Category Archives: startups

Crowdfunding- The Good, The Bad & The (really) Ugly

By Shane Liddell is the CEO and chief Crowdfundologist at Smart Crowdfunding LLC,. Crowdfund Beat Guest post,

Part 3 –The (really) Ugly

Introduction

In Part 1 I covered all of the good things that we have seen as crowdfunding continuously gathers momentum across the world. The future looks bright indeed!

In Part 2 I wrote of changes within the industry, especially within rewards based crowdfunding – the competition which makes it so much harder for the small guys and the Indiegogo platform now giving preferential treatment to corporates, allowing them “…to pay for special placement on Indiegogo’s site, making them more discoverable than other campaigns”. I also explained that although campaign creators are often labelled as scammers when they fail to deliver on their promises, in many cases this is not true at all.

Here in Part 3, we delve into the dark world of extortion, blackmail and a whole host of other not so nice behavior. I’ll cover some real scams where the campaign creator’s intention from the very beginning was to steal people’s money, in some cases, with the crowdfunding platforms help too!

Part 3-The (REALLY) UGLY

Extortion and Blackmail

Ethan Hunt – Micro Phone

During our very early days of offering crowdfunding campaign marketing services, we were engaged by a Mr. Ethan Hunt who had just launched his Micro Phone campaign on the Indiegogo platform. Ethan and I shared a few phone calls as his campaign began to gather momentum and I specifically remember being on a call with him one day, while the money was rolling in, and each refresh of his campaign page showed more and more backers claiming the rewards on offer. Times were good and there was an element of excitement in his voice (and mine too). Who wouldn’t be excited to see such fantastic traction?

Around 4 weeks later, with almost $50,000 raised, Ethan reached out to me to say he’d been contacted by a guy named Michael Gabrill who claimed that he had some negative information about Ethan and that if he did not pay him $10,000 he would release this information to the public through various media channels. Ethan forwarded me the email communications so I could see for myself.

Low and behold, there it was in black and white.

My advice to Ethan at the time was to just ignore this guy, as I was sure that Gabrill was just a typical opportunist money grabber and was probably seeking attention too. Ethan wrote back to him, refusing to pay a single cent but what happened next surprised us both – Garbrill began contacting various media including Pando and even went so far as to create a webpage slandering Ethan and his Micro Phone project.

The story continued and in Ethan’s own words at the time:

“Did Michael Gabrill attempt to extort money from us? Yes, he did, this is fact he has admitted to doing it here and on one of the many webpages he has set up in an attempt to cover his actions and his motives, claiming it was a test to see if we would incriminate ourselves. Incriminate us for what? Running a successful and legitimate campaign? Or refusing to pay him money not to do what he has done, something he threaten(ed) to do if we did not pay him.

What did Michael Gabrill do exactly? Well, he approached me the day after our campaign reached 100% funding which means in laymans terms when our campaign had received enough contributions for our campaign to be successful and for us to receive payment of the funds at the end of the campaign.

It took more than 30 days to reach our goal and our campaign to be fully funded. During this time, Michael Gabrill sat back and waited until there was enough motivation for us as campaign owners to if he could build enough fear of loss by the thought of him getting our campaign closed down to pay him money for his silence.

Why if Michael Gabrill if he really believed the campaign was fraudulent did he not immediately report it? Simple up until the campaign is 100% there would be no motivation for campaign owners to pay him a penny. This was never about him believing there was an issue with the campaign it was about his motivation to gain financially from a successful campaign. Something, we are sure he has done many times before.

Why do we think he has done this before? He waited until we were 100% funded, he claimed he could shut us down, he claimed that we had no intention of delivering anything to contributors and were going to steal their money and he wanted his cut or he was going to have us arrested for fraud.

Michael Gabrill’s only motivation was money, he sent me a link to his first webpage and told me if we paid him it would not go up. That webpage included photos of myself, details Michael Gabrill had obtained from my eBay account (which could only have been accessed by an eBay employee) and he claimed I was a creep or in Australian terms a sex offender. When I refused to pay him and reported him, he had the webpage active in less than 10 minutes. Only an extortionist would have a pre built webpage ready to go to force his victims into paying him to remove it.

Is our campaign is legitimate? Yes it is, we have registered businesses in Hong Kong and Australia, neither Mike or I have ever been investigated for fraud and we have both been successfully running business in Australia, Hong Kong and China for more than 25 years.”

To end the story, Ethan initiated legal action and managed to have all the slandering webpages created by Gabrill removed and received a public apology from the man himself too. In turn, Indiegogo went on to ban Gabrill completely from their platform.

This turned into a very time consuming and costly endeavor for Ethan but unfortunately, there are many Gabrills lurking in the shadows and waiting to pounce.

 

Bob Rohner – RG Energy

Bob signed up with us a few months after Ethan but his story is a different one in that his crowdfunding campaign didn’t really do too well at all. We tried our best but the ‘crowd’ seemed to think that what Bob was attempting to do was nigh impossible.

However, during the third week of his campaign. Bob received an email from someone claiming to be the owner of RG Energy, a company based in Ohio. Bob’s business was registered in Iowa. They emailed Bob stating that because they were using their RG Energy’s company name, he would have to pay $10,000 (yes, coincidently the same amount as Ethan was asked for) in license or royalty fees. What??

After a little research, it turned out that this goon had registered a company by the same name in Ohio AFTER Bob had launched his crowdfunding campaign thinking he could get money out of him by playing this little game. This led Bob to get his legal team involved and the problem swiftly went away.

 

The Scammers – Very few real ones but they are out there!
Intentional scams are very rare. During my time in the industry I have seen no more than 3 or 4 which were clearly scams from the very beginning.
Many labelled as scams today are situations whereby the people involved set out with good intentions, only to find out that what they are attempting to do is either impossible or far costlier than they expected. Crowdfunding campaign first, homework afterwards rarely works.
Julien (Courteville) Buschor – Launching Multiple campaigns helped him steal almost $400,000

During July 2015, a campaign on the Indiegogo platform called Smart Tracker 2 (ST2) caught my attention for the simple reason that it had raised over $20,000 within the first 24 hours. Normally, campaigns that gain this kind of traction so quickly have done their homework and are fully prepared with social media assets before launch. In most cases, they have a substantial number of social media followers. However, when I looked at the Smart Tracker accounts I saw that they barely had any followers at all. In fact, at the time, their Facebook page showed only 149 ‘likes’ and their Twitter account a measly 19 followers. Maybe they’d done a fantastic job of building a targeted email database before launch, was a thought at the time. My suspicions were aroused though which lead me to delve a little deeper.

