Category Archives: Entrepreneurship

Why VC Firms Aren’t Spending

Todd CroslandIt is no secret that startup funding has significantly decreased since the start of the new year. This was foreshadowed at the end of 2015, in which startup funding slowed down, and new companies were given smaller and smaller investments from venture capital firms. This morphed into a disappointing, and somewhat frightening, beginning of the year for early stage companies. However, the new startups do not lack funding because venture capital firms are raising less. In fact, venture capital firms seem to be doing fine in terms of the money they are accumulating. It turns out that the root of the lack of funding lies in what venture capital firms are now seeking in a startup company.

It turns out that venture capital firms have begun to accumulate a large amount of money because of the lack of faith in the startup companies with which they are connected. They are worried the companies they have put money into will crash and lose money, and they want to be prepared for this point. Although some companies have come to terms with the drying up of funding, and are responding accordingly, most are living in a state of denial. This is why venture capital firms are basically hoarding their funds.

It is all a result of the startup funding boom that occurred over the past few years, in which early stage companies were able to raise massive amounts of money and spend most of it in attempts to beat out others. With this lack of funding, they are faced with the choice to cut costs in order to be a self-sustaining company, or try to find more funding. The latter comes at a large cost and could be detrimental to earlier investors and employees that already have a share in the company.

What are venture capital firms looking for if not potentially successful companies in their early stage? As it turns out, these firms are choosing to spend their money on already-established startup companies. Companies that have already experienced some level of success are the ones being funded at this point, although the funding is still moderate. Venture capital firms are operating with the fear that startup companies in which they invest are going to collapse. Therefore, they are putting more investments into the ones they know will not.

Early stage startup companies can no longer be extravagant operations. Founders and CEOs have to get into the habit of cutting costs wherever they can, becoming a self-supporting operation as soon as they can. Startups can no longer count on venture capital firms for funding, so, until this lull blows over, all companies have to adapt.

Venture Capital Firms Bring in Money

Todd Crosland EntrepreneurshipVenture Capital firms have been in existence for years, yet they do not always bring in as much money as they would hope. This year, however, is different. Since 2016 began, these types of firms have been able to collect money at a rate greater than they have in fifteen years. More surprisingly, they are managing this feat even as the valuation of many startups begins to drop. Even as ‘unicorn’ startups become less enchanting in Venture Capital, investors are still reaping rewards.

Venture Capital firms have been able to raise over ten billion dollars since the beginning of the new year, at an astonishing rate. It turns out, while investments in startups are slowing, investments in Venture Capital firms are not. Of course, this was predicted last year. When polled, the majority investors in these funds announced that they would continue to match or increase the amount of money they were giving to firms. The firms, however, are the reason startups are having more trouble raising money.

Why is this, exactly? Well, IPOs did not have a good year in 2015. The market was unpredictable, and new companies focused on technology were not as impressive as they have been in previous years. The Venture Capital firms have chosen to dole out money more slowly because startup valuation keeps going down. They are simply not sure which companies are going to make money, and which will remain stagnant or fail. Entrepreneurs who take the billions in Venture Capital raised as a good sign must keep this in mind.

Venture Capital firms that are amassing this money have a few options for where to go from here. They seem to have given up on pouring money into late-stage startups, but may continue to focus on early-stage companies. At least early-stage investments have the ability to give investors a portion of return, therefore this may be the most viable option for Venture Capital firms.

However, this also calls into question how this will affect the slowing entrepreneurial boom in the United States. Of course, if Venture Capital firms choose to invest in early-stage startups, fresh faces in the startup world need not worry. However, that leaves later-stage startups out to dry. If the funding continues to shrink for these late-stage companies, which I suspect it will, we may see an increase in startups trying to exit more quickly than they would normally, or than others have in the past.

Now, entrepreneurs must focus on generating a positive cash flow. This is the only way to make sure that startup companies stay afloat, which may bring in additional funding along the way.

Everything you Need To Know About Title III of the Jobs Act

Todd Crosland Entrepreneurship

In a previous blog post, I spoke about a government policy called Title III of the JOBS Act which would make equity crowdfunding available to startups and small companies. While the law has not yet come to pass, it will open the door for a number of aspiring entrepreneurs to partake in crowdfunding on the equity level, rather than simply doing regular crowdfunding. Equity crowdfunding is more beneficial because, when an investor gives money to a business, said investor will then have ownership of a small portion of the business. Equity crowdfunding has become very popular due to its mutually beneficial nature. It has been met with some incredible results and it is exciting to think that soon a law will allow small companies to invest as well. Here are a few things to keep in mind about Title III of the JOBS Act:

1) What information is required of a company that is gaining investors?

