Feathercoin Kickstarter - Ideas are just multipliers of execution
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I really want to address this whole equity funding suggestion properly.
I imagine this topic is being suggested because of the JOBS Act and the U.S. Securities and Exchange Commission, which this week inked rules that govern how startups can publicly vie for investors’ attention. Many entrepreneurs expect this legislation to solve one of the core problems facing early-stage businesses: limited access to capital. Often companies are left with few options besides self-funding or cobbling together funds via thin connections to angel investors. Those who couldn’t attract funding might wind up watching their companies fade under the weight of diminished resources.
While this legislation certainly provides another path for capitalizing a business, it’s important to ask the critical question: Is this a good thing?
The process of raising capital for a company is time tested, and despite its flaws (insufficient funding for minority or women-owned businesses, very low returns for most venture funds) has helped build many of the great companies that have significantly advanced our economy and society. When we think about the dislocation in the startup market, the imbalance is not a lack of capital but rather a lack of good ideas.
This crowdfunding legislation enables anyone to try to raise money from a new investor class. I think it’s inarguable that predominantly first-time entrepreneurs will attempt to access this new funding source. In addition this new capital base will likely be comprised of mostly new investors with little to no experience in early-stage investing.
I am a strong believer in entrepreneurship and its massively positive impact on our economy and society. However, starting a company is extremely difficult and is not for everyone… trust me, I’ve driven a few into the ground before learning how it’s properly done. When you combine novice entrepreneurs with inexperienced investors, the outcome is probably not going to be what everyone hopes.
Equity crowdfunding proposes a fair shot for all instead of just the wealthy and accredited, but as with most things in a capitalist structure, only the strong will survive. There will be adverse selection. Good entrepreneurs will not go to crowdfunding sites as they can raise capital the traditional way. Good investors are not going to crowdfund because they do not struggle to connect with good entrepreneurs. Thus, equity crowdfunding sites will be left with entrepreneurs who couldn’t raise capital and investors who couldn’t get into deals.
Professional investors (angels, seed investors, venture capitalists) add a tremendous amount of value to the company creation process. These investors help form ideas, build teams and craft business processes. They also make introductions to customers and partners. Good investors can make a company a success. By contrast crowdfunding will not provide these partners as the investors will either be too inexperienced to add value or have invested so little that their interest will be limited. Like founders, investors need skin in the game. This mutual risk and collaberative partnership is absolutely critical for running a successful business and without it most are doomed to fail miserably.
Starting a company is hard. Most entrepreneurs fail, even with the support of experienced investors the abundant capital available in the venture community and an incredible ecosystem of supporting structures. Likewise, venture investing is hard. Most venture investors fail to generate a positive return on capital, let alone the returns necessary given the risk involved. Venture investors with access to the best entrepreneurs and the best deals still struggle to generate the returns necessary to justify their existence.
Bottom line: it’s safer, and prudent, to prevent everyone from swimming in the deep end of the pool. If equity crowdfunding is your only path to raise capital you should probably not quit your day job. If it’s your only path to invest in startups, buy stock in Google.
The reason that crowdfunding has been so successful so far is precisely because it does an end-run around these problems, connecting buyer with seller directly and skipping the startup, eliminating equity, ignoring the business, and giving the finger to traditional thinking about how to make a product successful. Instead of saying, “We need to start a business to get this product to market”, crowdfunding allows people to go, “I’m going to get this product to market without the overhead of running a business”, and THAT is the game changer.
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[quote name=“T4rQu1N” post=“29267” timestamp=“1380225547”]
Firstly, apologies for not being around lately, I am on trials with work, in a tempested building in a room with no windows…its fun, honest!Anyway, before any project gets off the ground, and as an investor, I would like to see some sort of solid business plan. Nobody in their right mind is going to front up some cash (or coins) without reasonable confidence that something is going to come out the other end.
[/quote]Hey right I have decided to address each point in a post because it was becoming difficult to write a response with all the BB Code.
I use the business model canvas a lot in my mentoring too and I like it as a guideline, like a framework for the mind of those are not naturally business minded.
To me a business is simply a sequence of activities brought about by a group of individuals with a shared vision.
So I definitely see a place for this but I am inclined to agree with [b]kevlar[/b] that we wouldn’t want to make this a rigid framework since we are not set up to provide full scale business finance.