I returned to the ST2 campaign page and began to scroll through their backer list. As I scrolled down to the very first backer, and began searching through the list of names, low and behold, I began to see some of the same names appear as backer’s multiple times and eventually realized that 7 or more user accounts had contributed to the campaign many times over – a clear sign of self-funding taking place. This raised alarm bells and prompted further investigation.

What I discovered was a first for me. A look at the user account profile that created this this ST2 campaign showed that this was the 4th campaign launched since the beginning of the year by the very same person – Julien Scherer (whose real name turned out to be Julien Buschor) and now it was only July? Ding..ding..ding. The alarm bells grew louder!

Upon further investigation I discovered that Mr Buschor first launched a campaign called Last Crime in January 2015 raising over $7,000 and claiming:

“Last Crime was made with cutting edge technology that can easily analyze data, provide facial recognition, perform phone and email scanning and much more”

A month later yet another campaign had launched by the name of Innovative Swiss Teeth Whitening Machine raising over $ 60,000 and with a tagline of “Swiss White Teeth, the most advanced swiss teeth whitening light with color screen and USB interface

A few short weeks later the Smart Tracker campaign launched and managed to raise just over $18,000. And finally, the ST2 campaign as initially mentioned above.

The answer to the question – How had the Smart Tracker 2 campaign managed to raise over $20,000 so quickly? –  was now fairly obvious as it was clear that Mr Buschor had rolled funds from his other campaigns into this new one.

Armed with this information, we reached out to Mr Buschor using a private email address and began a lengthy exchange of emails over the following few days. Initially he was panicked and changed user names on the campaigns listed above and sometimes became aggressive in his defense, but he did begin to accept that we knew his game. We threatened to report his campaign to Indiegogo and eventually, he did confirm that he had self-funded the ST2 campaign and his defense was made with a claim of “I’ve done nothing wrong as it’s legal so Indiegogo won’t cancel our campaign”

Mr Buschor self-funded his ST2 campaign to the tune of over $20,000, using money collected from previous campaigns to create a sense of popularity in the eyes of the public. No doubt in my mind that we were seeing a real con man in action!

As my marketing agency, Smart Crowdfunding is listed as a ‘Partner’ on Indiegogo itself, I reached out directly to their Trust and Safety division armed with all of the evidence needed to show that Mr Buschor had been scamming the public. I was certain they would listen, or at least reach out to me for more details. Nope. I received a canned email response saying very little except that they would investigate the matter. Did I hear back from them after this? Nope.

Of even more concern was that the ST2 campaign continued and on July 12th was promoted through the Indiegogo newsletter to a huge database of millions of people. Funding continued to ramp up and eventually the campaign raised more than $300,000.

Was it really a scam you may ask? Absolutely! The comments page on the ST2 campaign tells the whole shameful story!

As for Mr Buschor, he was resident in Switzerland and made local news for all of the wrong reasons as seen HERE

 

BioRing- The Amazing Ring That Made $460,000 Disappear

Now, this one had scam written all over it from the very beginning. However, even some notable Crowdfunding Marketing agencies were taken for a ride in the process too.

During mid-January 2016, we (Smart Crowdfunding) received an email inquiry from a Daniel Johnson asking about our services. After a few back and forth emails with our team, this lead to a Skype call booked for the 20th January. For some reason, they had to reschedule and we rebooked a time for 9am on 27th January, this time with a James Lee.

The call went ahead as planned, and James told me all about BioRing and that they were going to launch a crowdfunding campaign to raise the funds to manufacture the product and get it out there into the market. I explained our campaign development and marketing process, and the need to build an audience prior to launching. James asked if we would work on a percentage only basis to which I replied “No” and then went on to explain that without any validation testing we do not know if his product is a good fit for crowdfunding. Upon concluding the call I did say that I would email through our fee structure and the call ended.

My thoughts at the time were that what they were trying to do was nearly impossible, so a few days later I emailed again stating that after careful consideration I could not help them as I felt their product was impossible to develop.

We did not hear from either Daniel or James again.

The BioRing campaign eventually launched in June 2016 and did rack up over $700,000 in funding.

Fortunately, at least some of the backers were refunded, as Indiegogo did not release any of the InDemand money to the campaign owners. The total amount ‘stolen’ is now showing at $424,664 as of today’s date.

Now, that’s a lot of money and has, in effect, added to a community of backers claiming to never back another Indiegogo campaign again as can be clearly seen on the comments section of the BioRing campaign page. There are many other campaigns with such negative comments.

These disgruntled backers have a right to be pissed and there are hundreds of thousands of them who have supported other campaigns that are disgusted with the treatment they receive from Indiegogo themselves.

You can read more about this scam in this excellent investigative article from Sara Morrison here

The ironic thing with BioRing is that the marketing agencies involved – Funded Today (FT), Herscu and Goldsilver (H&G) and Command Partners (CP) – were up in arms when they didn’t get paid after the campaign concluded, having raised over $700,000. It surprises me that none of them thought that this campaign was nothing but a scam from the very beginning, considering FT were taking a 25% cut of funds raised, H&G a 10% cut and I assume CP a minimum 10%….so, a minimum of 45% off the top! Add to this the 5% Indiegogo platform fee and payment processing fees of around 3.5% meaning that BioRing were giving away more than 50% of the backer’s money!

A screenshot of the BioRing campaign team captured prior to the campaign been flagged as fraudulent. Since then all associated team members removed themselves from the campaign, most likely out of embarrassment. 


New to Crowdfunding? Here’s What to Expect.

40Billion.com, Crowdfund Beat Guest Post.

With the popularity and success of crowdfunding as a new way to fund new projects, it’s easy for other aspiring entrepreneurs to believe that sites like Kickstarter are their golden ticket to launching a business. But the reality is, crowdfunding isn’t always as simple as it seems.

Whether you’re looking to raise a small amount of startup cash or acquire a larger sum through equity crowdfunding, there are a few challenges you might face during the process that you may not have expected.

cartoon concept for crowdfunding, businessman hand with light bulb and with money. vector illustration in flat design on blue background
cartoon concept for crowdfunding, businessman hand with light bulb and with money. vector illustration in flat design on blue background

Choosing the right platform

The first step is to choose the right platform. Not all of them are created equal. Platforms like Kickstarter or Indiegogo are great for raising smaller amounts of money, but equity crowdfunding portals are best for entrepreneurs looking for large sums of money. If you’re interested in the latter, it’s important to do your research and find the platform that meets your needs. Also, find an experienced attorney who specializes in equity financing.

