A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

As an entrepreneur, the constant stress around money in vs. money can at times be overwhelming and deeply emotional. Anxiety/angst/anguish/fear-and-loathing, and all synonyms thereof, best describe the feelings swirling in and around the entrepreneurial community these days when the subject of money, AKA funding, comes up — although not so much if you are one of the “chosen”, i.e. connected/entitled.

That said…

Bambi Roizen, Vator Founder and Managing Partner of Vator Investment Club, actually sees more money available. (Here is the video and full transcript of her talk at Splash one year ago. The quote is edited for clarity.)

There were about 20 post seed venture funds; now my friend Paul Martino counts probably 200 and there’re going to be a lot more funds. If you think that there’s going to be a crunch, don’t worry about it. I have a feeling there’s going to be a lot more funds coming to fill that void. I think there’s going to be a lot more specialized funds. (…) I think that’s we’re actually going to see local funds. Local funds investing in local businesses.

Because remember, this is the opening up of title 3 to the average investor. (…) It’s so hard sometimes to look at companies, because they’re so good at telling stories these days. I knew that was going to happen — you’re such great storytellers, you have to be, because you have to sell your vision. But it makes it really hard for investors to know what to invest in, so they’re going to invest in everyone, right? Money is available.

I asked KG what he thought from his perch as a serial entrepreneur who has raised funds in very different economies and attitudes over the years.

 “What she says is interesting. However, what we’re seeing is the financialization of the startup/entrepreneurship industry, with the consequence that financial investors will get involved earlier, take larger stakes and leave less for the entrepreneur and the team. 

One could say that it is good that capital may become easier to access (if this is true), but the cost of that capital is also increasing since there are now two layers of return that has to be provided much earlier than before — that to the VC and also to the VC’s LPs. 

In other words, entrepreneurs are coming earlier into the VC model where only a few outsized returns matter and the majority of companies are pushed/allowed to fail.”

Many VCs treat startups the same way commercial agriculture treats seedlings — once they get to a certain size they are thinned in order to concentrate resources on fewer plants that will yield a larger harvest.

“This may actually be negative for a whole host of companies that have no way of maturing before being put under the pressure of the VC return machine.”

However, newly emergent investors may bring change to the game. Kobe Bryant and Jeff Stibel have invested together since 2013 and have started a new fund with their own money.

Dozens of other musicians, actors and athletes are investing directly or through funds they started or joined.

Hopefully, that money will be more patient and come with a different mindset than the typical Silicon Valley focus on the connected and entitled.

It would be good to see at least some of the new funding go to the unconnected — especially people of color.

But no matter how much money is out there, I’m willing to bet that will take a lot more than vision/great story/rapid user growth to access it.

These days investors want a solid business plan focused on generating revenue, and, in many cases, a strong spotlight on social responsibility/giving back.

Image credit: HikingArtist

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Forbes had a a useful article bringing spotlighting a prime point abut crowdfunding that often takes a backseat.

Taxes.

This is especially true if you raise substantially more than your stated goal.

Sure, you will probably spend what you raise on development and operations, which eliminates the problem — assuming you have enough of the year in front of you.

Near the end, the article does you a serious disservice.

You may be able to sidestep the whole issue by claiming it was a gift. Here’s where the rules start getting funky, and unclear. That’s because if a backer gives you a lot of cash for a minimal reward, it’s arguably a gift rather a sale. Get a good accountant. (Any gift taxes would be owed by the giver, not the recipient.)

Don’t count on it. When it comes to the IRS, making assumptions in areas that are murky and don’t have clear rules can be a recipe for disaster.

And, as it does say, you need to deal with sales tax State by State.

There’s no question that launching and running a successful crowdfunding campaign takes focus and hard work, but it also requires special expertise.

Just as you wouldn’t ask your a programmer to design hardware, don’t assume that your own skill extends to the tax code.

The cost of a few hours of financial/tax expertise, with proven knowledgeable of the startup world will save you much more than money in both the short and long run.

Image credit: HikingArtist

That said, here are some stories that drive the point home.