However this is a discussion about what we want this to be so I think we should not shy away from these kinds of ambitions. Perhaps this could be a part of the business development.
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[quote name=“Kevlar” post=“29276” timestamp=“1380232100”]
If an idea is so easily implemented, then it’s not worth funding, because someone can just go implement it and no need to raise funds. Such problems tend to solve themselves. There’s no way to enforce an NDA, so there’s no point in having one.
[/quote]I can’t stand NDAs. I think a simple non compete agreement works just fine. This is simply an agreement between two people that one party won’t go off and set up a competing business within a reasonable time frame. You cannot protect an idea.
And this goes back to the title of this post.
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[quote name=“T4rQu1N” post=“29325” timestamp=“1380288905”]
[quote author=Kevlar link=topic=3687.msg29276#msg29276 date=1380232100]
[Quote]
If an idea is so easily implemented, then it’s not worth funding, because someone can just go implement it and no need to raise funds. Such problems tend to solve themselves. There’s no way to enforce an NDA, so there’s no point in having one.
[/quote]Again I disagree. I have an amazing idea which would generate a lot of interest, and could potentially have a great revenue stream for its owners, but I lack the skills to develop it. Someone with those skills however, could probably finish the whole project in a month or sooner. If you are starting a new service, then you can readily agree the terms with which people invest, and become backers.
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When it comes to running a business I think what really matters is how much you care. The people that succeed in the long run aren’t the ones who just come up with ideas they are the ones who have the grit and determination to keep on going through the dips and all the troubles.In the past you could throw brute money at the problem and file patents and that worked for a while but now information travels so fast and the cost of starting a business is decreasing entrepreneurs can be more responsive to the changing nature of realty. I think having a forum like this is vital for that.
There’s an interestling book called [url=http://sethgodin.typepad.com/the_dip/]The Dip[/url] by Seth Godin. It simply states that the businesses that thrive do so because of something called the dip, which is a period of time usually just after the initial launch of a business and all the hype has died down. The dip is the period of time when most people give up but the ones with passion and purpose are able to persevere and it acts as a filter.
I think what crypto does is present us an opportunity to:
[list]
[*]Help people financially without the barriers of the legacy banking industry
[*]Provide support by drawing on a diverse range of experiences on a public forum
[*]Be responsive with this support and get to the needs of entrepreneurs in a way that traditional mentorship programs can’t
[/list]I can see both [b]Kevlar[/b] & [b]T4rQu1N[/b] complementing one another really well as judges.
[quote author=T4rQu1N link=topic=3687.msg29325#msg29325 date=1380288905]
Having looked back I feel I may have misinterpreted what this kickstarter thing is supposed to be. Are we purely talking product development for cryptocoins? Or are we including services within this category? If services, then I would very much suggest a venture capitalist style approach, simply because it lends itself to these business models. If products, then a Kickstarter copy with cryptocoin payment options would work very well I suppose.
What do you think Kevlar? Or am I missing a trick again? :-\
[/quote]You haven’t necessarily misinterpreted it because we are still in the process of defining it. That’s what this dialogue is all about.
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[quote name=“Kevlar” post=“29352” timestamp=“1380301205”]
No, I definitely would not. I completely agree that experience, background, and detailed development plans should absolutely be part of the pitch. Not just what, but who, how, and when is very important. This things absolutely form a critical part of the proposal, all I’m saying is that has nothing to do with revenue models or potential market segments.
[/quote]Thanks for all the time you have put in to responding to this thread.
It sounds like to you what’s most important is the integrity of the person behind the idea. And I think what this gets to is how we overcome the anonymity that the internet, and particularly the cyrpto community, affords.
How can we persuade people to step out from behind the curtain in such a way that would reassure a business mentor and investor? Given that time is an investment as well as money.
##quick digression##
This is what I am trying to do with the videos by the way. Try to get to the people behind this technology. Because at the end of the day it’s not about the technology, that should be invisible*, it’s not money we want it’s what it buys us. It’s the freedom it gives us. The financial sector has become this huge profit centre when in reality it should only be a marginally profitable activity. It exists to free up the rest of us to get our goals and needs met.If only we could find the people in the world willing to take up that task.
*Just because it’s invisible doesn’t mean everyone shouldn’t at least have a basic understanding of it.
##I agree with you that we should not try to turn this in to an equity purchase, but we might be able to partner up with some other companies like [url=http://www.seedrs.com/]Seedrs[/url] (who are friends of mine) who might be able to take care of this.
