Skip to content
June 16, 2011 / racheltobias

Reserve Your Spot Now: Fashion & Handicraft Entrepreneur Event, June 30th

On June 30th, ProFounder will be hosting an exclusive event for entrepreneurs of fashion and handmade goods. This event will bring together entrepreneurs and industry experts to discuss crowdfunding and how to grow your business.

We will also be doing a hands-on activity that we call Swap + Meet, in which entrepreneurs (like you!) can give a short pitch to the audience and make 4 asks; these asks could be for testimonials on your site, reviews on yelp, introductions to helpful connections, graphic design help, or financial investments! The audience will then be able to pledge their support for your individual asks!

We have only 5 spots available for entrepreneurs to pitch, so email rachel@profounder.com for more details if you are interested in this opportunity or fill out our application form!

We will also be giving financial incentives that will allow you to invest and be invested in!

June 14, 2011 / racheltobias

The Making of Good Citizens

This weekend, @HoracioAtHome tweeted about Amy Cortese’s new book, Locavesting: The Revolution in Local Investing and How to Profit From It. After reading a few chapters, I was especially inspired by a anecdote she shared about Benjamin Franklin, who is often referenced in the world of microfinance, a piece of trivia I was previously unaware of.

While we typically share case studies and articles for entrepreneurs, I wanted to pass on this anecdote for investors as well, and create a discussion around why it might be important to invest either locally or in entrepreneurs we believe in.

In Benjamin Franklin’s last will and testament, he bequeaths two thousand pounds sterling to a loan fund, half to loan to Philadelphia artisans and the other half for Boston artisans; these artisans should be married, under the age of 25, served in an apprenticeship, and have a good moral reputation. Additionally, he provides a detailed summary of how these loans will work, including interest rates and loan amount.

In explaining his motivation for creating this fund, Franklin writes:

I have considered that, among artisans, good apprentices are most likely to make good citizens, and, having been bred to a manual art, printing, in my native town, and afterwards assisted to set up my business in Philadelphia by kind loans of money from two friends there, which was the foundation of my fortune and all the utility in life that may be ascribed to me…”

It is exciting to think that the simple contribution of two friends provided, in Franklin’s eyes, the basis for everything he would later create and provide for his community. This idea was so powerful, that he was compelled to provide that same opportunity for other young entrepreneurs. His belief in artisanry, strong worth ethic, and good moral standing were the factors behind who and what he chose to, in his case, lend.

As an potential investor in a friend or family member, what is most important to you? What issues and foundations do you care about in your own community?; Perhaps you are passionate in investing locally, or maybe the future of technology is more up your alley. When you are contemplating an investment decision, consider that your contribution, no matter how big or small, could potentially lay the foundation for a lifetime of impactful work from the entrepreneur you chose to believe in, in the making of a good citizen.

To close, I wanted to share a fun comparison between this next sentence of Franklin’s and ProFounder’s mission, which is to ensure all entrepreneurs have access to the resources they need through the engagement of robust, supportive communities.

I wish to be useful even after my death, if possible, in advancing other young men, that may be serviceable to their country in both these towns [Boston & Philadelphia].

