Is Crowdlending better for small business then Crowdfunding?

Depends. What is the stage of your business?

Crowdfunding may be good to get a business concept started, but Crowdlending is better for growing it. Crowdlending will help you raise more money faster, once the market demand is established and the business model is proven.

Why?

Simply put, Crowdlending helps you get a loan, not a gift. You pay back the money with interest, rather then provide rewards to supporters.

Let’s take Jenny for an example.

Few years ago Jenny was the first to offer Italian style espresso in her community. She put down 3 months of rent on a tiny space and funded the

purchase of a second hand espresso machine by offering free coffee, cookies, and T-shirts in exchange of donations from the first espresso enthusiasts.

Jenney’s Coffee Shag was a success. The line in the morning grew ever longer.

Jenney decided to expand into Jenny’s Coffee Shop.  But how much more cookies and coffee can anyone eat and drink?

Jenney launches a Crowdlending campaign instead.  She offers to borrow the money, promising to repay it on a schedule and with interest. Now, her friends and customers can help her out and earn interest on their capital, as well as enjoy a shorter line for their morning espresso. It is a win-win for everyone.

Where can you crowdfund a loan in Texas?

You have to set up your crowdfunding campaign on a Texas registered crowdfunding portal. There are currently only two registered portals that specialize in debt, and they are quite different: Lendoor and NextSeed. The first facilitates term loans, and the latter does revenue sharing loans.

Crowdlending in Texas--Can my small business get a loan?

What is Crowdlending?

Crowdlening is funding a small business loan by getting many people to lend small amount. These could be customers of the business, neighbors, friends, family or community members. Earning interest on your investment is even more compelling when you are helping people and businesses that are important to you.

Crowdlending became possible in Texas only recently through the implementation of the Texas intrastate crowdfunding exemption.

Who is it suitable for?

There are two things that you need to successfully crowdfund a loan: 1) a cash flow generating business (so you can pay back the loan), and 2) a large network of supporters that you can reach out to. That could be personal or business connections.  Thanks to the new regulations you can now leverage your network to raise growth capital for your business, instead of knocking on closed bank doors.

To crowdfund your loan your company must be registered in Texas.  You also can raise money only from Texas residents.

What does it involve?

If you want to crowdfund in Texas, you need to follow a few rules.

1.     Pick a portal

You have to set up your crowdfunding campaign on a Texas registered crowdfunding portal. There are currently only two registered portals that specialize in debt, and they are quite different: Lendoor and NextSeed.

2.     Povide information

Your crowdfunding campaign must contain certain information about your business and about your loan. While all the regulatory requirements may seem overwhelming, most portals will assist you with preparing your campaign.

3.     Crowdfund

This is by far the most important part of the process. The success of your loan is in your own hands, so be prepared to reach out to everyone you know. If you reach your target amount you will receive your loan. If not, all the pledges will be returned to investors. Remember, it is a loan, not a gift! This makes it more likely to fund. 

Viktoria Krane talks about Crowdlending -- Lendoor

Viktoria Krane talks about Crowdlending -- Lendoor

Where are you from originally?

I was born and raised in Bulgaria. I came to the US as a student almost 20 years ago.  Since then, I had lived and worked mostly in New York, but also spend couple of years in London, Hong Kong and LA.

What university did you go to?

University of Oklahoma. I’m a Sooner. Don’t hold it against me.

What brought you to Austin?

Crowdfunding. I came to Austin for the first ever Texas crowdfunding roundtable.

What is your group’s mission?

Our mission is to help start-ups and small businesses in Texas get crowdfunded loans from friends, customers and supporters — instead of bankers — with terms that work for both sides. 

What need does it fulfill?

Affordable growth capital is crucial but hard to secure for small business.

What exactly does it bring to startups?

Through technology, we re-invent and improve the traditional friends and family market for small business financing.  We make it more efficient, official, transparent, and automated, which is better for both sides.

What type of startup would benefit from your group?

A startup with strong social network and cashflow. If your are expecting sufficient cashflow to service a loan, you should consider crowdlending.

What was the most challenging aspect of starting up the initiative?

Perhaps educating people about crowdfunding. There is great deal of misunderstanding and confusion, especially with the new Texas rules.

