Crowdfunding for Success
WITH ARUP ROY-BURMAN AND SOPHIA YEN
ONE WORLD recently hosted the fourth webinar as part of our Impact Webinar series where we address topical challenges and opportunities in the impact space. On the heels of some exciting changes to the rules and regulations governing Crowdfunding, this event ⸺ “Crowdfunding for Success” ⸺ features insights from Sophia Yen, Co-founder & CEO of Pandia Health and Arup Roy-Burman, Co-Founder & CEO of Elemeno Health.
While their crowdfunding journeys differed in that Sophia’s raise was conducted through a special purpose vehicle open to accredited investors only, and Arup’s raise was open to all, their experiences and takeaways were comparable. Arup recalled his decision to proceed with a campaign open to non-accredited investors, which allowed his end-users to engage: “Well here is an opportunity to raise capital, to go to the crowd, to be able to have our users turn around and invest in us and own a piece of the company. What kind of statement does that make? Twofold: one, for our buyers, your own staff liked this so much they invested in the company. And for our investors, it gave a whole different type of affirmation, with investors being interested in the safe note as it caught the interest of several VCs.”
Sophia’s advice for entrepreneurs thinking about exploring crowdfunding and her own success with this tool: “Never write anyone off as you never know where a contact can lead. Reaching new people is critical and extending yourself through your networks...is key.” When asked how she has prepared for a crowdfunding campaign, Sophia shared: “Just like any raise you’re doing, you need a deck, you need your financials, you need all the due diligence materials that you would do for any other raise.”
For entrepreneurs, the benefits of conducting a crowdfunding campaign include:
Multiples of individuals that are now connected to your company and can serve as your “cheerleaders”
A link to potential investors for future fundraising opportunities
The collective wisdom of a crowd that traditional VCs can’t replicate
Connection to a group of investors/supporters that value the soul of a company, in addition to the financial elements
For Investors, crowdfunding offers:
A Collaborative Due diligence process - does the market want this product? Multiple investors provides a different level of affirmation
Reduced risk. While never zero, the risk is reduced if a business has 50 (or 500+) advocates behind it.
An opportunity for the crowd to pave the way for institutional investors to engage at the right stage in a company’s growth
The webinar provided some critical insights into the pros and cons of crowdfunding for both entrepreneurs and investors. We are grateful to Drs. Sophia Yen and Arup Roy-Berman for sharing their wisdom and experience in navigating these relatively new crowdfunding waters.
Find all resources mentioned during the webinar below.
Resources:
Crowdfunding platforms mentioned:
Backstage Capital has BackstageCrowd: Invest alongside Arlan Hamilton and Backstage Capital to get access to the best diverse deal flow in VC. (Used by Pandia Health)
Republic (Used by Elemeno Health)
StartEngine (Used by Elemeno Health)
Supportive networks mentioned:
Additional resources:
Huge news: SEC to raise Regulation Crowdfunding limit to $5M
New rules for investment crowdfunding go into effect March 15th - Myth-Busting In Equity Crowdfunding (Forbes)
Sweeping Amendments to Investment Crowdfunding Rules (Investibule)
New Rules - New Possibilities (Jenny Kassan)
New crowdfunding rules set to boost investment in diverse startups and founders (ImpactAlpha)
Community Investing: How Does it Work? (Investibule)
Thank you to our friends at Cooley who support our Impact Webinar series and to each of you for engaging with us at One World!