best for nonprofits? Donation only? Donation and reward? Others? >> Nonprofits need to stick with donations because it matches the endeavor and the backers that are back in the campaign, people are giving money and respect -- and expect nothing in return, you could try a rewards campaign, and incentivize them with a T-shirt or some token but that is not what they are in that for they are back in you and your idea, the nonprofit you're trying to do the online now as opposed to the old school method of doing that off-line, but when I change what you're doing I would change the strategy of moving from passing the hat around in the church to doing that one line because we have streamlined the way in which you can get information from us. >> If we did not address your question, we encourage you to connect with a mentor and they can be found online, they can help you apply the strategy, we will send out a link to this recording and the presentation slide deck later today , we will send out an email concerning contact information for Sherwood and his organization. On behalf of SCORE thank you for taking the time out of your day to attend this session. Thank you to Sherwood Neiss. Thank you. Thank you. I hope this was useful for all of you. Thank you, everyone. Have a great day. >> [ Event concluded ] ................
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