Do your best, link to the rest.
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Hi Chris thank you for all the support you are providing us… Yes Chris I will be able to help you find Investors and get the word out about Feathercoin infront of Millions of people who are tired of the Corrupt Fiat Money System.
I will be in contact with you on Monday.
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Apologies for the late response, I’ve been without my computer all weekend.
[quote name=“Kevlar” post=“29352” timestamp=“1380301205”]
I’m not clear on this one. If someone ELSE with those skills could finish the whole project in a month or sooner, why would I give YOU the money? I’d rather give it to the guy with the skills to pull it off, who’s probably asking less as a result. Supporters don’t care if it has a great revenue stream for it’s owner, because they’re not it’s owner, they’re just users of the product/service. I don’t buy an iPhone because it makes Apple a lot of money, I buy it because it suits my needs and style.
[/quote]
I agree with the rest of what you were saying, so this is why I’m only responding to this particular quote.
In essence, my idea could easily be stolen, so I would be trying to form a team of enthusiastic people who would want to share in that revenue stream. I suppose there is nothing stopping that person from stealing the idea once I’ve disclosed it though, hence why I haven’t posted it here a long time ago :(. If supporters shared a part of that revenue stream, then it becomes more like an investment, and my particular role becomes the project manager/owner. I could then use the funds to pay someone with web development skills as you suggest, but I’d rather the investors form the core team, and split the workload that way, thus removing my image as the middle man!
Going down a rabbit hole there, but I hope you get my point. Personally I would find a percent of the profits more attractive than a few months early access…but you’re right, this opens it up to a world of potential pain.
Good debate!
Here’s a project then that should benefit those of use with ideas and a vision, and no real technical skills…lets make a matchmaking service which builds the ideal team. Discuss!
[quote author=chrisj link=topic=3687.msg29617#msg29617 date=1380449247]
I can see both [b]Kevlar[/b] & [b]T4rQu1N[/b] complementing one another really well as judges.
[/quote]Just seen this! Let the games begin! ;D
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[quote name=“T4rQu1N” post=“29879” timestamp=“1380573935”]
Just seen this! Let the games begin! ;D
[/quote]This is all very good but I need to resurface this thread to get more views on it because so far it’s just you, Kevlar and me that have really put the work in and it needs to be more representative.
Won’t get time until tomorrow afternoon after the News Letter.
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Corather brought up [url=https://cryptostocks.com/]cryptostocks.com[/url] but I don’t think it’s been addressed.
Any thoughts?
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[quote name=“mnstrcck” post=“29955” timestamp=“1380615212”]
Corather brought up [url=https://cryptostocks.com/]cryptostocks.com[/url] but I don’t think it’s been addressed.Any thoughts?
[/quote]Ok that looks interesting. So it’s been setup by the guys at Vicurex. I like it, I think we could work with them on this but the only thing that put me off was the number of spelling mistakes on the [url=https://cryptostocks.com/welcome/help]Help page[/url] and the lack of usability and design. The whole point of crowd funding is marketing. If the platform cannot give you a visible presence to people who would otherwise have been unaware of you then there’s no point but what I do like about this is the Securities management.
Perhaps we could approach them about accepting FTC and just take care of the marketing from our end while they do the security?
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I think it’s worth discussing Chris - I think there’s great ideas in the site, but ultimately, is it exactly what we’re looking for? Can we improve on it?
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[quote name=“Kevlar” post=“29556” timestamp=“1380413821”]
The reason that crowdfunding has been so successful so far is precisely because it does an end-run around these problems, connecting buyer with seller directly and skipping the startup, eliminating equity, ignoring the business, and giving the finger to traditional thinking about how to make a product successful. Instead of saying, “We need to start a business to get this product to market”, crowdfunding allows people to go, “I’m going to get this product to market without the overhead of running a business”, and THAT is the game changer.
[/quote]Very good point and well thought out piece, sounds like you have a lot of experience… Just reading through this thread another time, keep finding more.
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I have summarised the views of the people on this board as they related to the running of the Kickstarter. There were many other views expressed and I hope we get to revisit those too. But for now I just want to Kickstart the Kickstarter, go here and see:
[url=http://forum.feathercoin.com/index.php/topic,3883]http://forum.feathercoin.com/index.php/topic,3883[/url]