Establishing a realistic goal amount and time frame

Many entrepreneurs, especially those new to the crowdfunding scene, tend to think that they will be able to quickly raise all the money they need and then more by the time their campaign ends. It’s important to be realistic about time and money when it comes to planning your campaign.

Consider how much capital you would need to take your business to the next major milestones, and don’t rely solely on crowdfunding sites for your fundraising.

Creating a buzz

Having a great business idea that is supported by friends and family is good, but it does not mean that the donations will come pouring in once you launch your crowdfunding campaign. Doing a lot of prep work before your campaign will help create and maintain interest in your project.

Before starting the project, gauging level of interest for your investment opportunity or project is a critical part of the process. Even though supporters have told you that they would support the campaign, it gets lost in their email inbox. Without specific requests, it’s difficult for people to actually pull the trigger on an investment or funding opportunity. Make sure you have personalized outreach to your first degree networks, and remember to ask for assistance in spreading the word.

When you’re ready to spread the word and create a buzz around your crowdfunding campaign or project, sites like 40Billion.com make this easy. They broadcast and promote your campaign to their large network of several million users across the most popular social networking sites for businesses – including Twitter, LinkedIn, 40Billion, and even Facebook. Innovative services like tweet ads and promoted company listings were created for crowdfunders to tap into a growing, active network online without spending thousands on pay-per-click ads or traditional advertising.

The risk factor

Everyone knows that there’s risk involved in any business venture. What investors want to know is, exactly how much of a risk will they be taking by offering you a large sum of money? Even small venture funds express interest in investing, but ask the entrepreneur to come back to them when they have an investor who is leading the round of funding. Everyone wants to know the amount of risk.

A lot of investors at the early stage simply want to de-risk investing by being the last money in the round once a lot of other sophisticated investors have already committed. This often creates a scenario where founders have a few hundred thousand dollars in “commitments” for months without any way to actually close on anything. Using a reputable equity crowdfunding platform with accredited investors can help solve this problem.

While the “lead investor” issue most commonly affects startups seeking large-scale investors, the same basic principle can apply to a smaller Kickstarter campaign: If potential funders see that no one is backing the project or that people are only contributing a few dollars, what incentive do they have to donate a large amount of money? This is where building interest and spreading the word become critical to raising the funds you need.

Even if you aren’t launching a crowdfunding campaign at this time, it’s important to learn about the industry, as well as what it takes to succeed.

Source:

http://upflow.co/l/5cIW/2017/01/02/new-to-crowdfunding-heres-what-to-expect-2

Crowdfunding Beat Media Announces 2017 Conference & Expo USA Tour

 

You are invited to attend:

Crowdfunding Beat Media, Conference & Expo Tour 2017

New York – Silicon Valley – Washington DC.-  Denver

By Sydney Armani, Founder / CEO / Publisher / Speaker, 

Happy Holidays 

Crowdfunding Beat Media, Conference & Expo – Tour 2017 will explore new methods of finance, as well as review existing and developing legal considerations and international initiatives.

We will bring together investment community and the new generation of social entrepreneurs – crowdfunders. The event offers you unique opportunity to promote your business in the center of private investments and innovations. We have several options available for those who will participate in the conference. Also, we offer packages of the virtual exhibitor and advertiser, for those who won’t be in the conference.

As you know, we have built CrowdFund Beat  into a leading media platform covering the crowdfunding and marketplace finance space.  Our viewership continues to grow daily as we are Internationally recognized as the definitive “Go-To” for all news & trends Crowd Fund Related. . .

Before we do our normal general Marketing, we are offering you first rights of participation to personally “touch” the eager CrowdFunding National Community and showcase YOU to this ever growing community by Inviting you to be a Conference Speaker and/or Sponsor of any of the following exciting 2017 Opportunities:

We are looking forward to your participation and much appreciate if you share these events with your social network.

Furthermore, we are now advancing our efforts into proprietary research on the space, and are pleased to introduce “2020 Vision”,  a  prognostication report on equity crowdfunding that will be released with much fanfare at our 5th Annual Silicon Valley Fintech Conference that will now have a new, and even larger home, at the Santa Clara Convention Center.  The Report will have general distribution to the International Crowdfunding Industry as well as being promoted at each and every 2017 CrowdFundBeat USA Tour Conferences. 

About:

CrowdFund Beat Media International ” Established  2012″ is an online source of news, information, events and resources for crowdfunding. We e-publish latest news and expert view related to the crowdfunding industry in the USA, Canada, UK, Italy, Germany, France, Holland and coming soon in Spain, Australia, Japan and China on a daily basis. With support of a group of crowdfunding professionals and experts, We are including an editorial column to our journal, in order to present a better perceptive on this new industry to our readers. At crowdfundbeat.com we think of our effort as an educational and informative service to the crowdfunding community, and appreciate your suggestions to make our work more helpful and efficient.

Crowdfunding Beat Media, Conference & Expo Tour 2017

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REGISTRATION – SIGN UP NOW!

HR 3784 – SEC Office of Small Business Advocate – Is Now the Law of the Land

By Samuel S. Guzik, CrowdFundBeat special guest editor,  Guzik & Associate

On December 16, 2016, President Barack Obama Signed into Law HR 3784 – SEC Office of Small Business Advocate, creating an independent Office of Small Business Advocate at the SEC, reporting directly to the full Commission and Congress. This legislation was first introduced into Congress in October 2015, where it was originally co-sponsored by former House Representative John Carney (D-Del) (now Governor-Elect of the State of Delaware) and Congressman Sean Duffy (R-Wisc) and was passed unanimously by the House of Representatives in 2016. It was passed unanimously by the U.S. Senate on December 9, 2016, as part of a flurry of year-end bills passed by the Senate before it recessed for the year.

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The bill had broad industry support upon its introduction in October 2015, including the U.S. Chamber of Commerce, the National Venture Capital Association, National Small Business Association, Small Business Investor Alliance, SBEC, and the Crowdfunding Professional Association (CfPA), of which I served as its Chair and President at the time.

Remarkably, this Bill passed Congress unanimously without the support of the SEC. In testimony from SEC Chair Mary Jo White before the Senate Banking Committee in June 2016 she was asked by the Senate bill co-sponsor, Heidi Heitkamp (D-ND), whether she supported this legislation. Her response:

 “We currently have the Office of Small Business Policy within the Division of Corporate Finance. I am an advocate for small business.” 