What advice do you have for entrepreneurs?

Everything takes twice as long and cost twice as much. Plan accordingly.

What Austin-based resource have you found to be the most helpful and why?

TEN has been a great partner in Austin. Local knowledge is very important. 

Jason Taylor talks about Codelaunch and their upcoming Pitch Day

Jason Taylor talks about Codelaunch and their upcoming Pitch Day

Where are you from originally?

The President of Code Authority and Founder of CodeLaunch, Jason W. Taylor, is from Oklahoma City, Oklahoma.

What university did you go to?

University of Oklahoma

What brought you to Austin?

We are based in Dallas (Frisco) Texas

What is your group’s mission?

The CodeLaunch mission is to offer a venue for very early stage App ideas to get seed funding and launched as a service to the hopeful entrepreneurs and active angels in the North Texas community.

What need does it fulfill?

CodeLaunch is an App startup funding and investment venue. We invite the general public to bring their “app ideas”, line-of-business concepts and other ideas that could benefit from software development services to compete for an invitation to our annual event in August.

Along with our own investment, we hope get third party investors will also help seed fund some of the competitors.

What exactly does it bring to startups?

The “overall winner” of Pitch Day gets investment from the software development services company that produces the event, Code Authority Custom Software. In short – they get a partner, not a vendor. They can get their app built for free.

There are many other benefits, awards, and ways to benefit, as well as representatives from Angel groups and VC at the event and networking reception which follows. Competitors can potentially be funded even if they are not the “Overall Winner”.

What type of startup would benefit from your group? Any Embryonic Stage, or Early Stage Software Application (or simple “App”) startup.

What was the most challenging aspect of starting up the initiative? 

This is CodeLaunch’s 5^th year. We have started 6 companies in our history and helped 2 others connect with 3^rd party funding at Pitch Day.  While we have one recent “Exit” we are proud of, and have provided thousands of hours of free labor to the various benefactors, the most challenging aspect is getting people to know this medium exists and is credible.

What advice do you have for entrepreneurs?

Have the guts and mental toughness to get back up every time you get knocked down when working on your startup ideas.

Key Information

http://www.codelaunch.com/

Applications Accepted via website through May 31, 2015.

Finalists’ Pitch Day event: August 13, 2015 Frisco TX 2:45-5pm, Networking Reception follows.

CodeLaunch is produced for the benefit of the startup community by Code Authority Custom Software and a group of sponsors and partners. http://www.codelaunch.com/.

To attend CodeLaunch Pitch Day RSVP to Sarah Mix, 469-656-5023, 

smix@codeauthority.com

2013 Winner RentEval “Exit”

More information here.

Kevin Castello talks about Best Fit Capital

Kevin Castello talks about Best Fit Capital

Where are you from originally? 

I was born in San Angelo Texas.

What university did you go to?

I have an undergrad from Austin Graduate School of Theology and a MBA from Baylor University.

What brought you to Austin?

My family moved here in 1984 so I have witnessed some of the tremendous change the Austin area has seen in the last 30 years.

What is your group’s mission?

Best Fit Capital seeks to help entrepreneurs know which type of investment capital, investor, and process is the best fit for their goals.  I want entrepreneurs to understand what the implications of investment capital are and to be comfortable with the expectations of the investors.

What need does it fulfill?

There are many potholes on the entrepreneurship road and I want to help entrepreneurs avoid the ones related to funding their venture.  No entrepreneur would launch a venture without strategies for development/marketing/sales but many do so without a proper capital strategy.

What exactly does it bring to startups?

BFC helps start-ups to align investment types with their personal goals and to keep it aligned through their end game.

What type of startup would benefit from your group?

BFC wants to help all entrepreneurs in this area.  We offer seminars to allow those with very little capital to get the proper educational information to avoid some of the major issues.  We also offer dedicated consulting to those who are ready for an objective viewpoint during the venture.  BFC wants to be a long term partner with the entrepreneur to help them protect and grow their venture to see their dreams come true.

What was the most challenging aspect of starting up the initiative?

It is entrepreneurial just like any other start-up.  I have left the comfort and stability of a job to pursue my own goals.  I want to see entrepreneurs achieve their goals and get the funding they need but not take capital they don’t need.

