Series A Crunch: Real vs. Pseudo Entrepreneurs

Much is being said on a daily basis about the Series A crunch. This is our series on the subject. In short, byte-sized posts, I will give you my thoughts on how to deal with the issue. Please note, this advice is entirely for entrepreneurs, not investors.

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Having Trouble With Series A Funding?

There is a lot of talk right now that Series A funding has gotten difficult for the tens of thousands of entrepreneurs who have received angel financing over the last 18 months. Some data from PEHub:

According to the University of New Hampshire’s Center for Venture Research, the number of active angel investors topped 300,000 last year, up 20 percent from 2010. The ranks of the matchmaking service AngelList also swelled, with 2,500 investors joining the community last yearalone, most of them in the last six months. (When AngelList got its start in the spring of 2010, it listed 80 accredited investors.) A study from UNH shows that angels put a fresh $9.2 billion to work in the first half of this year, a 3.1 percent increase over the same period in 2011.

Meanwhile, the number of firms that are actually investing is dwindling, despite the best efforts of partners to save face. The NVCA pegs the official number of “active” traditional firms at 500, but according to NVCA President Mark Heesen, this number is misleading, because at least 200 of the firms only do a deal or two a year.

Last year, some 66,230 companies received $22.5 billion through angel investors, up from 36,000 receiving $15.7 billion in 2002, according to the Center for Venture Research at the University of New Hampshire.

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Pre-Seed Money via Crowdfunding: A Conversation with PleaseFund.Us’ James Bailey

James Bailey completed his economics degree at Durham University in 2005 and started working in a technical role at data marketing specialist Dunnhumby on the campaigns team. After leaving Dunnhumby, James worked full time on a large property development in Morocco. He approached Tarkan Ahmet with the goal to create the UK’s best crowdfunding platform back in April 2011. Since then, James has been working with Tarkan on growing PleaseFund.Us. They have based the company at their Queens Club, London, office, from where James has been working full time since August 2011.

Sramana Mitra: What is your offering in the domain of crowd funding to fund startup ventures?

James Bailey: PleaseFund.Us is a unique crowdfunding platform in terms of both service and offerings. >>>

Seed Capital Using Crowdfunding: Korstiaan Zandvliet, CEO of Symbid, Amsterdam (Part 3)

Sramana Mitra: For investors with zero or limited experience in pre-seed or seed investment, what do you do to mitigate their risks? Of course, this is a highly risky business. How do you recommend or help your investors evaluate deals?

Korstiaan Zandvliet: I think the second part of the interview addresses risk analysis and risk management from an investors’ side. From the side of Symbid, the reference to risk is mentioned in the How-It-Works-section on the website and in the Terms & Conditions one has to agree with before making an investment. Also, the opportunity to retract shares and reinvest them in another idea is one way to mitigate risk to a certain amount. However, it remains so that with any form of investing, risk is part of the deal. It is up to the investor how much he or she is willing to risk losing. >>>

Seed Capital Using Crowdfunding: Korstiaan Zandvliet, CEO of Symbid, Amsterdam (Part 2)

Sramana Mitra: What are the core benefits that your community offers to the investors?

Korstiaan Zandvliet: There are several motivations for investors to invest, so the benefits differ accordingly. What the community offers to all investors is engagement and information/updates about the plan. The entrepreneur provides the latter by answering questions, sending out emails, or placing status updates about the progress of the idea. Other than that, part of the community is mainly involved with the idea and doesn’t participate much in discussions. Other investors enjoy posing questions or information in relation to the idea they came across or answering questions that are aimed at the entrepreneur in general if they know the answer. >>>

Seed Capital Using Crowdfunding: Korstiaan Zandvliet, CEO of Symbid, Amsterdam (Part 1)

Korstiaan Zandvliet holds an MSc in New Business Venturing and Entrepreneurship and has a background in sociology and business administration. He is a frequent writer of blog articles on social media, crowdsourcing and c. After holding a position as marketing manager for a Dutch software company (www.mendix.com), he co-founded a company called Symbid, which aims to help nascent entrepreneurs to overcome financing problems for their start-up or small business. Symbid focuses on entrepreneurial finance needs up to €2.5 million by using the concept of crowdfunding in a new way. In contrast to currently available crowdfunding sites, Symbid developed a financial and legal framework, which allows crowdfunders to actually become a shareholder of the offered crowdfunding propositions. For more information, visit www.symbid.com.

Sramana Mitra: Korstiaan, welcome to the blog. To start, would you tell us more about your offering is in the domain of crowdfunding to fund startup ventures? >>>

Pre-Seed Money via Crowdfunding: A Conversation with Rock The Post’s Alejandro Cremades

Today we are talking with Alejandro Cremades, the founder & CEO of Rock The Post, a crowdfunding platform for entrepreneurs and small businesses. Prior to Rock The Post, he worked as an attorney at King & Spalding in New York. During this time, he was involved in one of the biggest investment arbitration cases in history, Chevron v. Ecuador. He also provided advice on other complex international arbitration cases before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) and under the UNCITRAL rules, as well as international commercial arbitration under ICC, AAA and SCC rules.

Cremades has a law degree from Universidad San Pablo-CEU (Spain) and a master’s in international business & trade law from Fordham Law School.

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Seed Capital: IndiaCo Investor Rahul Patwardhan

[We just received a tragic news that Rahul passed away of a cardiac arrest.]

The entrepreneur ecosystem continues to grow in India. This is an exciting time for both startups and investors. As my interview with Rahul Patwardhan of IndiaCo shows, there are investors for every sector. If they do their own due diligence before sending out pitches, those entrepreneurs who need funding to get their ventures started can find several potential investors in their chosen industries.

Sramana Mitra: Hi, Rahul. Tell us briefly about your group. >>>