A roundabout way of saying “no” – it seems to me.

In the past I have referred to this bill as the missing title of the JOBS Act of 2012. Though it parallels to a large extent to the SEC Office of Investor Advocate – part of the Dodd Frank Act of 2010 – the need for this legislation goes back decades.

The successful passage of this law was the result of the participation and support of many individual and groups. However, I am proud to have had a major role in initiating this legislation, among other things:

  • I was the first person to publicly advocate for this legislation, in Feb 2014, in an article published on Crowdfund Insider.
  • I met with former SEC Commissioner Daniel M. Gallagher in June 2014 to advocate for this bill.
  • I was cited by Commissioner Gallagher in a public address (Note 36) by Commissioner Gallagher given at the Heritage Foundation in September 2014 where he advocated for the need for a permanent Office of Small Business Advocate.
  • I worked with the original sponsor, Rep. John Carney (D-Del) (now Governor-elect of Delaware) in drafting this legislation prior to its introduction in Congress.
  • I assisted in procuring the initial Republican co-sponsor – Rep. Sean Duffy (R-Wis).

A special thank you is in order for SEC Commissioner Gallagher. Without his public and vocal support for this legislation it might have taken many more years for this historic legislation to become a reality.

A copy of the Bill can be found here.

For those of you who want to dig deeper on this subject, here is some background material on the Bill and my role in its journey:

http://www.crowdfundinsider.com/2016/12/93592-sec-small-business-advocate-moves-closer-reality-senate-passes-bill/

http://www.crowdfundinsider.com/2016/11/92607-unstacking-deck-smes-washington-call-sec-small-business-advocate/

This entry was posted in Capital Raising, Corporate Governance, Corporate Law, Crowdfunding, General, Regulation A+ Resource Center, SEC Developments and tagged , , , . Bookmark the permalink.

THE FINTECH REVOLUTION COMES TO REGIONAL AND COMMUNITY BANKS

Crowdfund Beat Fintech Center. 

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Manatt Survey Reveals Collaboration, Not Competition, Between Banks and Fintech Is the Way Forward

LOS ANGELES – Oct. 24, 2016 – Thousands of regional and community banks are turning to fintech in order to meet the needs of customers who demand services on their computers, tablets and phones, according to a new report by Manatt, Phelps & Phillips, LLP. Conducted in conjunction with Mergermarket, the report, “Growing Together: Collaboration Between Regional and Community Banks and Fintech,”  is based on survey responses of senior executives from regional and community banks (50%), fintech companies (25%), and private equity firms, venture capital firms and investment banks (25%).

The survey reveals that executives are optimistic about future collaboration between the two industries, with 54% of bank respondents calling fintechs a potential partner and 89% believing that partnerships between the two will reign in the next decade. The benefits are clear to both sides. As banks seek to gain a competitive advantage, they see fintech as a way to offer online services to customers while decreasing technology costs and offering lower lending rates. Fintech firms also see the potential in working together (58%) as an advantage to gain access to the clients of midsized and smaller banks.

“Rather than compete or acquire one another, we’re seeing these institutions begin to form partnerships, and we predict that collaboration will be the primary way that they continue to interact,” said Brian Korn, chair of Manatt’s digital finance and marketplace lending practice. “In September, Radius Bank announced it would team up with online lender Prosper in an innovative deal to help make small business loans, a model that continues the collaboration theme demonstrated by other banks and lending platforms, such as JPMorgan Chase and OnDeck and Regions Bank and Avant. This is the beginning of a new trend that points specifically to an increasingly symbiotic environment.”

While the benefits of working together are unmistakable, adapting to the fintech revolution is not always smooth. Banks need to be prepared for the challenges of implementation, as well as possible security risks. As an executive of one Southeastern community bank put it, “We would have to restructure all our processes and push management and employees through training in order to get accustomed to the new technology. But we foresee a slowdown in our business if we do not find new solutions to implement. So currently I would say we are unprepared, but on the way to getting prepared, for the necessary changes.”

Banks are hyperaware of regulatory risks and therefore demand high standards from fintech companies when it comes to compliance—bank respondents who are not partnering with fintech (19%) cited cybersecurity among their biggest worries. The threat of data breaches is part of digital services, and both banks and fintech firms know how dangerous security risks can be to their businesses. As a result, the two sides must pay careful attention to the issue when preparing to collaborate.

“Despite the demand for mobile services, cybersecurity will be the chief concern as these institutions come together. Fintech opens numerous doors for traditional banks, but at the same time, it leaves the possibility of a cyber breach wide open,” said Craig Miller, co-chair of Manatt’s financial services practice. “Manatt is well equipped to help these institutions navigate compliance challenges that will arise during this exciting time in financial services, from counseling on cybersecurity preparedness and response plans to exploring the different types of partnership agreements that exist and ensuring those agreements are legally compliant. Building on Manatt’s traditional strength of working with depositary institutions and our leading digital finance and marketplace lending practice, we look forward to helping banks, fintech companies and investors develop strategies to overcome these challenges.”

Here are four key takeaways that are useful to everyone in the banking and fintech sectors when approaching the challenges that come with collaboration:

 

  • Banks are on board with fintech. At 81%, the overwhelming majority of regional and community banks are currently collaborating with fintechs. In addition, 86% of regional and community bank respondents said that working with fintechs is “absolutely essential” or “very important” for their institution’s success.

 

  • Lower costs + a better brand = a win-win. For regional and community banks, enhanced mobile capabilities and lower capital and operating costs were highlighted as the benefits of collaborating with fintechs. Fintechs named market credibility and access to customers in regional markets as the main benefits to partnering with banks.

 

  • Data security remains a challenge. Both banks and fintech companies are highly sensitive to the ways in which data is shared and secured. This means extra attention must be paid to cybersecurity when the two sides collaborate—especially given the cultural mismatch that can exist between them. Despite the optimism among banks for collaboration, preparedness is a large concern. Almost half of regional and community bank respondents said they are just “somewhat prepared” or even “somewhat unprepared” for this kind of partnership.

 

  • Regulatory concerns remain paramount. For banks and fintech firms, structuring relationships that are regulatory compliant, including, if required, prior regulatory approval, is critical to ensuring success and the opportunity to change the way financial services are ultimately delivered.

The full report is available for download on Manatt’s  website. 