What advice do you have for entrepreneurs?

Boot-strap your venture as long as you are able and it is strategically wise to do so.  Once you know you are going to need to raise money then prepare, execute and close your raise.  “Maybe” is the worst thing you can hear from investors as it strings you along.  Make it easy for investors to be able to make a quick, quality yes or no decision so everyone can keep moving.

What Austin-based resource have you found to be the most helpful and why?

The entrepreneurial ecosystem itself.  There are so many resources in Austin:  Capital Factory, Tech Ranch, CTAN, Texas Entrepreneur Network, SKU, professional services, other entrepreneurs and mentors.  Each serves a different entrepreneur in a different circumstance.  It is the accumulation of all of it which makes Austin exciting!

Badria Jabali talks about her new book "The Blueprint of a Successful Business"

Badria is the author of The Blueprint of a Successful Business


What is your background?

I am an internationally qualified and experienced professional with a background that includes accounting, financial management, project management, team building, financial and business consulting.

How do you help startups?

We help clients analyze their business practices and define requirements to strengthen and grow the business focusing on the financial and management aspects of the business. 

What other positions do you have?

I am  the CEO of Global Business Financial Consulting , a US based consulting practice that offers their services in the US, Middle East, Europe and Asia.

What topics does the book cover?

Performing market research, Creating comprehensive business plans, Building an efficient business model, Setting comprehensive financial strategies, Building a brand name, Setting comprehensive marketing strategies, Building business relationships and maintaining credibility, Managerial skills and organizational behavior.

Where can one find the book?

The book is available on the Kindle store at Amazon here with a price of $25.00.

Shelley Delayne Talks about Orange Coworking

Shelley Delayne Talks about Orange Coworking

Where are you from originally?

St. Louis, Missouri. (Born and raised; 4th generation St. Louisian! Have also live in Kansas City, Santa Fe, NM and Los Angeles)

What university did you go to?

Avila College in Kansas City, briefly. 

What brought you to Austin?

When our daughter was born, we knew we wanted to raise her in Austin, near my husband's family.

What is your group’s mission?

To connect and support entrepreneurs, whatever their stage of business, by providing a professional, flexible workspace with events, networking, and resources.

What need does it fulfill?

Entrepreneurs are cut from a slightly different bolt of cloth than everyone else. And starting, running, and growing a business has many challenges. Having a community of like-minded folks around you makes entrepreneurship better, more fun, and more successful.

What exactly does it bring to startups?

Membership-based shared flexible work space with ergonomic furniture and fiber internet, meeting rooms, classes, and connections.

What type of startup would benefit from your group?

Any startup needing a place to focus, whether by themselves, with a small team, or with clients.

What was the most challenging aspect of starting up the initiative?

The most challenging aspect, so far, was finding an appropriate location with sufficient parking, good local businesses nearby. Once we found the location, it's all been a lot of work, getting to opening, but it's all gone fairly smoothly.

What advice do you have for entrepreneurs?

Magic happens when entrepreneurs come together in real time, in real places. Get out of your solo office, get out of your house, stop trying to work at Starbucks. Whether it's at our space or another (there are lots in Austin!), give coworking a try. Let yourself be surrounded by other entrepreneurs and independent professionals, and see how that positively impacts your business.

What Austin-based resource have you found to be the most helpful and why?

So many resources have been helpful to me. The first two I think of: the BizOpen program (permitting guidance from retired city employees) has been incredibly helpful. My mentor from SCORE (Celia Bell) is a wealth of knowledge and support. 

Steve Kelley of Arganteal

Steve Kelley of Arganteal

Where are you from originally?

I grew up in a suburb of Saint Louis, Missouri

What university did you go to?

I have a Masters in Electrical Engineering from Cornell University

What is the idea behind your startup?

We have developed a technology that automates many of the labor-intensive tasks required to deploy applications in the cloud computing environment. 

What need does it fulfill?

By using our technology, systems integration companies can reduce the labor to deploy complex applications like Microsoft Lync by 60% - 70%.  This allows these companies to do deployments more rapidly and with fewer expensive technical personnel. 

What exactly does it do?