When a company gains investors, there is a certain amount of information that, by law, this company must reveal. It must tell investors the price of securities, the method by which they determined the price, the target offering amount, the deadline by which to reach that target, and whether or not the company will be willing to accept investments that exceed their target. This information must also be filed with the SEC. In addition, a company must provide a description of the product or business and have a discussion regarding the financial condition of the company. Lastly, companies must provide information about directors, officers, and owners of 20 percent or more of the company, as well as yearly financial statements.

2) What can we as the “crowd” invest?

One legal restriction placed on investors is that if either the net worth or the annual income of the investor is less than $100,000, investors are limited to the greater of $2,000, or 5 percent of the lesser of their annual income or net worth. In the case that both the net worth and the annual income of the investor are greater than or equal to $100,000, there is a different restriction. In this case, investors are limited to one tenth of the lesser of their net worth or annual income. 

3) Under equity crowdfunding, what liability will a company and its officer have?

Unlike Kickstarter, equity crowdfunding involves selling securities rather than simply the pre-sale of a product. There are both state and federal laws in place that restrict the sale of securities. If you do something against these laws, it is possible for your company, along with its directors and officers, to be sued. In some cases, people have even gone to jail for breaking these regulations. Essentially, telling the truth is absolutely mandatory because, if you lie, you can get in some serious legal trouble. 

These are just a few pointers to keep in mind when Title III of the Jobs Act comes into play. This law will play a large role in the growth of equity crowdfunding by opening the playing field to small businesses rather than just large companies.

Choose Equity Crowdfunding over Crowdfunding

Todd Crosland

Any company that has thought about raising money knows about websites such as Kickstarter and Indiegogo, which fund company startups through online donations by regular citizens. This crowdfunding practice is popular among small companies and online sensations. It works because the person(s) raising money offers a small incentive for donation. In The Oatmeal’s campaign, for example, everyone who donated was sent a copy of their game before it was officially released on the market. For others, the gift is a t-shirt or some other type of trinket. However, many companies are, instead of going to open crowdfunding websites, getting involved in equity crowdfunding. There are many benefits involved in equity crowdfunding that are not present in a regular crowdfunding campaign.

The founder of Spacefy, for example, wanted to raise a large amount of money for his company that would have been very difficult through regular crowdfunding. So, he tried equity crowdfunding for his company and ended up raising more money than he had initially needed. Spacefy decided to try equity crowdfunding before Title III was passed, meaning that it was not a more popular means of fundraising. However, they took the chance because they wanted the extra money and publicity that could come from equity crowdfunding.

They are, of course, not the only company to choose equity crowdfunding over regular crowdfunding. Many investors are excited by the chance of being able to gain equity in a company when investing. This would mean, if the company did well, the return on their investment would grow, rather than remain stagnant in something like a t-shirt.

I believe equity crowdfunding is the next big stage of crowdfunding, poised to become even bigger than regular crowdfunding. With companies backed by regular civilians on Kickstarter doing so well, more and more people who gave money wish they got a return on the company’s success. Of course, there are risks that everyone putting money in equity crowdfunding needs to take into account. Like any investment, those that invest need to make sure they truly understand and believe in the company that they give their money to. Take into account that many startups are not successful, and therefore there is a high chance of losing money, or not gaining a return on investment at all.

However, there will be a few companies that succeed. There will be more companies such as Oculus that become worth billions of dollars. Those companies will create a large return on investment, and equity crowdfunding will make sure investors get rewarded for their efforts.

Military Spouses in Entrepreneurship

There are many different subgroups within the umbrella of ‘entrepreneur.’ A few examples would be social entrepreneurs, tech entrepreneurs, young entrepreneurs, and, most recently, military spouse entrepreneurs. Entrepreneurship within the community of military spouses has been growing for a good reason. The careers of the husbands and wives of those in the military are usually put on hold due to constant movement and the responsibilities of caring for their children as single parents. Entrepreneurship has given these individuals a way to delve back into their preferred career paths from remote locations.

Of course, being a military spouse with a business to run is not easy. Business owners have to deal with the challenge of managing a remote workforce, and engaging their target audiences, in the midst of busy days and weeks. This is why nonprofits such as The MilSpo Project have been formed. They educate military spouses on how to manage their time, and provide support to any who require it.

Very recently, an article came out in Forbes about the company R. Riveter, which was begun by two military spouses. Lisa Bradley and Cameron Cruse founded this company of handmade products in lieu of taking jobs below their experience levels because their husbands were in the military. R. Riveter is a company based on female empowerment, and Cruse and Bradley are making it work in spite of their busy schedules.