June 7, 2011 / David Lang

Case Study: Offshore Blue Adventures

When you’re starting a business, you take all the lucky breaks you can get. CiCi Sayer has had her fair share as she’s taken her idea of starting a whale watching business in San Diego from dream to reality. Undoubtedly, CiCi’s luck is a direct result of her incredibly hard work. The hard work that she’s put into making her dream a reality was apparent to everyone as she went through the process of raising money on ProFounder. As we’ve discussed before, one of the big benefits of doing a ProFounder raise are all the intangible benefits. CiCi’s story should serve as a blueprint to anyone who wants to create their dream business with the support of their communities. She was kind enough to provide us with great insights during our interview with her after the raise…
In your own words, tell us about your business…
Offshore Blue Adventures is primarily a whale watching and eco-tour business, designed to cater to a more individualized experience for small groups.  The tours are conducted on a 21 foot Rigid Inflatable Boat which accommodates up to six passengers.  These boats are fast, quiet and very stable in all but the stormiest conditions.  I chose this type of boat for all of those reasons, but also because a ride in one of these Navy seal type boats is so much fun.  To quote a good friend of mine “Nobody has more fun than us!”
Why did you decide to use ProFounder?
After completing my business plan, I approached a variety of financial institutions as well as applied for several grants. As a startup business with no credit history, in the current economic conditions, it became very clear that getting a loan was completely out of the question.  Grant money, too was scarce and I was turned down on that front as well.  I was lucky enough to borrow  $30,000 from a friend and my brother, but even that was not enough to bring to the table.  I needed minimally $90,000 or so I thought.
I heard about “crowd funding” on the very day that I was turned down for the grant, through Good Morning America.  While Profounder was not specifically named, I decided to do some research into this intriguing method of raising money.  I looked at several sites and felt that Profounder offered the best and most professional services.
What did you expect when you started the raise? What changed?
I was not really sure what to expect at first.  After talking it over with some of my closest supporters, I decided to go for it.  I was encouraged by the enthusiasm of every one I spoke to and my expectations began to rise.  Once the site was launched, I was quite sure that my community of friends would be as excited as I was and would be happy to invest in my startup.  I was therefore mystified, and then disappointed at the lack of response that I was getting.  What had I done wrong?  I needed to communicate more, and reach out to my supporters.  I found the perfect vehicle for that by setting up and sending an online newsletter with a progress report.  Suddenly people were interested again!
Aside from the money, has the process helped your business?
This process, while emotionally painful for me, because the thought of asking for money from my friends was very difficult, has helped the business in so many ways!  I received offers of help for so many of the problems that a startup business faces.  From the building of a website to the immeasurable benefit of word of mouth advertising & promotion, and good old fashioned, backbreaking labor in the boatyard, preparing the boat for launch.  Remember that money saved is as good if not better than money earned or given!
If you had to give an entrepreneur who was about to do a ProFounder raise one piece of advice, what would you say?
The best piece of advice I could offer an entrepreneur, is be  brave, don’t give up and keep the doors of communication wide open.  I am the kind of person who absolutely hates to talk on the phone, so for me to call people up and talk about raising money for the business was pretty difficult.  However, inviting people to lunch, sending out newsletters kept everyone engaged and informed.  Because I kept looking for ways to make the process easier for me, I was able to overcome many of my fears and much of my discomfort in “asking” for money.
You have to tell us the story of how you found the boat…
Here is how I came by the boat.  I had been in touch with a company who built RIBs for the tourist industry, police & rescue, as well as small versions for yacht tenders.  The smallest RIB that would work for me was 21′ and cost about $65,000 new and about $50,000 used.  That is why I was looking to raise so much money.  But the pledges were very slow in coming and were much smaller than I had hoped for. I was ready to put my dream on the shelf and move to Lake Havesu to work as a ferryboat captain .  I had decided I would go work in “hell” for 5 years to save enough money to buy the boat I wanted.  The day after making that decision, I received an early morning call (5:30 am) from a friend asking if I had seen this ad on the laundry mat bulletin board for a 21′ RIB in “like new” condition, for $18,000.  After looking it up on the craigslist site where it was listed, I called the owner & set up a viewing and sea trial.  (I also told my friend to take the ad off the board before anyone else had a chance to see it!!)  The boat looked like a new boat and the engine looked like it just came off the showroom floor!  So by 4:00 pm the boat, engine, & trailer were mine.  The owner, it turned out had bought the boat to take to Mexico with some of his friends, but everyone bailed out on him because of the situation in Mexico, so the boat had sat under cover in an airplane hanger for about 7 of it’s 10 years.  Being a pilot he had meticulously maintained the boat!
At first I thought I would name the boat “Out of the Blue” because that is where she came from, but on second reflection, I have named the boat “Nereid” one of the Goddesses of the Sea.
So what I thought would be a $90,000 startup wound up costing about $25,000 instead! (I still needed to buy a vehicle to tow the boat with & found another fantastic deal there,too!) I was able to reduce the amount of my raise to a more manageable size & reduce the minimum investment as well.  I immediately posted a new “Progress Report” and suddenly, the raise was completed!  Lesson learned:  be flexible in your planning and be ready to move at a moments notice!
May 27, 2011 / David Lang

Case Study: Brown Water Coffee

Ricky Padilla is inspiring. It was no surprise to us that his friends and family wanted to invest in his new venture, Brown Water Coffee. Ricky epitomized everything we encourage other entrepreneurs to think about: telling a great story, following up, making a personalized ask. If you’re looking for a textbook raise, Brown Water Coffee is it. They raised $17k from 10 investors. The money raised was used to purchase the companies first roaster, pictured here:

Ricky was kind enough to provide us (and you) with a very insightful interview based on his experience with the process. If you’re in the process of creating your pitch, you’ll appreciate his words of wisdom, including my favorite line from Ricky, “Start before you’re ready.”

Read more…

May 26, 2011 / David Lang

The Most Important Person in Crowdfunding: Investor #2

We’ve spent the past few blog posts talking about how crowdfunding is a bit of a misnomer. The widespread (and misleading) understanding of the term is a large number of seemingly random people who contribute a small amount to a project or business. Our experience so far has taught us something slightly different: crowdfunding for business is successful if and when the entrepreneur is able to identify specific (not random) people who are enthusiastic about helping them grow their business and vision, then give them an easy way to invest. We call this strategy “community-based crowdfunding” and have explained this idea through a serious of blog posts like The Importance of Trust, Personalized Invitations, and a number of Case Studies.