 

 

An Upcoming Opportunity for Private Companies to Explore Regulation A+ Financing Options

By Samuel S. Guzik, CrowdFundBeat special guest editor,  Guzik & Associate

Though I regularly speak at national alternative finance events it has not been my custom or practice to independently publicize these events.  So today being Columbus Day, an historic event marking the voyage of Christopher Columbus toward new horizons, I thought this would be as good a day as any to break with tradition and call attention to my next speaking event – open to the public.

On November 10, 2016, I will be joined by more than a dozen of some of the most prominent professionals in the new Regulation A+ financing space, representing the critical areas of a Regulation A+ financing: legal, accounting and marketing.  The event, which is open to the public, is The Regulation A+ Bootcamp.  The venue, and ringleader of this event, is none other than OTC Markets at their headquarters in New York City. And it is specifically targeted toward both early stage and privately held mature companies who are considering their financing options. Co-sponsoring this event is Crowdfund Beat, a leading crowdfunding media publication and event organizer .  Additional details regarding this Event are available here.

OTC Markets has been a leader in supporting a secondary market for Regulation A+ securities. It has also been an outspoken advocate for expanding all avenues of capital formation for both mature companies and SME’s.  Its most recent, visible example is its Petition for Rulemaking filed with the SEC in June 2016 requesting the SEC to expand the use of Regulation A+ to fully reporting companies. Currently, the SEC’s regulations limit the use of Regulation A+ to non-reporting companies and companies reporting under the SEC’s new, streamlined reporting requirements under Regulation A+.  This limitation is nowhere found in the statute mandating Regulation A+, Title IV of the JOBS Act of 2012.

The Petition has already garnered public support from some of the leading industry participants.  Any of you wishing to weigh in on expanding the use of Regulation A+ can do so via the SEC’s website.  You are also free to contact me directly at sguzik@guziklaw.com for more information on the Petition.

And in the interest of full disclosure, as noted in the Petition, I had the privilege of working with OTC Markets in connection with the preparation of the Petition.

A Reflection of Online Money Lending

By Steve Cinelli , CrowdFund Beat Sr. Editor, @stevecinelli

Some many months back, in fact prior to their listings, I wrote a piece questioning the lofty valuations of the marketplace lending platforms (LC and ONDK) as they entered the public markets.  The basic thesis was recognizing the fundamental business these platforms engaged, i.e., money lending, and how others in the same space, albeit not as “technology positioned”, delivered the same product and/or service, and I thus intimated that the newbies should be valued with similar metrics to the incumbent financial institutions.

In observing the platforms’ performances over the last year, as well as evolving market conditions, my thinking has changed.  In fact, I have furthered my assessment of relative values, and am concluding that there are actually distinct shortcomings in the current technology-enabled model vis-à-vis the conventional banking institutions.

The basic premise in the P2P space was that credit card rates were way too high, so why not provide an alternative to reduce the cost. Behold, lower rate amortizing term loans. Sounds fine, but essentially, such a model is based on price, i.e., something the big guys have an advantage.   True, a great technology interface, rapid underwriting and credit decision making were part of the thrill, but in the end, the “product” was better priced credit than other lenders provided.  Maybe 70% of P2P clients were “refinancing” high interest rate card debt, so bang…. the proposition seemed supportable.

Well consider any market that competes on price. All participants ride the price levels downward, so where’s the differentiation? There will always be someone that beats you, whether it’s sustainable or not.  This is where brand and a broader offering come in.  Consider all the major credit card providers, whether Capital One, Chase, BofA, Wells, and others.  They have the ability to adjust price for consumer credit as they monetize the broader banking relationship in many other ways.  Think about it.  I posed the question to a couple of the execs at a P2P platform, anxiously awaiting the response to what happens if Capital One or Chase come out with a permanent 3% card to their best consumer borrowers.  Recall that the P2P players target the top 10-15% of FICO scores, so price is the driver for the credit-worthy consumer.

But look at what’s happening now. Because the P2P platforms have just-in-time funding, i.e., they intermediate the transaction, using investor capital to fund loans, and rather than using core (and insured) deposits, they are beholden to their “cost of funds” to drive the price of credit to their borrowing customers.  In recent months, such investor capital has dried up, concerned with performance (risk-adjusted returns), as losses and delinquencies have been moving north.  So to attract such capital, higher returns are being sought by investors, read a higher cost of funds to the platforms.  This of course results in a higher price of credit to the consumer, which all the platforms have raised borrower loan rates.   So much for the market positioning of better borrowing costs.

We can further review the business model, and unlike banks that may be able to monetize their customer relationships over many products and services, and during an extended life cycle, these platforms live and die by their immediate transaction volume.  Turn on the spigot and they can grow as we have seen.  But without new deals, growth stagnates.  There is limited if any recurrent income, and the life time value of a customer is limited.  Are there recurrent borrowers?  Certainly.  But to that point, might those that refinance their credit card debt go back out and run up those credit limits once again, increasing their overall credit risk for the next time round?

There have been discussions about the technology enabled, algorithmic underwriting that the platforms utilize, which should be a value proposition.  Machine learning, AI, looking at credit factors beyond just FICO scores.  A bit of history here.  Consumer loans are relatively small, and with bank margins very slim, such credit historically was limitedly profitable. Enter Bank of America in 1958 with the introduction of BankAmericard, the first all-purpose credit card, in an attempt to do consumer lending quicker, faster, cheaper and more profitably. With direct marketing followed by a broad licensing program, the use of “plastic” became part of the banking and credit nomenclature in a huge way.  MasterCard, an association of other banks, was developed as a competitor, and BofA and its licensees, evolved into VISA International.     Such “plastic” became the protocol of consumer credit, and, while the interest rates were and still are lofty, this was to offset the expected portfolio losses, as underwriting mechanically had issues. The banks were still earning an ongoing net spread.  To be cost effective, the process of underwriting a new card applicant has been credit scored since the 1960’s, with possibly in retrospect antiquated algorithms, but still the process was streamlined with scoring methodologies to expedite decision making and deployment.   How much human underwriting time can actually be spent on granting a card with a $500 credit limit, given the amount of profits that can be had?   Don’t you think Capital One and Chase apply technology and algorithmic underwriting to their current card business as a matter of efficiency?  And lastly, have you actually looked at the unit economics of a P2P loan, particularly the marketing cost of origination.  Banks can cross-sell; the platforms have one product directly originated.  I do acknowledge that some platforms have different types of loans now, but the fundamental model characteristics remain.