The amazing thing about this company, besides the high-quality handbags, is that it works to employ other military spouses as well. Once Bradley and Cruse realized they would have to put their professional careers on hold because their husbands were in the military, they wanted to make a company to help themselves and other women. All of the products of R. Riveter are handmade by military spouses who live in different locations in the country.

Additionally, of course, everything in R. Riveter can be accomplished in a remote location. Bradley and Cruse have formed the company with the knowledge that their employees will be moved around, so they have made everything flexible. Furthermore, all of their materials are made from recycled military equipment. Even their products are the embodiment of the life of a military spouse.

In order to be a happily employed military spouse, a creative business model has to be put into play. Bradley and Cruse realized this early on in their careers, however I doubt they will be the last. I expect to see a rise in the military spouse entrepreneur community as more people realize they do not have to give up their career goals for the career of their spouse.

Is All Entrepreneurship Social?

The term ‘social entrepreneurship’ has become popular in the small business world. It’s a buzzword that is defined as utilizing entrepreneurial techniques to find solutions to social issues. A ‘social entrepreneur’ is a business owner who connects their company with some philanthropic cause. For example, Jordan Kasselow runs the company VisionSpring, which sells inexpensive reading glasses in developing countries.

So far, this makes sense. Social entrepreneurship is about solving social problems, which equates to making philanthropy part of a company’s mission. However, Ray Hennessey, a writer for Entrepreneur Magazine, does not agree. In a recent article, Hennessey postulates that all entrepreneurship is social entrepreneurship, and separating the definitions of the two is harming the entire startup industry.

In his opinion, all business brings good to society, whether or not the business is philanthropic in nature. He is not wrong. Entrepreneurs start companies based on a problem they want to solve. Whether it is a problem that affects an entire country, or perhaps just an individual, a company can only succeed if it has a product that people want to buy. Namely, a product that solves some sort of problem.

Does it matter if social entrepreneurship is defined as being separate, and somehow bigger, than regular entrepreneurship? Hennessey thinks so. He writes that CEOs of companies, big or small, are thought of as being greedy money-hoarders. This is why stories of companies doing any good, whether it be donating to charity or treating employees well, go viral. People are surprised when CEOs care, but are not surprised when a company hurts the environment or cheats employees out of money and benefits.

The term ‘social entrepreneur’ has become a loophole to this stereotype. Rather than being an actual entity, it has become a marketing tactic for starting a business. Social entrepreneurs are looked upon more kindly, and therefore are able to raise more money, but the nature of a marketing tactic is that it is only that. Social entrepreneurs are no different from regular entrepreneurs, save in how they define themselves.

Hennessey makes a good point in his assertion that companies known for bad deeds have contributed to social good, and conversely companies known for their philanthropy have, at some point, harmed society. There is no black and white between ‘good’ companies and ‘evil’ companies, as CEOs are faced with having to make a profit while solving social problems.
Entrepreneurs that want to be successful in the long run are focused on solving a problem in society, and on treating their employees and customers well. That sounds like doing social good to me.

10 Highest Grossing Crowdfunding Campaign

A couple of weeks ago Pebble smart watch launched the most successful crowdfunding campaigns in history, raising over $16.5 million in crowdfunding revenue.  Over 60,000 individuals backed the campaign, and the launch date is set for May of this year. This crowdfunding campaign beat the previous record holder, the Coolest Cooler that was able to raise $13.3 million. Below is a list of the 10 most successful kickstarter projects of all time.


1)   Pebble Time raised $16.5 million

2)   Coolest Cooler raised $13.2 million

3)   Pebble 1st gen smartwatch raised $10.2 million

4)   Exploding Kittens card game raised $8.7 million

5)   OUYA games console raised $8.5 million

6)   Pono Music player raised $6.2 million

7)   The Veronica Mars movie raised $5.7 million

8)   Bring Back Reading Rainbow raised $5.4 million

9)   Torment: Tides of Numenera game raised $4.1 million

10)  Project Eternity game raised $3.9 million


Startup Environment in Southeast Asia

Todd Crosland Asian EntrepreneurshipAccording to The Establishment Post, South East Asia is being called the next Silicon Valley with its innovative and unique features that differentiate it from the startup industry in the United States. GGV, or Golden Gates Ventures, is one of the six venture capital companies that have been entrusted by the Singaporean government and private sector to aid in the development of their emerging startup industry.

Vinnie Lauria, founder of GGV, claims that the entrepreneurial startup scene in Southeast Asia differs from the US startup scenes in that it is comprised of locals creating products for locals.

