Crowdfunding

Crowdfunding Start to Finish and All the Parts in Between

I Charge A Contingency Fee (% Fee) For Helping You Raise Money

It means if I don’t help you raise any money, I don’t get paid. The payment of my fees is based solely on the level of success of the project and are payable out of the proceeds of the offering. It means you don’t have to put out big bucks for the “chance” to see if any funds are collected.

A contingency fee sometimes is referred to as a percent fee, meaning that I receive a % of the money raised. So you could say I offer % Fee Crowdfunding campaign assistance. My fees are paid only if you raise funds. While each case is different, a rule of thumb you can use is that my fee will be about 15-25% of the first $100,000, and then 5-10% on the balance. I am risking my time, skill and efforts on the hoped for probability that your project will be successful. My fee is a flat fee and is not computed based on the amount raised, but tracks the amount raised. I use the % example in order to try to help you understand what the fees may end up to be for estimation purposes, and not for strict computation purposes.

Most crowdfunding schemes fail. Most are not successful. Think about that when you have someone telling you that you will need $20,000-$50,000 or more to undertake a campaign!!

When I began looking for someone to undertake a crowdfunding campaign a few years ago, everyone was an expert and everyone charged a very high upfront cost. It seemed to me no one cared if any money was raised. When I asked for a contingency fee based on results, instead of their high required deposits and monthly fees for executing the “campaign”, they were stunned. They all said “No”, and I remarked that they therefore had no confidence in their skills.

Try to find anyone that will work with you on a percent basis… I will.

The “Experts” and Their Cost

Crowdfunding was intended to help the little guy, the new business, the entrepreneur with a new idea, to raise some money on a shoestring. You need a corporation, and in many cases an accountant to review financials. This can be accomplished for $500-$2500. Other than those essentials, you should not need much more. If you had a good idea, the public would support it.

But Good Luck with that!! Now you are bombarded by all the experts that you will need at huge costs of a minimum of $20,000 and usually more. You need marketing experts, Facebook campaign managers, website managers, website designers, sales experts and on and on. None of these experts guaranty anything. You need lawyers, accountants, and of course someone to create your unnecessary Business Plan. Did Steve Jobs or Bill Gates have any business plan?? You know the answer.

The arrogance of some of these experts is stunning. I have heard them report on forums: Well this is Your project to do, if you don’t work on it and get all your associates and friends working on it, how do you expect us (charging $20,000 and more) to accomplish anything?

And verifying any track record is difficult at best. Many claim success in this or that fundraising, but what role did they really play???

The so-called telephone “consultants” are the worst. They will charge $300-$500 for a worthless phone consultation. I tried one as an experiment. All the consultant wanted to talk about were what my plans were and what I was thinking. Hey, I called You to tell me how to do this successfully. So, don’t waste your money. If you have a question, the answer is floating around somewhere for free.

I offer free consultations for almost everything. I am not going to charge you to tell you whether I am interested in your new business!

Business Plans-You Don’t Need Any!

Many experts want you to have a Business Plan in order to move forward, and of course, for a fee, they will assist in generating one. This seems like a way to stop a lot of people. I have never really known why anyone would ever need a Business Plan when they are just starting out and have no idea where they are going, just that they are going…

I guaranty you that Steve Jobs working in his garage, or Bill Gates never had any business plan when they were getting started. Sure, now with billion dollar companies, of course plans are needed. But we are talking about folks just starting out.

The lively and talented group of “Entrepreneurs for Nepal” taught me a lot about business and I respect them highly. I learned a lot from Kathmandu!!

I would like to share their Nepali Entrepreneur’s Handbook. It makes for a fascinating read for anyone contemplating a new business. I especially enjoyed BJORN SODERBERG’s comment in Section 39:

“You don’t spend money to start a company;
You start a company to earn money”

I have never forgotten it.

His comment about Business Plans being stupid also resonated with me and is worth sharing with you:

He believes more in learning by doing rather than trying to focus too much in theory as he says:
“Most people believe you need to follow a certain process and make business plans to start a company. But the matter of fact is you don’t need websites, business plans or brochures to start your company, just start making money. Once you have your first customer, you have your market research, you have your company”.

The Nepal handbook is Here: Entrepreneur Handbook Nepal copy

I would like to help you with either the traditional crowdfunding like Kickstarter, in which a benefit is given to people donating to your project; as well as the new equity crowdfunding model where you will sell shares of stock in your Company, or issue Revenue Sharing Certificates.

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I help you with raising money via Crowdfunding

A. You need a corporation.

Unfortunately, the $99 incorporation services one finds on the internet are “bare bones’ incorporation papers that are not suitable for equity crowdfunding. You might be selling millions of shares at 10 cents. Not only do you need an appropriate amount of authorized shares to be issued, but also there are a few other necessary clauses that are required to get you going smoothly.

B. I help you select the best Crowdfunding Platform for your product or service.

Even though you could probably sell your stock via your website, as interested people visit, like what they see, and are willing to invest, unfortunately, this is not permitted. You are required to go through a crowdfunding platform or other funding apparatus approved by the United States Securities and Exchange Commission.

So the first step is to select a crowdfunding platform, either a traditional platform like Kickstarter or Indiegogo wherein shares of stock are not offered to the public; or by way of one of the approved new equity funding platforms.

What I Will Do: I will help get you organized for submission to a crowdfunding platform, and handle all legal paperwork, such as Form C, a prospectus if necessary, and provide relevant required financial statements by a qualified accountant, if necessary based on the amount of your offering.

After that, I will be in charge of leading the presentation on the crowdfunding platform, including all communications, general inquiries, communications with potential investors, communications with crowdfunding staff. By this I mean handling the inquiries, not just passing them on to you to figure out. Some work may be outsourced with your approval. In addition to serving as communications chief for the offering, I will also utilize any marketing approaches I feel may be beneficial, including creation of videos, and using other techniques deemed useful.

Not every business idea is going to excite me enough to get involved, which is to say, not every case or business is accepted for handling. After all, I am basically on a commission basis working for you!!

Compensation: Because you probably are a start-up with limited funds, my compensation must be paid out of the proceeds of the offering. Of course you will have some small initial out-of -pocket expenses as well, for incorporation, crowdfunding platform fee, accounting fee if necessary, but I will do everything to keep these to a minimum. You should budget about $2500 for the overall campaign. While my compensation is not based strictly on a commission basis or % basis, yet the success of the offering does in fact speak to my efforts and value and my fees will be paid out of the proceeds of the offering. In a typical offering, a minimum of $100,000-$250,000 is required for a successful offering with a goal for about $1,000,000. What that means is that if the offering does not reach the $100,000-$250,000 mark (to be determined later upon selection of platform), funds will be returned to the investors. If the base mark is achieved ($100,000-$250,000) my earned base compensation, to be paid immediately as funds are released , is $25,000. If more than the base amount is raised, I will be paid an additional 10%-15% bonus based on additional funds. [For example if $300,000 is raised, my compensation is $25,000 base plus 10% of the additional $50,000, for a total compensation of $30,000. And so on] A contract will be prepared and will recite these terms in greater detail.

Of course, all numbers are lower if the traditional crowdfunding route via Kickstarter is used which involves no sale of stock. In this situation, your costs are much lower and the usual base amounts you would be seeking would be $10,000-$100,000. It is a much easier route as no securities laws come into play, no accountant required.

I don’t claim to be an expert in anything. But I am not scared to help you on the basis that I am paid contingent on YOUR success, because I have faith in my abilities and skills. If you find anyone else willing to handle your crowdfunding campaign on a contingency fee basis that you feel has more expertise than me, than of course, use that person!!