ImpactCrowd - blog

Valuation of startup companies is usually problematic because of three factors. First, often the company does not have revenues, stable cash flows or even a market share, since the novelty of its idea. Second, the entrepreneur’s knowledge about finance and valuation is seldom deep enough to be able to use proper valuation metrics and to forecast future cash flow. Third, these firms are already financially constrained and they often cannot afford a formal advisor to help in this respect.

Essay The essay will present you with a new way of looking at startup valuation! It presents a new framework to divide equity between entrepreneurs and investors

Download the paper (issuu) here: DOWNLOAD 

What’s the plan? Make sure you have a clear view of what kind of project you are investing in and what you can expect as a return on investment. Does the venture owner has a clear plan on how to make the project succeed? What kind of environmental or social problem is the entrepreneur trying to solve with his project and do you want to be a part of that? Making an investment with an impact is more than just investing your money; it’s also about generating impact.

Ask enough questions to make yourself comfortable If there’s something you need clarification on or want to learn a bit more about – just ask! We’ve got a great Q&A option at the bottom of each listing that allows you to publicly ask entrepreneurs questions to make you confident in your investment decisions. You can also directly get in touch with the venture owner.

If you see a great investment opportunity, don’t hold off investing! You don’t want to kick yourself when they reach full-investment and you wish you’d been a part of it. Remember, if a business doesn’t fully-fund, you get all of your investment back in-full when it expires.

Don’t invest if you don’t have the money Sounds pretty logical, because like with any other investment, there is the risk that you don’t get as much money back as you expected. So don’t invest with money that you can’t afford to lose. 

Bridging the gap

Joe Swain, editor and writer of the magazine, believes there is a need for this kind of magazine on the market. “I’ve always known that scientists have trouble with some of the more simple things in life, like knowing when it’s okay to wear knitted jumpers and why jokes about nuclear fusion don’t always work at non-scientific gatherings. But not being taken seriously when they are warning us of imminent danger seems to be a new kind of problem”. The existing media coverage about global warming is often viewed as too scientific, too technical and too alarming. With the magazine, along with the website on which it is hosted, books and educational material, the founders of 2050 Magazine aim to bridge the gap between the science world and the general public.

Putting the energy out there

Their goal is to make the whole business of renewable energy and sustainability available to as wide an audience as possible. Not thousands, or tens of thousands, but millions. “To play our part in persuading the general public that switching to clean, sustainable energy is rich with opportunity both economically and socially.” The reason why they chose ImpactCrowd to finance their idea via crowdfunding is because it exactly fits their overall purpose of taking their content to as large an audience as possible.“To everyone as excited as we are by the opportunities that await us when we finally switch to free and sustainable sources of energy. And, most importantly perhaps, each one of them willing and able to promote us within their own networks.” Their environmental impact aim is to save 30 million kilowatt hours of electricity (equivalent to approximately 3-6 million euros) through an increase in the climate-friendly behavior of their readers after a year.

10.000 readers who want to make an impact

10.000 Readers have already found 2050 Magazine. The investment 2050 Magazine is aiming for is needed to scale up the magazine. Everybody who is interested can make an investment via the ImpactCrowd platform. Besides a decent return on investment, investors will get access to a very smart and growing network of people who all see the value of the energy opportunities ahead of us, and are willing to make it happen. ImpactCrowd makes it possible for everybody to invest in projects and ventures which are aiming to create an environmental, social, and economic impact. At ImpactCrowd, everyone can invest in and become co-owner of a world changing company.

More information

Want to know more about 2050 Magazine? Visit the website at 2050magazine.com. For more information about the crowdfunding campaign go to www.impactcrowd.com

About ImpactCrowd

In this article Profounder refers to the Two Investors Principle when it comes to community-based crowdfunding. The principle illustrates that every project that got financed by crowdfunding had at least two investors. Of course, there’s more to it than just finding two people to invest in your new product or service. But the Two Investors Principle shows the importance of personally and specifically asking people who trust you, as a person and as an entrepreneur, to invest. Derek Sivers speaks about “nurturing your first few followers” in his TED Talk, How to Start a Movement. In his talk, he describes the important social proof factor by explaining that “followers emulate the followers, not the leader.” Enviu also used to power of the crowd to finance their project. Enviu mobilized her community by creating an online campaign asking the Enviu community if they wanted to invest. Besides that Enviu created special communication packages for members to help explain their crowdfunding plans to other people.

Building a relation

Taking your investors seriously and investing in the relationship with them becomes even more important on the new crowdfunding platform ImpactCrowd. Here investors become co-owner of the projects that get funded. Building a strong relation with you investor can give you lots of benefits. It gives you a potential client group and the possibility to validate your idea with a large community. Besides that you can use the feedback of your investors to improve your product or service.

Considering crowdfunding for financing your project? Read our tips below about how to build a crowd.

1# Before you start your crowdfunding campaign. Ask your family and friends if they want to make an investment. Explain how much you value their participation in your project.

2# Get the first followers actively involved in your raise. Ask them to write testimonials that you can place on your website and crowdfunding platform.

3# Tell your personal story. You are inviting people who you know to invest and they want to hear your authentic, personal voice shine through and feel your passion.

4# Make the first followers feel special. Maybe a tangible benefit of being first in or an emotional benefit that you build up with them.

5# Send invitations. Make sure that potential investors are up to date with your business and give them a heads-up that an invitation to get involved is coming soon.

6# Let followers emulate followers. Having asked some of your closest community members to invest in your campaign will create momentum and encourage others to get involved. Ask your early investors to share your plans with others! Create a one-page flyer to explain your plan and ask your crowd to send it to potential investors.