So the query is posed.   Where lies the sustainable value in these platforms?  The product is not unique, i.e., consumer loans. They compete largely on price, which in any market is a concern.  The model requires new relationships to grow, rather than monetizing a relationship many times over.  The ability to grow is further challenged in a “just-in-time” funding model, with such cost of funding subject to more volatility than the banking industry. As few hold a recurrent revenue portfolio, there doesn’t seem a tangible asset to place value, nor is there the ongoing net interest spreads to capture.   There is now a move towards balance sheet lending.  Hmm.  Seems like the banks have something with being a depository with a stable and well price funding pool.  That said, how and with what do the platforms fund their balance sheets with?  More equity?  A bit dilutive, eh?

Finally, is there real intellectual property contained therein, such as risk assessment and underwriting methods, that the larger card issuers and consumer lenders do not enjoy?   This of course begs the questions, are these sustainable models, and do they have strategic and economic value for an acquirer, as it appears that many have “for sale” signs up?  Maybe for someone outside the space looking to enter gingerly, but for a big player, what would they be buying?  What is the value add?

While this assessment is not meant to be a complete disparagement of P2P or online finance.  In fact, I am one of the biggest bulls on online lending and capital formation.  Money lending is actually the “world’s oldest profession”, even longer recognized than the business of carnal frivolity according to the Code of Hammurabi in 1800 BC.   Modern banking developed during the Renaissance periods with the brilliant European merchant banks, such as the Rothschilds, Warburgs, Medicis, Fuggers, and Barings, that transitioned from “merchant” activities to extending credit to other merchants, as the depth of their knowledge was unparalleled and they found the returns from money lending were more attractive than trading goods.   The predicate of their activities was knowledge and information: about their clients, the markets, the external conditions, and how to price their risk.   Theirs was keenly an information business.  And now, we live in an information world, where data and facts are readily available, in all quantities and qualities, able to be assembled and analyzed for risk and return assessment. Information technology is meant to be applied to finance and money lending.  It is only natural and commonsensical.  But what will the sustainable models look like:  that’s for another chapter.

 

 

Five Ways that Brexit Will Complicate Cross-Border M&A

By Jonathan B. Wilson CrowdFundBeat Sr. Guest Editor, Partner, Taylor English Duma LLP 

Last week’s referendum in the UK and the decision for Great Britain to exit the European Union has caused turmoil in financial markets.  For M&A practitioners, however, the impact is only just beginning.  Here are five key ways in which Brexit will complicate cross-border M&A:

1. Deal Terms Will Need to Contemplate the Potential for Additional Exits

If you thought the UK exit was tumultuous, just imagine the complications that might result if the Netherlands, France or another EU stalwart held a referendum that allowed its voters to possibly leave the EU.  M&A deals with European targets should contain provisions that contemplate these complexities and either allow the acquiror an “out” if the situation in Europe changes or that provide a mechanism to make changes if another EU member state serious contemplates an exit.

2. Taxes Will Get Complicated

The terms of UK’s exit from the EU have not even begun to take shape.  At a minimum, though, the harmonized system of taxation that was developing under the EU will no longer apply to UK companies or companies with subsidiaries in the UK.  Counsel in M&A transactions will need to grapple with the complexities of multiple, competing tax regimes when target companies have significant assets in both the UK and the EU.

3. Data Protection Rules Will Get Complicated

In our ever-digital world, data is everything (or nearly so).  For the past decade, U.S. firms have become familiar with the EU Data Privacy Directive and its member-state implementing legislation.  U.S. firms with data flows out of the EU have had to deal with the EU/U.S. safe harbor rules, to ensure that such data flows do not offend the EU requirements.

Counsel in M&A transactions will need to account for the possibility of different treatments for data flows into the U.S. from the EU and the UK and the possibility of different (or multiple) safe harbor regimes in the future.  The EU safe harbor provisions will (in all likelihood) cease to apply to UK data outflows once the UK’s exit is completed, but we cannot predict what safe harbor regime (if any) will govern UK data in the future.

4. Multiple Sets of Regulatory Approvals

U.S. acquirors looking at targets with both UK and EU assets previously could look to a single set of EU regulators for deal approvals.  Post-exit, there will be at least two sets of regulators whose approval may be required for the acquisition of mixed UK/EU companies.

5. Multiple Sets of Local Counsel

U.S. acquirors doing deals in the UK before Brexit could often hire out European firm to provide pan-European local counsel services for the deal.  Most UK law firms had developed continental offices to facilitate deals across borders.

Post-Brexit it is more likely that U.S. acquirors will need to retain both UK and European counsel (or at least involve the continental partners of UK law firms).  While law firms with offices in both the UK and Europe will have an advantage in providing cross-border advice, the coming divergence in legal systems between the UK and the EU will require an increased level of effort from lawyers in both regimes in M&A deals that span the UK and the EU.

4 Crowdfunding Tips for Women Entrepreneurs

By Rayanne Dany CrowdfundBeat Media Gust Post.

When joining the entrepreneurial journey as a woman, you must be well aware of the fact that how difficult it is to make your mark as an entrepreneur in the male-dominated world of business. It is also a fact that most male funders are notoriously slow in investing in women-led startups.

 

crowdfundingLuckily, women don’t have to stick to the traditional ways of finding the funds for their business. There is Crowdfunding for them, and it is getting popular every passing year.

Crowdfunding is a great way for women to pave their way into the business realm. There are two ways of going about it: rewards-based or through equity. For a reward based funding method, you send a product or any service of your company in exchange for the money.

For equity, you can simply ask your funders to buy stocks of your company. This way, they’ll have a fair share and the proper know-how.

Below are a few ways you can run a crowdfunding campaign successfully.

1. Social Networking Platforms
Build a strong network of followers. The majority of your crowdfunded money comes from the people who know you directly or through connections.  They are the ones who take a special interest in what you’re doing. You also need their help to help you make your campaign go viral.

Before you head out to a crowdfunding platform, you should already have a social media pages devoted to your cause. Gain a following by interacting with the people. Get a strong hold and backing. But don’t stop here.

Promote yourself and your cause through other, traditional means as well. Take the opportunity to connect with your community in public events.  You can also speak about causes which you are connected to, and like-minded people will rally to support you.

2. Do a Thorough Research
Make sure that you choose a platform that put your idea in front of the right target audience. It will help if the platform particularly targets your cause and generates good traffic. Carefully research the benefits and services they provide.

Do your homework well, and see what’s best for the business. Is it reward based, equity or security? Is it targeted towards other women?

You can also see what the other companies are doing on that platform. To get yourself familiar with the process, fund a small amount to a cause you are interested in. This will help you put yourself in your customer’s shoes.