A beautiful 23-foot air purification tower developed by a partnership of three Dutch companies that’s not for sale to the highest bidders.

“We’ve gotten a lot of requests from property developers who want to place it in a few filthy rich neighborhoods of course, and I tend to say no to these right now,” he says. “I think that it should be in a public space.”

Marco Arment built an ad-blocking app that blazed to the top of Apple’s App Store, but he pulled it almost immediately.

But he said that building such a successful ad-blocking app “just doesn’t feel good.”
“Ad blockers come with an important asterisk: While they do benefit a ton of people in major ways, they also hurt some, including many who don’t deserve the hit,” Arment wrote on his personal blog Friday.

Finally, Kickstarters founders, with the full support of their board, reincorporated the company as a B Corp, i.e., a public benefit corporation.

“We don’t ever want to sell or go public,” said Mr. Strickler, Kickstarter’s chief executive. “That would push the company to make choices that we don’t think are in the best interest of the company.”

Still for profit, but focused on something more.

Other companies, including the e-commerce site Etsy, Warby Parker, Brazilian cosmetics maker Natura, Plum Organics and Method are B Corps — and Unilever is considering changing.

Doing good by good by doing well, as Sir Richard is so fond of saying.

Flickr image credit: opensource.com

A look at what entrepreneurial minds are doing, whether they are starting a company or work at an innovative enterprise.

In May I wrote that graphene has the potential to change the world and it seems that Elon Musk plans to take advantage of it.

Tesla could soon achieve this 500-mile battery thanks to a development in graphene-based anodes, which can reportedly quadruple the density and output of lithium-ion batteries.

When I wrote about Ryan Grepper’s Kickestarter campaign to fund his reinvention of the lowly cooler in July he had raised $5M and counting. It ends tomorrow and is the most highly funded campaign ever.

However, with the financial support of 48,971 backers, Coolest Cooler has raised a whopping $10,362,461 — making it 20,721% funded. And the campaign doesn’t end until Friday.

The reinvention of the boring, unsexy butter knife is cool enough to attract boring non-shoppers with no little-to-no interest in the trendy—such as my sister. The attraction comes from the fact that it solves an annoying problem—something entrepreneurs should give more thought to doing.

The Stupendous Splendiferous ButterUp, a butter knife developed by Australia’s DM Initiatives, has a built-in grater that is designed to soften butter and make it easier to spread. 

Four college guys have developed a solution for women to a problem created by guys. It’s a badly needed product that gives women a simple way to know if their drink has been doctored.

The polish — called “Undercover Colors” — will change shades if it becomes exposed to a drugged drink. (…) Simply dip your finger in the liquid. If the polish changes colors, you’ll know not to keep sipping.

When it comes to large company innovation, I’m not sure who is more impressive.

The giant that re-imagined one of the most necessary and embarrassing products on the market today or the ad agency that created a hip way to get the word out.

The company is Kimberly Clark, the product is adult diapers and the agency is Ogilvy & Mather”s New York office.

Adult diapers are used by all ages, often due to injury, and the younger the user the greater the embarrassment at the check stand.

Nearly half of those who experience some form of urinary incontinence are under 50, according the brand. Among the causes are, for women, weakened pelvic muscles that can stem from pregnancy and childbirth and, for men, prostate cancer.

Here’s the ad.

YouTube credit: Depends

Ryan Grepper’s Coolest is proof that necessity is the father of invention.

Not that his invention is a necessity and it won’t save the world or even a little bit of it, but it will make your summer fun easier.

The original galvanized metal cooler was patented in 1954.

Coleman introduced a plastic liner in 1957 and wheels were added a couple of decades later.

But nothing, including the fancy electric versions, even comes close to Grepper’s Coolest.

There are far more moving parts to manufacturing a complicated product such as Coolest, which Grepper seems to understand.

It’s also nice to see a “real” product from a twenty-something that while focused on fun will generate revenue through sales, not ads.

Obviously, others agree. Coolest has raised over $5.5 million dollars from more than 29,000 people—and the campaign still has 42 days to run.