7# Follow-up! After sending out an invitation to invest, continue to stay in touch with investors with updates throughout the time of your campaign.

8# Don’t treat your investor as a donor. Don’t forget your crowd after you collected the money. They are shareholders now. Involve them in the developments of your company and use their feedback to improve your product or service. Build a community of supporters and fans.

Waar in de startjaren van crowdfunding met name creatieve en culturele projecten werden gefinancierd, zien we het laatste jaar een indrukwekkende groei van crowdfunding voor ondernemingen. Door ondernemers is het afgelopen half jaar bijna 1,5 miljoen euro opgehaald. Gijsbert Koren van Douw&Koren: “Dat is twee keer zo veel als in heel 2011 door ondernemers werd opgehaald. In 2012 is de omvang van crowdfunding voor bedrijfsfinanciering voor het eerst groter dan crowdfunding voor creatieve projecten. Dat is een omslagpunt.” Creatieve projecten haalden het afgelopen half jaar desalniettemin 1,2 miljoen euro op. “Dat is bijna evenveel als zij in totaal in 2011 ophaalden. Ook hier zien we dus een fikse groei.”, aldus Koren.

“Crowdfunding wordt steeds serieuzer genomen als additionele bron van financiering en instrument voor marketing en vergroting van betrokkenheid vanuit publiek.”, aldus Simon Douw van Douw&Koren. “De groeicijfers van afgelopen half jaar laten zien dat crowdfunding nog lang niet op haar hoogtepunt is: als de groei doorzet, krijgt crowdfunding een volwaardige plek in het Nederlandse financierings- en marketinglandschap.”, aldus Douw.

We zien in 2012 dat ook steeds meer gevestigde organisaties crowdfunding inzetten voor de financiering van projecten. “Het draagvlak en de betrokkenheid vanuit publiek die crowdfunding met zich meebrengt is voor gevestigde organisaties misschien wel net zo waardevol als de opgehaalde financiering”, aldus Douw.

“Voor de tweede helft van 2012 verwachten we dat de huidige groei verder doorzet. Steeds meer projecten en ondernemingen zullen dankzij crowdfunding van de grond komen. In het bijzonder zien we op het gebied van duurzame energie projecten en wijkinitiatieven kansen voor crowdfunding”, aldus Koren.

The Enviu campaign

Enviu develops innovative solutions to environmental and social issues, and introduces these to the market through start-ups. In cooperation with Symbid, Enviu started an online crowdfunding platform where everyone who was interested could invest in new business start-ups. The campaign to promote the crowdfunding project started in September 2011. Enviu created an online campaign asking the Enviu community if they wanted to invest. They also created special communication packages for Enviu members to help explain their crowdfunding plans. Every investment helped. Enviu started ´the club of 1000´ to increase the size of donations from single donors. If you invested a hundred euros or more you were entered in a contest to win a Sustainable Dance Floor party at your house or a Hybrid TukTuk ride, two products of Enviu startups.

The number of investments was staggering. Several large investors pushed Enviu through the halfway point and new investments, both big and small, kept coming in. A lot of team effort and creative marketing made the Crowdfunding project an overwhelming success.

Tips & Tricks for a successful crowdfunding campaigns

According to Enviu, the key to crowdfunding is personal contact, interactive communication with potential investors, and repetition of the message. It is very important to keep in mind that most people like the idea of crowdfunding when they hear about it for the first time, but actually investing money in an opportunity is a big step. Asking people personally if they want to make an investment can make all the difference here. Personal contact is a huge trigger in crowdfunding. Enviu had the advantage of a large network via the Enviu community, who they could ask to make an investment. Clear and interactive communication was a very important part of the project too. Only promoting your idea and waiting for the money to come in is not going to work. Presenting your business idea as clear and transparent in an early stage is very important. Entrepreneurs need to promote their idea from day one and really think about how to place their product or service in the market. Besides that, listen to your potential investors and provide them with answers to their questions. This is one of the main tenets of crowdfunding. Enviu really listened to the feedback of investors and changed their concept of investing to a new one in which investors can chose one a business start-up they want to invest in.

The way forward: ImpactCrowd

Impact-driven businesses and projects are difficult to finance through traditional financing channels. This limitation and the complexity of the market are the main reasons that people want to know how and where they can invest and the long term impact of the project

With experience and ideas to improve crowdfunding, Enviu and its partner Planet B are launching a pilot crowdfunding platform called ImpactCrowd. ImpactCrowd is a crowdfunding platform that focuses on ventures that create positive environmental, social, and economic impact. ImpactCrowd shows the potential investor the impact of the project. Investors become co-owners of the startup and can expect a return on investment. ImpactCrowd will guide the entrepreneur to make sure the opportunity becomes investable and will facilitates the match between impact investors and projects. ImpactCrowd provides an interactive platform where entrepreneurs and investors meet and do business together.

http://www.impactcrowd.com

Lessons learned

Involve your potential investor in setting up a strong proposition

Come up with a strong crowdfunding campaign concept so people take notice and repeat your message 

Make clear what’s in it for the investor

Present a clear and transparent business proposition

How will crowdfunding continue to evolve?

1. Vertical platforms will emerge to focus on select market segments.

2. Crowdfunding platforms will evolve into “full-service” communities to better meet the needs of their members.

3. Creativity and innovation through online crowdfunding will be supported not just by individuals but by organizations as well. 

4. Benefits-based crowdfunding will complement equity-based platforms.