3. Effective Communication
Be sure to communicate well with your audience. It can be in terms of sales tax or new developments. Keep your audience updated with all the current happenings in your startup or cause.

Make a convincing business plan because it will help you engage well with your customers. Keep in mind that all your efforts should effectively communicate your message with your audience. For instance, if you’re planning to offer True assignment help to school girls, your message needs to highlight this point.

You must keep in mind that you are not employing a traditional method where you pitch in your ideas to venture capitalists before speaking out in public. You are looking forward to grabbing the attention of a crowd that is a mix of both professionals and volunteers looking to put their money for the right cause.

4. Goals
Plan what goals you hope to achieve and how you would achieve them. Your efforts are determined by your passion. Properly plan how everything should be executed and how you hope to communicate. Make sure your audience understands your goals.

If you’re making a video, it should be short, clear and concise. If it’s more than three minutes, it might not make that much of an impact. If it is a message that takes no more than a minute for it to be conveyed but your video is taking more than 1 minute, you’re not doing it right.

Women mostly fund other women, so it’d help if your goal is to target the women audience too. Recognize the hole in the market and fill it.

 

By crowdfunding, you manage to evade through the prejudice held against women startup businesses. Being a woman, you can get offered special benefits, allowing you to bypass male funders.

You can directly reach out to friends, family, colleagues, and other like-minded people. All you need to have is a convincing power and the ability to sway other people to your cause.

 “When you’re trying to influence, persuade or convince people, nothing is more powerful than a good story,” says Donna Cravotta, CEO of Social Sage PR.

By Line: Rayanne Dany is a growth hacker currently working for a tech startup. When not working, he spends his time writing blogs on topics related to business growth, fundraising, etc.

Daft or Deft – Trump the National Debt

By Steve Cinelli , CrowdFundBeat Sr. Editor, @stevecinelli

Can the political narrative get any stranger, and in many ways, even incredulous?   First off, the country is undergoing an election season wherein the two front runners are disdained by the majority of Americans.  One (the Dem) purports to have experience, but seriously, she merely has had “exposure”:  yes, a nice (planned) resume, but has she actually accomplished anything as a statesperson or legislator?  Ask about “her” treaties or “her” laws or initiatives that have translated into real progress or meaning, domestically or abroad. Seems to be a goose-egg. But give her credit for marketing…  Then the other (the Rep) is waxing on about areas of foundational principles that are more daft not deft.  So we have an electorate with the propensity to vote to negate the opposing side, or simply support the lesser of two whatevers.   How would our founding fathers, such as Jefferson or Madison or Adams or Washington or Franklin, view the current roster? Graves are turning.

National Debt

And then look at recent comments, the most amazing (not to be construed as a positive perception) is the “Trumpette” about defaulting on the national debt.  Rather than even spending a moment of time on the incomparable ramifications of such on both the US and global markets, the inane unlettered intimation should cast a big question mark on the quasi-politician’s understanding of how certain things work.   I can certainly appreciate Mr. Trump’s effort to utilize his experience as financier and investor, even how he desires to show his acumen with overleveraged situations which need restructuring.   Some can certainly posit that the US balance sheet is overleveraged, and the national debt should be reduced.   But those that understand banker’s parlance, including cash flows, debt serviceability, cost of capital along with primary, secondary and tertiary sources of repayment, may view the national financial statements as not really that bad.  The economy is servicing its debt, and true, the government continues to spend more than it takes in, thus expanding the debt level, which could prove deleterious in a higher rate environment.  But with its cost of capital and ability to adjust its revenues, the debt is currently manageable, and fundamentally, the government does pay it bills.

 

Mr. Trump, as a “restructuring expert” should look at other pathways to address the debt overload, like many private equity firms or companies with problematic portfolio company balance sheets.   Why not think asset sales to monetize less needed assets with proceeds to pay down the debt, if that truly is part of the agenda?        The nation’s balance sheet holds tens of millions of acres of land and thousands of buildings, that are used for both private and public sector purposes.   Would private sector participants be interested in outright purchases of such, and for properties used by the public sector, what about “huge” sale-leaseback programs?  What about a trillion-dollar REIT, sponsored by the Federal Government, with the faith and credit of the government, as a lowcredit risk tenant?

What about operating segments of the government which could be sold off, like an underperforming or non-strategic corporate subsidiary?   One target may be the US Postal Service.    Federal Express, UPS and Amazon have proven that investors have an appetite for the logistics business.   Pull in a Blackstone or a KKR or TPG or probably all of them to take USPS “private”.   How much would it monetize?   Certainly hundreds of billions.

Of course, we have listened to exhaustive conversations about returning the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, to private ownership outside the current conservatorship of the government.    While lip service has been paid to such, the government has little motivation IMHO as these two entities are absolute cash cows now.  Having invested $187 billion during the financial crisis to stave off further collapse of the housing finance system, the government made a right choice to intercede.  But we have evolved from the crisis, and over the last five years or so, the GSEs have paid the government back over $400 billion in dividends, not even retiring any portion of the original preferred stock.   Put a multiple on say $100 billion a year in cash flow, and what would the market cap be for these entities?  And with the 90% market share of the mortgage market, maybe even a “premium” could be achieved.  In fact, given the prospective deal size, the country could even provide “seller financing” to ease the transition to private ownership.

And besides the GSEs, even though Rand Paul has stated that our central bank is broke, vehemently opining that our monetary system will shortly collapse, he obviously hasn’t taken a look at the financial performance of the Federal Reserve.    Yes, there are financials and audits to review.    It may surprise folks that the Fed is probably the best performing bank in the country, based on (ROA) return on assets and (ROE) return on equity metrics.  The problem is that virtually every dollar of profit goes back to the Treasury department for government spending, generally outside the appropriations process.   Member banks of the Fed receive a small dividend, say around 7% annually, but the Treasury Department pulls 90% of the annual profit, leaving limited retention of earnings for the Bank, resulting in an excessively leveraged institution.  This is not underperformance of the Central Bank, rather a land grab of its positive cash flows.  Though there are policy and pragmatic reasons to have control of the Fed, imagine the monetization opportunity for a segment of the private sector to participate as investors.   Compared to other financial institutions, its market cap would not match Wells Fargo, but still there would be hundreds of billions of value to be availed.

