Running out of money is one sure way to kill a startup. But Union Square Ventures’ Fred Wilson suggests raising too much can also kill startups too.
He’s been in the venture game for multiple decades with a portfolio consisting of Tumblr, Foursquare, Kickstarter and Etsy. He has come to this conclusion:
“The fact is that the amount of money startups raise in their seed and Series A rounds is inversely correlated with success. Yes, I mean that. Less money raised leads to more success. That is the data I stare at all the time.”
Wilson advises startups to operate as lean as possible (Tumblr went two years before hiring a third employee, he points out). Also, don’t worry about how long the money you have will last. If you build something great, the money will follow.
“Getting somewhere fast is the game [startups] should be playing,” Wilson writes. “f you can get the plane to take off, the length of the runway matters less. If you can’t, there is no runway long enough for you.”
Head over to AVC for the full post.
drag2share: Why Millionaires Are Lining Up To Help Students Pay Off DebtHow does it work?What’s in it for the backers?
Upstart, a company aimed at helping college students-turned-entrepreneurs raise funds for business endeavors (and pay off lingering student debt), is barely a year old and already has wealthy entrepreneurs lining up to give young people a leg up.
They must be doing something right. Since launching in November 2012, more than 200 backers have made 1,000 unique investments in Upstart projects. Of the 120 Upstarts on the site now, about half have been successfully funded.
L.A.-based entrepreneur Tony Safoian was an early supporter of the site. He’s run his own successful cloud computing and IT consulting firm, SADA Systems, for over a decade, working closely with Upstart’s founders back in their Google days.
“It took me a while to understand the business model, but I definitely feel like [Upstart] is potentially groundbreaking,” Safoian told Business Insider. “I always like being on the ground floor, not taking a massive risk but … literally being a customer or a member and getting integrated that way.”
How does it work?
After passing a rigorous background check, would-be entrepreneurs build a fundraising page with their business proposal and credentials laid out, just like an artist might raise funds on Kickstarter. Then, the site’s cache of “backers” (i.e. investors) have their pick of the litter. Investments start at $100, and backers can fund however much or! little they’d like. On the flip side, Upstarts can also deny investments from backers if they choose.
What sets Upstart apart from other crowdfunding sites is the option backers have to also offer themselves up as a mentor.
If you have a brilliant new idea for an mobile app, a handy gadget, a smartphone case that does something cool, an album you want to produce, or even a comic book you want to publish, it’s never been easier to get your idea in front of a lot of people and raise money to make it a reality. There are dozens of free and cheap sites designed to boost new ideas, but not all of them are best for your idea. Here’s how to pick the best one for you.
Sites like Kickstarter and many others all cater to people with ideas they believe can make it big, but who need money to get them off the ground. The community supports the idea, everyone chips in, and with luck and enough interest and the right amount of money, the product gets made and the contributors usually get first cut or a special perk. Still, even though Kickstarter gets a lot of press, it’s not necessarily the best one for your idea.
Photo remixed with an original by dinadesign/Shutterstock.
For The Most Attention: Kickstarter
Kickstarter is the major player in this space, and for good reason. The service gets a lot of media attention, and even though the majority of Kickstarter projects don’t go anywhere, it’s become the go-to destination for anyone looking to crowd-fund their projects thanks to a few high-profile projects that managed to raise a lot of money. It’s not the biggest crowd-funding community, and it’s not even the one with the best track record, but it’s incredibly easy to use, popular with angel investors and people looking for the next big idea to invest in and get behind, and well organized. Idea creators can set up their profiles for free, founders can pledge as much or as little as they choose, and no money changes hands until time runs out or the project is fully-funded. If the project is fully funded, Kickstarter takes 5% off the top, and the rest goes to the inventor or creator to make their idea happen.
For App-Builders, Game Designers, and Developers: IndieGoGo
IndieGoGo is actually larger than Kickstarter, and more people there use it for more types of projects. The site takes 4% off the top of your fundraising if you reach your funding goal, and encourages creators and developers to offer perks to the community for funding their projects. Unlike some of its competition, IndieGoGo also has its doors open to charities and non-profits. The site is particularly popular with software and app developers, although all sorts of creative projects are up on the site for funding, including documentary and independant films, education projects, and international aid projects. IndieGoGo also has the benefit of being a global site, available to users around the world.
For Inventors and Gadget Creators: Quirky
Quirky has an excellent track record, and some of our favorite gadgets started as Quirky ideas. The process of getting your idea in front of the Quirky community is a bit more involved than at other sites. You submit your idea, the community weighs in first on whether or not it’s an idea that could be made into an actual product before it goes in front of the world for fundraising. That’s the key, while other sites focus on creative endeavors, most Quirky projects are tangible products that can be manufactured and sold. The Quirky community is active and engaged in idea building and product design and development, and a lot goes on long before the idea ever gets on the site for presale fundraising. Pricing is on a sliding scale—people who get in early can get lower prices than people who get in later, and once the product is made, Quirky can work to manufacture it themselves, or work with a major retail partner to get it on store shelves everywhere.
For Musicians: Bandcamp
We touched on this topic a bit in our previous story on how to release music online so music-lovers can get to it, but while SoundCloud was one of our favorite options for releasing your music for free, allowing people to remix it, and comment on it, Bandcamp is another great solution for musicians looking to set up a free storefront on the web to allow people to buy and download their music directly. Artists and fans both love Bandcamp, and the service handles the entire payment platform, from set-your-own-price albums and songs to artists with a mix of free and paid songs in their discography. Artists can also sell merchandise through their stores, and Bandcamp takes a slice off the top depending on the artist’s sales. Fans and music lovers on the other hand get a social platform where they can follow and interact with their favorite artists, get alerts when new music is released, and discover new artists through their friends.
For Crafty Types: Etsy
Crafty types are already well aware of Etsy and how the platform works. When people who made their own hand-made goods, arts, and custom crafts wanted an online storefront that catered more to their needs than a general auction site like eBay, Etsy was born. The site has dozens of categories, including clothing, art, jewelry, household accessories, and more. While most people know Etsy as a craft-lovers haven, the site is also home to a number of stores that manufacture products you wouldn’t associate with “arts and crafts,” like wall decals, custom motorcycle helmets, and even edible crafts like homemade cookies and beef jerky. Where other similar sites help you get seed money for an idea, Etsy is more of a traditional store, meaning you have to have your idea off the ground and your product ready for sale—even if it’s a single item—before you can sell it.
For Global Users: RocketHub
Many of these sites limit their membership to users in the United States, but RocketHub is one of the largest global communities dedicated to crowd-funding new ideas. RocketHub combines a traditional crowd-funding site where individuals can promote and raise money for their own ideas and pet projects with a funding bank where people with inspired ideas can connect with sponsors, non-profits, and funding groups who are willing to share some cash with a particularly motivated or passionate individual. The service works much like Kickstarter or IndieGoGo—sign-ups are free, and the site takes a 4% cut.
Different crowd-funding sites have different goals and different audiences. Depending on the type of idea you have and the audience you want to reach, you have an array of sites to choose from, and this is just the beginning. For example, if you have a random request or want to get the crowd’s help in funding a life event like a wedding or a vacation, you can try GoGetFunding, and if you’re an industrial designer, Yanko Design is a great resource for like-minded designers.
Whichever site you choose to get your ideas off the ground, make sure it’s one where the community is aligned with and supportive of your ideas, and you’ll have no trouble raising the funds needed to make it a reality. Have you used any of these sites to crowd-fund a project or idea? Share your experiences in the comments below.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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