After looking back at the data and statistics from those raises that closed successfully and those that didn’t, something jumped out at us: every raise that had at least two investors was able to eventually close successfully. Surely, there’s more to it than just finding just two people to invest in your business, but I think the Two Investor Principle is a great way to think about the importance of making a specific and personal ask to the people who trust you, as a person and as an entrepreneur. As you get started, focus on finding the convincing the first two investors to get involved.

It reminded me of a Seth Godin post from a few years ago, Guy #3, where he talks about third person being the catalyst to start a movement. In the post, Godin describes the video below:

My favorite part happens just before the first minute mark. That’s when guy #3 joins the group. Before him, it was just a crazy dancing guy and then maybe one other crazy guy. But it’s guy #3 who made it a movement.

Derek Sivers referenced the same video and talks about “nurturing your first few followers” in his TED Talk, How to Start a Movement. In his talk, he describes the important social proof factor by explaining that “followers emulate the followers, not the leader.”

As you create your raise, here are some tips to get you thinking about the all-important first two investors:

  • Instead of just making a list of potential investors, prioritize them by how confident you are they will invest. This will help identify the first two.
  • Talk to the first two before the raise even starts. Explain your vision and how much you value their feedback and participation.
  • Consider if the people you identify as the first two would also be good board members for your business. This will allow them to be even more invested, beyond any financial contribution they may make, in the long-term success of your venture. Notably, as board members, they can legally invite their networks to invest in your ProFounder raise as well!
  • Get the first two actively involved in your raise – ask them to write testimonials that you send to other potential investors.
    Even if they aren’t board members per se, get the first two actively involved in your raise – ask them to write testimonials that you can send to other potential investors.
  • Make the first two feel special; either a tangible benefit to being first in or an emotional benefit that you build up with them.
May 16, 2011 / racheltobias

ProFounder Update

May 5, 2011 / David Lang

How to ensure that your raise is successful even if you do not reach your financial goal

We’ve now had 14 raises that have successfully reach their fundraising goal on ProFounder, which is fantastic! What goes unannounced are the raises that don’t meet their fundraising goals. Obviously, the reasons are business specific: didn’t have enough time to give the raise the attention it needed, friends and family weren’t in a position to invest, bad timing, etc. However, just because a raise doesn’t meet it’s intended goal amount, doesn’t mean that it’s a failure. A number of entrepreneurs who didn’t reach their goal have reported back that the process was a positive one and that valuable lessons were learned along the way. Susan Scott, Founder of Scott Creations LLC, is a perfect example. Susan and I had a very honest and open conversation about her raise during the final days of the raise period, and I was incredibly inspired by her story and encouraged to hear of her non-financial successes. Susan kindly agreed to share her story for the ProFounder community in the hopes of helping and inspiring future entrepreneurs who use the platform. Enter Susan…

Versetta is my collection of luxury bags and cases that are designed specifically to hold the iPad. I’ve labored through the initial start up from sketch designs to prototypes and product refinement. My next step was commercialization.

My goal was to raise funds on Profounder to pay for my first shipment of bags from China. The minimum factory orders are large, so the cost was prohibitive for me. I knew that I needed to try Friends and Family before other types of conventional loans – like SBA. I also didn’t want to give up any equity. Profounder’s revenue sharing plan seemed like a great solution to try.

I had already written a business plan. I didn’t think setting up my raise would be difficult. But I took the extra time to refine my story and work on my sales projections. It was a good process to go through. I thought I was ready to answer any questions and convince everyone to join my cause.

After I started my raise and engaged in conversations about my business, questions were asked that I hadn’t considered. It was a bit discouraging at first, but knew the questions were valid and that I had to figure out answers. One of the main questions I received was about my management team. As a solopreneur, with only a paid consultant, I’m a team of one (who still works a day job). It became clear during my conversations that raising the money to finance my product shipment would only be a single piece of a complicated puzzle. My business needs additional skills and efforts that I alone cannot do.  I became aware that I need a partner. Coincidentally, through a ProFounder conversation, I was able to identify and attract a partner: financially and operationally. Although I would be giving up equity, my partner would provide me with the financing for the first shipment and more importantly, she brings business savvy, experience, another set of hands to do the exhaustive work involved in a start-up business!

I was not able to raise my goal during the time frame, but the process of realizing that money alone was not best solution for my start-up was invaluable. Without going through the Profounder fundraising process and engaging in poignant conversations, I would still be alone in my quest. I now have a committed partner to go on my journey with me. I’m not alone. It’s a good feeling.

