

Crowd-Sourced Capital - siliconcalley
http://calleynye.com/post/52663867/start-me-up

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mkn
While I can appreciate this approach from a one-off perspective, it seems like
it would make more sense to package this process up, like some of the micro-
lending services. The key difference is that there's no fixed interest
(compound or simple) on the investment, but the sky is the limit. Call it
anyVC.com.

You'd allow people to submit their startup idea, business name, contact info,
anticipated operating expenses, fund-raising goal, and so on. Once anyVC.com
had accepted the venture for presentation to it's users, anyVC posts these
ventures with an "Invest Now" button. Or have an auction-type interface:
X-many dollars at y% stake in company per dollar. You could just queue those
up from smallest stake per dollar to highest. (Funds would probably have to be
escrowed, so there'd have to be some serious legalese and possible snail-mail
notary-public stuff going on to sign up to become a microVC. Maybe that's a
show-stopper.)

Then, the entrepeneur looks at his queue and begins accepting funds from the
smallest-stake per dollar to the highest.

This might limit certain exit strategies, like incorporation, unless anyVC.com
aggregates the various micro-investments, paying out to the micro-investors
when they want to cash out, minus a small handling fee.

The firms would then be subject to some oversight from anyVC.com, and joint
reports would be filed to the micro-investors via the web site, or via a
private channel if security is an issue. (Maybe the micro-investors have to be
under NDA or non-compete?)

Has something like this been done? If not, have I overlooked something
glaringly obvious that makes this impossible?

Edit: This may make even more sense in a tight credit market.

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notphilatall
I think this is what <http://www.vencorps.com/> is doing. In regards of your
post to the OP: do it once, then refactor. :)

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gz
Apologies but: hahaha.

You are asking me for money and you'll owe me a favor and membership to a
service which you admit isn't quite well defined yet? Under the current
economic circumstances? And you cannot raise 25K on your own?! So when the 25K
runs out, what?

OK, I'd rather provide some constructive feedback. Please tell me why you are
a skilled entrepreneur. Here is an idea: you mention running a social media
company for 3 years. How did it grow under your leadership and how did the
initial investors do?

Alternatively you can just be funny:
[http://www.newyorker.com/humor/2008/09/29/080929sh_shouts_bo...](http://www.newyorker.com/humor/2008/09/29/080929sh_shouts_borowitz)

Sorry to be negative, nothing personal - best of luck to you.

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siliconcalley
@mkn That's a great idea, but the point is that I don't have the money to
build it. How do you raise money for a site to raise money? And I am extremely
dedicated to this idea right now.

@gz The idea is fully developed, I just don't want every aspect of my business
to be public before I have a concrete product built.

And to "so when the $25k runs out, what?" Isn't that question the cornerstone
to every investment ever made? It's to bring you to a next round, just because
the source is different, it doesn't mean the same rules don't apply.

And it's not that I can't get angel money or VC, it's that I'd rather do it
after I have a prototype.

I didn't have any investors to my first company, it was a marketing company.
It was a service, not a product.

I would love to answer your question about why I think I am a skilled
entrepreneur. I will do so shortly on calleynye.com.

Thanks for the feedback :)

~~~
gz
Thanks for your response. Sorry if I was sarcastic but honestly that's how it
spontaneously came out and certainly it's nothing personal. My point regarding
the $25K was that some people may be concerned about your ability to raise
capital so perhaps this is something you should address (otherwise put: why
crowd-sourcing in the first place?).

If your idea is fully developed then I misinterpreted the following statement
on being stealthy: "I don’t want to build up one idea, just to iterate and
have it be something totally different."

I am looking forward to the blog post about your entrepreneurial skills. One
more thing: you could perhaps say much more about your idea without revealing
what it is: eg, how big of a market is it that you are entering? How many
competitors? How are you differentiating yourself? How long will it take? What
will your sources of revenue be? You get the gist... give potential investors
more info so that they can place an educated bet.

Good luck.

~~~
siliconcalley
An idea can be fully developed but still have to change. There's an iterative
process involved in all startups, and it has nothing to do with the
development of the idea and has everything to do with limitations, competitive
edge and strategy. Startups iterate all the time, and it does not mean the
first idea didn't have merit.

If you sit down and really think about what I'm doing, in a purely business
(not money) sort of way, you may begin to see why I'm doing it. There are 20
reasons that have nothing to do with money that I can think of off the top of
my head.

And I don't know how anyone could describe their business that way without
saying what it is. How can I say what differentiates Dashbuzz without saying
exactly what it is I'm doing?

And no offense taken, I appreciate your input :)

~~~
gz
As far as the development of ideas goes I agree with you. But what you state
above is not what comes through in your blog post. But then again I am but one
sample from your readership.

Regarding your last question here are some things you could say without
revealing much while providing valuable insights:

1) we will differentiate ourselves by hiring k top scientists and attacking
the problem algorithmically something that hasn't been done been before (or
we'll hire k top marketers, you get it)

2) we will provide the service for free in a market where everyone charges for
subscriptions (or the other way around, doesn't matter)

3) we will be able to charge less because we have identified this and that way
to be more efficient.

4) we have xyz superstar coder/designer/etc in our team.

I could go on. But the point here is dual really: not only you are giving
people more info about what you are doing (without revealing much) but you are
also telling them you've done your homework (market research, etc).

Regarding the 20 reasons you are doing it this way, yes, I realize there are
reasons (marketing is probably #1, great story to tell) but again I think
_you_ will benefit from explaining. What I am trying to convey is that there
is a positive correlation between the effort you are _perceived_ having put
into this thing and the confidence/money you'll get.

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jasonlbaptiste
You should try doing what we did when Publictivity first started. Find a
potential customer or two, in this case it would also be a PR and/or marketing
firm. Proposition them to pitch in $5000-$10000 each. Give them:

a) the software free for life b) a small stake in the company c) direct line
access to new features + beta testing

Also:

a) Put a pitchdeck online that you're comfortable with b) Put some sort of
small FAQ so douchebags like @gz can't really say anything.

Lastly, you should apply to YC for the upcoming session :-).

~~~
siliconcalley
Those are all great ideas, Jason. Thanks!

And I am applying to YC :D

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jmacd
This post violates all sorts of securities laws regarding fundraising.

~~~
siliconcalley
no, taking donations is different than having investors who will receive
equity.

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jhancock
IANAL, but I agree with her. This should not violate security rules as she's
not selling you securities ;). She can easily book the donations as payment
for future services in case there are other accounting issues at stake.

Good luck!!! I would LOVE to have access to the product as described in your
post. FeedBurner and the like confuse the hell out of a small time blogger
such as myself ;).

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DabAsteroid
_This should not violate security rules as she's not selling you securities
;)._

This clause might be a problem:

 _the top 100 donations will receive a lifetime premium membership._

If I donate X amount of money, I do not know if I will receive the lifetime
membership. I could ultimately be outbid; or I might ultimately not be outbid.
It is a game of chance; and unlike in the case of an auction, I pay whether I
win or lose. That might make this an unlicenced gambling enterprise.

IANAL, but I would guess that if you are going to offer for sale specified
products or services, you need to guarantee that paying customers will receive
those specified products or services.

~~~
siliconcalley
interesting point, i had not thought of that. will talk to my lawyer.

thanks!

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lemonysnicket
someone has got to say it...

how many donations will you get calley (ex-model right?) because people think
you're hott?

