You are hereby invited to join my journey as I endeavor to use crowdfunding as a 21st century alternative to angel investment fundraising.
Crowdfunding, as the name implies, allows virtually everyone to invest in early stage companies -- not just rich people. Allowing small investors to participate in what has otherwise been limited to a very small group of high net worth investors is creating a tremendous source of new capital for entrepreneurs. Imagine if the general public had been able to invest in Google from the very beginning instead of a few select venture capitalists.
My company, Rural America OnShore Outsourcing, has reached a point where we need to raise outside capital to accelerate our already rapid growth. We have self capitalized since day one, but now need more "grease" (as we call it) to grow market penetration by increasing both our inbound marketing and national sales team.
The past two years have been a whirlwind, starting with the epiphany of offering rural onshore outsourcing, launching the company, the wins, the setbacks, all cemented together with the daily challenges of bringing the team and operational pieces together to form an industry-changing entity.
Rural America is raising only $350,000. We are seeking $250K from Angel investors and $100K from Friends and Family investors. Angel investors are predominately high net worth investors who meet the SEC criteria of being "accredited" and can invest an almost unlimited amount. Friends and family investors are usually non-accredited investors such as our associates' family members, our customers, and our friends/fans who believe in the company's future.
Usually when I'm conducting an angel capital round, I also do a friends and family (F&F) round. I love helping small investors get involved in growing our company while increasing their wealth. There is a school of thought that says "it is best to raise money only from angel investors as they are professionals and know how the game is played; and that F&F investors are unpredictable, uncontrollable amateurs who require a lot of time and hand holding." In my experience, it has been the exact opposite. F&F investors are usually just glad to able to play in the early stage investment game. I have never had a problem. On the other hand, in almost every angel group investment, there is one investor who after six months knows how to run the Company better than the management team.
One such example: I was the CEO of a start-up carbon composite manufacturing company. Due to numerous technical problems we were seven months behind schedule in rolling out our first product. We kept all investors informed via emails, phone calls, and plant tours. Sure enough, after a couple of months of frustrating pre-production setbacks, a $25,000 Angel was screaming that the company was in trouble and needed his guidance. He had visited the plant once and had no clue how to fix the problems. By comparison, none of the 20+ F&F who had invested $165,000 with checks of $5K and $10K became upset. They visited the plant, met with management, listened, and offered good advice. So much for that school of thought that small dollar amount investors cannot be trusted to be professional.
For the past three years, I have been reading about the new fundraising technique called crowdfunding. The buzz around crowdfunding is growing. For those readers not familiar with crowdfunding, Time Magazine, the Wall Street Journal, and fellow Huffington Post contributor Kevin Lawton have written excellent articles on the subject.
Can we at Rural America raise some of the money we need using crowdfunding? Recently, I shared with the Editor at Huff Post's Small Business America my intentions to explore how Rural America could make crowdfunding work for us. He suggested that I share my entire journey through the legal, investment, and operational challenges that Rural America will undoubtedly face.
My next step in this adventurous journey is to work with Rural America's legal team to learn the SEC roadblocks to crowdfunding in the USA. Is it possible to work around those obstacles that were created in the 1930s?
So check back here on Huff Post as I endeavor to use crowdfunding as a 21st century alternative to angel investment fundraising. I look forward to reading your suggestions and comments. Power to the people!