The Arganteal system takes information about the client – the number of users, their physical location and network identification – and then information about the computing environment – what operating system, what hypervisor is being used, how many servers of what kinds, what kind of database system – and based on this information create a library of commands that automatically install the chosen applications on the target cloud platform with minimal or no intervention from expensive subject matter experts.   

Who is it for?

We license the Arganteal SaaS to system integrators and consulting companies for them to use to install applications for the end user companies that are their clients.  This enables these companies to finish deployment projects for their clients in less time and at a higher profit. 

What was the most challenging aspect of starting up?

Since we know the needs of our industry and we have the expertise to design and develop our product, the most challenging aspect for us is raising the capital we need to effectively market our product and then fund the development of new product features. 

What is the next step for you and your business?

We have identified a number of companies that want to use our technology so our next step is to sign license agreements that generate revenue for us while we also raise money from investors.  With this income we will be able to fund the marketing and development activities to accelerate our presence in the market.

What advice do you have for entrepreneurs?

Focus, move rapidly, stay lean and stay flexible.

What resource have you found to be the most helpful and why?

We are a virtual company. The Internet provides a fast and economical communications platform that allows us to speed up our product development, deliver presentations and product demonstrations to prospective clients and investors (usually remotely thereby reducing travel time and cost) and communicate effectively within our own staff.  Because of the Internet we can move quickly, communicate effectively and run a lean and flexible company with greatly reduced capital needs.  

Chris Taylor talks about Square Root

Chris Taylor talks about Square Root

Chris Taylor grew up in Pinch, West Virginia. And yes, it’s as rural as is sounds. He attended Carnegie Mellon University, both because it had one of the top Computer Science programs in the country, and more importantly, it had a diverse student base with excellent schools for art, design and architecture as well.

That broad base of knowledge made him interesting to Trilogy, which recruited him down to Austin in 1995. When he finally left in 2005 he had 10 years of experience in enterprise software and a little money in the bank, the perfect time to start a company!

All he was lacking as the killer idea. By performing analytics and strategy projects with large customers, he as able try and test various ideas, finally coming up with CoEFFICIENT, performance engagement software for large enterprises, in 2009. Almost immediately knew that it was the big idea that he had set out to find four years earlier.

From Trilogy Chris adopted the paradigm that data is a tool that should be leveraged to make better business decisions every day. Square Root’s platform, CoEFFICIENT, analyzes large amounts of data to help retail organizations reduce operational complexity and find opportunities to maximize performance.

As he was building the software Chris was also building his company. He realized that “Company culture can make or break a startup. Think about what kind of culture you would like your company to have, then start building it immediately. By the time you've hit 10 people, it's too late.”

Square Root is built around four core values; Thrive, Think Big, Do Bigger, Be Customer Inspired, and Partner.  Says Chris, “Of the four, I think my favorite would have to be Thrive. It’s important to me that the team feel empowered to find the work-life balance that suits them best. We believe it is everyone’s responsibility to make their work environment motivating and fulfilling.”

“This takes communication from the C-level all the way down to our interns. Every Friday we get together for a company lunch, this alone has helped us build a strong report. We have announcements where everyone hears from the executives talk on the progress toward business, and one employee gives a presentation on something he or she is currently working on. It's a great way to make sure everyone is on the same page about our goals as a company, and it makes for a strong team.” says Chris.

Chris says that his goal at Square Root is to have “a positive work environment where ideas can flourish. I want to be excited to come to work every day, I want that for everyone at Square Root.” One way Square Root encourages this is their office environment. Occupying three neighboring houses, and soon to be four, the offices at Square Root could be confused with someone’s home, except in place of couches and chairs there are stand-up desks.

To date Square Root has been completely bootstrapped. But that hasn’t slowed its growth. Finishing 2013 at 20 employees, it’s currently at 40 and plans to be at 70 by the end of 2015. Says Chris, “Bootstrapping a software company is not easy. I’m glad I had to work hard to get where I am today. My upbringing gave me the grounding to truly appreciate the ups and downs of being a CEO, genuinely value the team at Square Root, and be thankful to be raising my family in Austin.”