Yes, if you want to reduce the debt levels, think about other tools of restructuring, like shedding some assets. Upon review, there may be multiple trillions of dollars to put a major dent in, maybe even eliminate, the national debt.  As long as the sales proceeds are directed to the purpose of deleveraging, rather than redirected to new spending. A one-time proposition, but a restructuring path forward. But the notion to threaten haircutting our sovereign creditors?  Please.

 

 

 

Fintech Wave of the Future?

CrowdFundBeat News Wire,

BROTHERS PATRICK AND JOHN COLLISON CHALLENGE THE FINANCIAL STATUS QUO WITH THEIR PAYMENTS START-UP STRIPE –  “60 MINUTES”

Patrick and John Collison are among a vanguard of entrepreneurs trying to make the movement of money online as easy as sending photos or videos. The young founders of Stripe, a $5 billion payments startup, appear in a Lesley Stahl report on the burgeoning industry known as “Fintech,” which is challenging traditional financial institutions. Stahl’s report will be broadcast on 60 MINUTES Sunday, May 1 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

“In a world where people can send a Facebook message or…upload an Instagram photo and have it available to anyone anywhere in the world like that,” Patrick, 27, says snapping his fingers, “I think that the fact that that doesn’t work for money is something that seems increasingly, honestly, unacceptable to people,” he says.

The brothers demonstrate how their app works by setting up a payment system for a fictitious online company Stahl makes up. They say this process could take weeks in the past, usually requiring a visit to the bank, paperwork, and a waiting period. They can do it in a few minutes. “It doesn’t need to take any longer. This is how it should work,” Patrick says. Watch an excerpt.

Patrick says in the past year over one in four Americans online have used Stripe, including on sites like Facebook and Twitter, and those of major department stores. The software is embedded on both Apple Pay and Android Pay, and Patrick joined President Obama in his recent historical visit to Cuba, to encourage local entrepreneurs to set up businesses online.

60 Minutes
60 Minutes

 

 

 

 

 

Banks and other financial institutions have started taking notice and paying serious attention to Fintech: studying, investing in, and partnering with these startups. But Fintech poses many challenges to the old guard – for example because of the jobs such technology would inevitably eliminate.

“As services move onto the Internet they can provide the services more cheaply. And you know many of these banks have hundreds of thousands of employees,” says John, 25, of Stripe. “We see financial service moving online, they don’t have to have a physical presence and pay for that.”

The financial system is getting its wake-up call from the Fintechies, says Vikram Pandit, former head of Citigroup, one of the world’s largest banks. “A lot of what you’re seeing in Fintech is what you’re seeing in Uber and Airbnb…you’ve seen the impact of technology on travel, retailing,” says Pandit. But will the banking industry bleed as many jobs as the travel sector? “It’s the early days,” says Pandit. “Banks are thinking about it…trying to understand what all this technology can mean.”

Marketing for Crowdfunding

By Ashleigh Everston  CrowdfundBeat Guest Contributor,

Influencer Marketing for Crowdfunding: An Equation for Success!

Crowdfunding is the first step towards successful entrepreneurship. Without having the right financiers in your pocket, you cannot make your dream startup a reality. You may say that the financers are your primary target audience to position your startup venture.

To promote a potential business idea, you needa support system of people who can promote your brand to the right audience, and who can do this better than influencers.

Influencers are industry experts who give their insights into best practices and trending topicsof a particular area of field. These are the people who form general opinions of the people about a product in a particular industry.

So, if you intend to launch a breakthrough product but you need help offinanciers, you should engage withthese guys andtake leverage from their marketinfluence.

internet-marketing
internet-marketing

Why You Need Influencer Marketing?

Influencers have a strong influence over their target audience. With their social commentary,they lend credibility to an idea and validate its authenticity. As they are regarded as trusted individuals, they can reinforce the viability of your projectin potential financiers.

Too often, social entrepreneurs make the mistake of connecting with common people while they should be pitching to the influencers who can instantlymarket their business idea in a matter of few days. By partnering with influencers,entrepreneurs can raise awareness about their brand and channel their products to the intended audience.

Don’t know how to do it?Let us guide you with the following steps:

  1. Identify Your Influencers

First things first.

The road to a successful influencer marketing begins by identifying the influential people in your industry. As the influencers will be promoting your cause to a specific audience, it is important to pick the people who closely match with your finely-grained audience.Consider the following questions to help yourself identify targeted influencers:

  • Who are the opinion leaders in your industry?
  • What people from your industry are making impact on social media?
  • What bloggers and social media marketers do your competitorsfollow?

Answering these questions will help you easilyreach the influencers in your industry that you can contact to pitch your brand to the right funders.

  1. Reach the Influencers

Once you have identified your influencer, the next step involvesfinding where they exist socially. Luckily for you, this is far easier today than it would have been in the past.

Social media is easily the one place you can find the targeted influencers in your industry.

Twitter, Facebook, LinkedIn and Google Plus are all popular social space used byinfluencersuse to voice their opinions to their audience.So, if you are already not visible on these platforms, you should do it today toconnect with influencers in your industry.

  1. Build a Rapport

Once you are able to convince an influencer, it is time to share with him the features of your products and how it would be a help for your targeted customers. A well-crafted proposal will serve the purpose in this regards and it will help the influencer understand the objectives you will accomplish with your business.

However, if you lack time to write a proposal, you can even present the MBA dissertation you once wrote on the subject.

  1. Single Out the Extraordinary from the Ordinary

Now that you have the influencers in your reach, you need to segregate them in terms of their magnitude of influence on your target audience. What you need to do here is measure the influence of individual influencers. The higher the influence, the more credibility the person will lend to your brand.

Kloutis an app that helps you evaluatethe power of an influencer. It shows Klout score of an individual based on his interaction with his audience on a particular social media platform.

  1. Nurture Your Influencer

After you have a list of handful influencers, it is time to pitch your idea to them. But, you need to take a gradual approach and first build a rapport with them. This is very much like nurturing a customer where you first educate them about a product before throwing your offer.

Similarly, you first need to educate your selected influencers about benefits of your product and how it will solve problems of a group of people. Get engaged with them on social platforms, such as Twitter, Facebook and LinkedIn. If possible, you should arrange a personal meeting to share the blueprint of your product and any other facts that demand aone-on-one meeting.

Influencer marketing is a powerful technique to market your business idea to potential funders. If implemented effective, it can generate the right hype of your startup venture and help you raise fund to make it a reality.

Author Bio: Ashleigh Everston offers free consultation who seeks career guidance. She works as a part-time QA at online startup. When not working, she enjoys writing blogs, writing short-stories and fiction.