So my advice…use your fundraising process to listen. Recognize that you’ve already told your story through your page, you can stop telling your story again, and again, and again. Instead, just listen. The questions and feedback are tough to take after all your efforts to make a convincing case, but you’ll likely find your friend’s and family’s insights are in your best interest and spot on. Heck, who knows you better – warts and all? Capitalize on their honest feedback to make changes to your plan to better your business. Now’s the time!

PS – The bags are ordered and on their way!! I’m working on the e-commerce site so we’ll be all ready to take orders when the bags hit the warehouse. Visit www.versetta.com to sign up for updates, or simply “like” us on Facebook. They’re really cool. Check ’em out!

Thanks,
Susan Scott, Founder
Scott Creations LLC
May 4, 2011 / racheltobias

We Love Mom!

The time has come to find that perfect Mother’s Day gift! If you’re on top of it, you may already have it wrapped and ready to go. But if you’re still looking for a gift and want to support some great entrepreneurs, here are some of our favorite products by businesses that have raised on our site that would be great for Mom! If you’re interested in learning more about these entrepreneurs and how they raised money on ProFounder, read through our case studies.

The Entertaining Mom

Check out these beautiful dinner napkins from Proud Mary, among other lovely household items, made by entrepreneur Harper Poe. Harper works with weaving and sewing cooperatives in Guatemala and South Africa to source fabrics and create treasured handicrafts for our homes (or perhaps for your mother’s dining room table?!).

The Hip Mom

Bucketfeet, wearable art by Raaja Nemani and Feinstein, would make a great gift for the fashion forward mother. We love our Bucketfeet here at ProFounder: they come in a range of fun and unique designs! Plus, your purchase goes towards supporting organizations that work to benefit children in Argentina, the very place where the Bucketfeet idea came to fruition!

The Luxurious Mom

Prosperity Candle would be the perfect gift for the mom who loves her weekly candlelit bubble bath. This social enterprise empowers women living in conflict-ridden areas of Haiti, Iraq, and Afghanistan, and provides them with tools and resources to build a successful business around making and distributing candles. Prosperity Candle even has a special mother’s day gift basket just for the occasion!

The Socially Conscious Mom

Love+Water Designs is the heartchild of Alexis Fedor, who has built a community around “wearable philanthropy.” Local artists create a T-shirt design around a charity they feel passionate about, and 50% of the proceeds from that shirt goes to the charity that inspired the design. Just imagine: not only does your mom get a beautifully-designed new T-shirt, but she gets to be the vehicle for a great story and a noble cause!

The Entrepreneurial Mom
Has your Mom have an idea, project, or even a full-fledged small business that she’s always wanted to grow?  Many of us on the ProFounder team have incredibly creative, entrepreneurial Moms, and we try to support them however we can.  Maybe, now is the time to tell a Mom about ProFounder, and volunteer to help her set up an account, create her pitch, and tell the world about her incredible work – and, perhaps you can even be her first investor when she raises money on the site!
May 3, 2011 / David Lang

ProFounder Invitations: The Good, The Bad, and The Effective.

In earlier blog posts, we’ve highlighted some strategies that other entrepreneurs have used to communicate with their investors. However, there is one important aspect of the investor communication process that we haven’t analyzed on the blog: the Invitatios. After you publish your raise on ProFounder, you’re prompted to enter the email addresses of the friends and family members you plan to invite to view your investment offering. After doing some research into which invitations had prompted the most open/click-through rates, I’ve put together some examples: two good examples from a real raise, and one made-up bad example.

Read more…

April 28, 2011 / racheltobias

Culinary Crowdfunding 101 Recap

Last night, LA food entrepreneurs gathered into our ProFounder office for a night of great learnings, insightful questions, and meaningful relationship development! Among the fabulous entrepreneurs who joined us were Bangers-Smashed, Aahsome Fudge, Anca’s Romanian, and the LA Fine Foods Group!

We were lucky enough to hear from Kimberly Albright, a Forager for Whole Foods (possibly the best job title every created) and Dennis Suh from MobiMunch, who provided valuable information about the respective industries. One of our greatest takeaways from the night is this idea of incorporating storytelling into your business. For Whole Foods, something Kimberly continued to emphasize was the importance of telling your story within your product, both through its labeling and packaging, as well as the product itself. Similarly, MobiMunch talked about how driving a food truck around the city can be a great beginning, or even extension to a great story.

We meet entrepreneurs every day who have their own story to tell; our platform is set up specifically so that your story can be told in a compelling way to a community who wants to become a meaningful part of your narrative.

For those who were there and those who were not, we wanted to provide the information that was given by our three speakers. Here are my notes below. Other notetakers, feel free to comment below and add your own lessons!

Other Resources

EverClean Services: Food and Safety Brand Protection that helps make sure labeling up to standards

Chef’s Kitchen: shared kitchen space for rent

Bronson Chang & House of Pure Aloha: a great ProFounder case study of one of our awesome food entrepreneurs