Lauria gives us an example of the commuting service startup, GO-Jek, as a company that is innovating for the local people. 90% of Indonesians do not use credit cards, so Go-Jek offers an immediate currier service for locals who opt for their cash-on-delivery service to obtain materials purchased online. The company is meeting the demand for a delivery middleman, creating a more convenient e-commerce environment for the people of Indonesia.

This intrinsic Asian entrepreneurial way of thinking has opened up a more Asia-focused startup industry that sets the startup scene in Asia apart from Silicon Valley. The government is a bit of a roadblock for many Asian countries, but the Singaporean government has allowed for $100 million of investment in the form of six venture capital firms. This will allow for more startups to come out of the woodwork, considering the difficulties of obtaining series A investments.

Lauria points out that along with government involvement, more awareness needs to develop to bluster the Asian startup scene. Lawyers and business developers are needed in Asia who can truly complete these companies and make them attractive for global investors in the long run. The Asian startup scene certainly does not have the extensive entrepreneurial experience as in the United States; however, the starting blocks are coming to fruition. Once the entrepreneurs are able to create a startup environment for their own people, they will be able to look at their companies from a more global perspective.

Latin America Seeing an Increased in Entrepreneurship

Todd Crosland Latin American EntrepreneurshipA recent Forbes article discussed the recent raise in entrepreneurship in Latin America. The article goes on to describe what exactly makes up an entrepreneurial society: a growth in the tech industry, centralized focus on entrepreneurs, and government subsidies on small business initiatives. In this day and age, many countries crave these qualities. In Latin America, the whole startup industry is quite new and the private entrepreneurial development company, Endeavor Global is trying to change that around.

Endeavor Global is a company that has gathered successful entrepreneurs from all over Latin America to act as a support network for emerging startups in the country. Latin America’s biggest concerns regarding entrepreneurship are a lack of leadership and financing. Endeavor Global has been able to address both issues with their professional network and venture capital firm, Kaszek, which sprung up from the Endeavor Global network.

This initiative has increased the number of successful businesses aiming towards lower levels of income, which is what Latin America needs. Online use in Latin America is expected in increase by 50% in the next five years. Many of these successful companies coming out of the woodwork are online service companies that are focusing on providing services to the hard working, middle class. Thus, companies in online retail are starting to emerge so services are more easily accessible. International credit cards are still not going to be accessible in Latin America for a while, so there are multiple companies focusing on different online payment methods for the country.

Overtime, as the entrepreneurial bubble grows, more and more mentors will be joining Latin America’s professional network to guide the future startup businesses. What Latin America is more concerned with is financing. There are plenty of crowd-funding services that provide initial seed investment, but venture capital is still the main area of focus when it comes to financing in Latin America.

You can read more about the rising entrepreneurship industry in Latin America in the Forbes article here.

Greek Entrepreneurship on the Rise After the Economic Crisis

Todd Crosland Greek EntrepreneurshipA recent article in Forbes discusses an increase in Greek entrepreneurship after a disastrous economic downfall. Throughout the Eurozone’s economic crisis, the Greek economy was doing the worst. Their corrupt public sector was running up massive debts while their private sector was mostly dependent on their government. This was a recipe for disaster.

Throughout this economic crisis in Greece, there was an increase in Greek entrepreneurs wanting to change the outcome of the Greek economy by focusing on tech-based startups. The article goes on to state that the Greeks were always strong in the entrepreneur market. However, many of these entrepreneurs were unproductive and did not focus on the right sectors of the economy for their sales. The article states that currently 90% of new ventures are continuing along the old, failed growth models while the other 10% are focusing on areas of growth.

Endeavor Greece is an example of one of these companies focusing on high-impact entrepreneur growth within the country. This will hopefully create more jobs and opportunities for other entrepreneurs wanting to enter high-impact industries in Greece. Endeavor is currently in 20 different countries. They support and identify high-impact entrepreneurs in a variety of sectors, and provide resources for these entrepreneurs to become successful in their sector. Although tech startups were more than 50% of total investment in 2013, Greece should also focus on industries where they have competitive advantage, for example, in sectors such as food processing, agriculture, and tourism.

The Tech ecosystem in Greece is in its developmental stages as there are about seven Greek venture capitalists managing about $100 million. This is better than before the crisis, but is it still getting off the ground. One area in where Greece could have an advantage is in their high number of engineers. Most of their engineers leave to the UK and the United States to peruse careers. Hopefully with the new tech environment, more of them will stay in Greece.

Many Greek entrepreneurs believe that international support is also necessary so that they can rebuild their economy. This involves a more stable tax framework that will attract foreign investment. The public sector has been investing more in their emerging business heavy industry as Greek tech-startups head the way for economic recovery. Fingers crossed.

This article is based on this article in Forbes.