And Austin has infused the culture of Square Root. They hire UT graduates, sponsor HI-B Visas, and in the last year have tripled the training budget. Says Chris, “Right now Austin has the balance between being too laid back and having no life other than work. There is so much to look forward to at Square Root. We are doing something awesome and doing it with balance.”

Kevin Stone talks about Austin Photonics

Kevin Stone talks about Austin Photonics

Where are you from originally?

I born and grew up in Dallas, Texas, but I have lived in Los Angeles, Fort Lauderdale, Moscow and Phoenix, to name a few places.

What university did you go to?

Texas A&M - Physics

What is the idea behind your startup?

Our idea is to provide solutions to ages old problems in lighting and related technologies by shattering longstanding paradigms, including providing high end optical filters on lightweight, flexible and unbreakable polymer films rather than grossly fragile and expensive glass; providing color filtration technologies that limit off-axis chromatic shift and provide an unparalleled range of hue and saturation; creating permanent theatrical color filters that replace expendable theatrical gel and eliminate the high labor costs associated with ongoing replacement while retaining light weight and ease of use; coating polymer optics without the high costs associated with expensive cleanup from outgassing and without undesirable deformation and coating damage due to thermal instability; providing small and lightweight variable color correction for television and cinema lighting; and pioneering new energy efficient technologies such as our laser-phosphor luminaire currently in development.

What need does it fulfill?

Our patents and processes replace heavy, fragile and expensive glass filters requiring large amounts of storage and complex actuating mechanisms with near-weightless, unbreakable and heat resistant flexible polymer filters that require vastly smaller motors for mechanical devices and micro-machines and significantly less storage space. They also increase the utility and viability of many older energy efficient light sources, expanding the useful lives of these technologies. Our laser-phosphor light engine will replace costly light sources such as HMI and xenon lamps whose rated life ranges from a few hundred to a thousand or so hours with an energy efficient 10,000 to 20,000 hour source that solves the problems of collimation and color accuracy that prevent LEDs from penetrating these markets.

What exactly does it do?

Our dichroic polymer filters replace color gel by providing a color-accurate reject-or-pass filter that, due to the lack of absorption of filtered light, does not degrade and burn through like expendable gel filters, while avoiding the shortcomings of heavy, fragile and expensive glass dichroic filters. Our coating technology also allows the coating of other polymer substrates without the costly and time-consuming cleanup due to outgassing that is typical of other vacuum deposition processes. End-use technologies provide highly precise color mixing and unmatched color and saturation range. Lastly, our laser-phosphor technology replaces LEDs with lasers and novel phosphor geometry to produce full-spectrum white light unattainable by LEDs while overcoming the inherent inefficiencies of optical systems designed around LEDs and their planar emitting surface, allowing precise and optically efficient beam shaping in collimating and imaging systems.

Who is it for?

The market for dichroic polymer filters and their end-use technologies is broad, ranging from medical and scientific applications to optical micro-machines to entertainment and architectural lighting to military imaging systems. Our polymer coating processes are applicable to any industry desiring cost-effective and highly accurate coating of polymers and polymer optics. Our laser-phosphor light engine targets any application that requires the energy efficiency and durable long life of LEDs coupled with superior full-spectrum color rendering and highly efficient and precise optics and beam-shaping.

What was the most challenging aspect of starting up?

Hands down, the most challenging aspect of starting up is attracting investment, given that most investors have little to no experience in the lighting and optics industries. The challenge is in educating them as to the extraordinary capabilities these technologies impart to existing lighting systems in a simple and cost-effective manner and the vast market potential that these game-changing technologies possess.

What is the next step for you and your business?

Aside from tying up a few intellectual property loose ends, the next step, immediately upon acquiring investment, is to purchase equipment and start manufacturing. A number of markets have already been identified and key players aware of our technology. Moving forward is as easy as fabricating material and taking customers’ orders.

What advice do you have for entrepreneurs?

Don’t underestimate how difficult it may be to attract investment if yours is a product that is specific to an industry suffering from lack of general public awareness. In our case, for example, people take light-producing technologies for granted and have little idea of what does or does not constitute viable innovation.

What resource have you found to be the most helpful and why?

It is probably trite to cite the internet as the most helpful resource, but it’s a great educational tool for making potential customers and investors alike aware of the value of your product.