John Maddox
I think it’s safe to say that crowdfunding is here to stay, and there is no sign of it slowing down.
In the last 5 years, the capital raised from crowdfunding has exploded from $1.5 billion to a projected $34.4 BILLION in 2015. WOW! In 2014 “only” $48 billion was raised from traditional capital. So at the rate crowdfunding is growing, NEXT year there will be more money raised via the crowd than traditional investment.
As I work with so many entrepreneurs trying to start new companies, raise capital for an invention, or just expand their company to the next level, the same problem stands in their way. Raising capital.
The Problem
Raising capital is one of the most complicated aspects of starting a company. Until the rise of crowdfunding, as an entrepreneur you were pretty much limited to friends and family, and let’s face reality, most of us don’t have friends or family with piles of money to give us, or you have to convince big time investors you have an awesome idea.
While there is a lot of traditional investor capital out there, investors are looking for massive return on their investments, justifiably so, and let’s face it, most small business ideas don’t do more than half a million a year in revenue, let alone that much in profit. So if you need a $100k to get your business off the ground, and the investor wants a minimum of 5x in ROI (return on investment), it’s just not reasonable for them to invest.
What Sparked The Idea
This sparked the idea of having a radio show to allow startup founders to directly pitch our city, and not just be limited to being covered by journalists or having the money available to run advertising campaigns.
As I was deciding to pull the trigger on the show, I started telling different businessmen about the idea and was shocked at how many of them didn’t know what crowdfunding was, let alone had ever backed a campaign.
These are extremely successful businessmen, well educated, even tech savvy. But had no idea how crowdfunding works, or what the benefits are to backers and founders. As I explained crowdfunding to them, they all were immediately intrigued, and within a week I was hearing all about startups they were backing and how “cool this crowdfunding stuff” is.
The responses I got from a prime demographic for backing startups – successful business owners, disposable income, risk takers – but who are unaware of crowdfunding indicates to me that an effort needs to be made to bring awareness of this modern method of raising capital directly to them. Not expect them to come to it.
So many of us in the world of entrepreneurship are so obsessed with the latest and greatest, that we are completely ignoring one of the best ways to share a message with America, and that’s radio. Whether in your car on the way to work, listening to the podcast version at the gym or live streaming on your phone. The options are endless.
The Purpose
What I’ve set out to accomplish with this show is simple. Test the concept here in Nashville, gain traction, then expand in to multiple cities. Crowdfunding is a numbers game, and it requires getting your idea in front of enough people.
If this concept is able to be expanded, then a “new” method can be utilized to help startups rapidly raise $50k, $60k, $100k+, while also creating a systematic way see what ideas are good, which ones need work, and which ones might not be a good idea to pursue.
We have an opportunity to impact our economy in a creative way, and I hope this idea resonates with you. With the help of Pilgrim Consulting and The Angel Capital Group, I have most of my hard cost covered, and am personally funding the rest. If you’re interested in helping me expand this concept I’d love to hear from you.
The show launched on October 10th, and airs live on SuperTalk 99.7 WTN on Saturdays from 5-6PM. This week we’ll have the first two episodes available to listen to via podcast on SeriousStartups.Com