Coolest is definitely a global business in the making.

I’m sure it won’t be long before he will have to choose between building a company and selling or licensing his technology.

What would you do?

Image credit: Coolest on Kickstarter

Opportunities to publicize your startup through talks and interviews can be golden if you remember these basics.

1. Create a set of no more than five sound bytes, i.e., brief, core points to make in all of your talks and interviews No matter what happens, be sure you get those four or five key points into the conversation and stick to them.

2. It’s normal for the constant repetition of those points to become boring for you, but it’s imperative that you control the narrative and the discussion so that you can deliver your key points. You will survive boring.  

3. The biggest mistake CEOs and founders make in these cases is to go in and “wing it.”  You need to use these opportunities in a carefully planned way and deliver your four to five key points every time.  That’s how PR and branding work…. boring repetition and strict discipline to stay on point, no matter what the venue or specific question asked.

4. Just as critical is to access an advisor with experience delivering a consistent brand message, who will coach you, help you write your key bullet points and messages and practice with you to polish your delivery.

5. If you create a founder’s video be sure to make it simple and informal. If it’s for a crowdfunding effort edgier and more “amateur” (less slick and professional) will resonate better. People will donate because they are swept up by the story and the emotion and the idea behind the deal.  Not the facts of the product or the “benefit” in a logical sense. It must be personal and emotional. Try using a camera phone, such as a high end Nokia, iPhone or Samsung, and it will be great—edgy enough to have good credibility and authenticity.

 And while these five points sound easy and simple, the discipline to follow-through on them is not.

Matt Weeks is Currently VP & General Manger, Ecosystem at Planet Soho, the industry’s leading cloud-based business management platform for micro-business customers and creatives; co-founder and investor in WorkersCount and Advisor/Mentor at ZOOMPesa Systems & Technology: The Mobile & Online Money Transfer Service with a Heart and a contributor here when he can make time.

Yesterday was launch day. Finally! Long time coming.

Let me explain.

A couple of years ago Tony Maina got in touch regarding his startup ZOOMPesa.

Tony and his co-founder Jesse Gitonga Mukundi have a strong belief in “doing good by doing well” as do I.

One conversation led to another and the short version is that I became deeply involved in crafting ZOOMPesa’s social aspect and other parts of their branding, which included developing the content for our crowdfunding campaign on indiegogo.com. (indiegogo was chosen because, while Tony and Jesse are Kenyan, they live in Canada.)

Along with being an active participant, I was also invited to serve on the formal advisory board.

Rather than paraphrasing, here is a brief excerpt from the campaign to explain ZOOMPesa.

ZOOMPesa was born of our frustration when sending money home to our families Kenya.
Frustration because the wiring companies charged so much that there was less for our families and because it was so inconvenient for everybody.
So we put our heads together and figured out the kind of service we wanted.

• An ultra-convenient service that allowed international money transfers using any kind of dumb or smart mobile phone or a computer online that was instantly credited to a mobile money account, AND
• charge 20-50% less than other services depending on the amount of money sent AND
• let that one low fee cover transfers to 2 or even 3 different people.

Then we started thinking about how Tom’s Shoes and Warby Parker give a pair of shoes or glasses for every one that’s bought and we wanted to do something like that, too.
Giving our service free didn’t make sense, but giving a percentage of each fee to a group, like a clinic or school, that’s local to the sender did make sense. And with your help that’s exactly what we’re going to do.
ZOOMPesa will make sending money home convenient and inexpensive and let us all GIVE BACK at the same time.
That’s why we call ZOOMPesa the money transfer service with a heart.

Please visit our campaign to learn more.

And donate because an affordable money transfer service is badly needed as is the social good that comes with its use; plus we have some cool rewards.

On a personal level I want ZOOMPesa to succeed for many reasons, not the least of which is proving that a financial services company can be profitable and succeed without sky high fees and lousy customer service.

(Contact me for help with your crowdfunding content.)

Image credit: ZOOMPesa