Howard Love: The Original Business Plan Never Works!

Howard Love is a startup legend founding or co-founding a total of 15 companies since 1985. Some of his most notable enterprises have been LoveToKnow, PageWise, and Flex Jobs. He recently released his new book, “The Startup J Curve” that stresses the importance of agility and willingness to follow through with change.

No time for reading? Fine! Watch the video interview by clicking here now! 

While attending Colgate University, him and his partner changed the school’s computer network to a trading system. It evolved into a technical analysis and software charting package for users of the original IBM PC. They made an okay name for themselves and later got involved in software development tools. After moving to Silicon Valley, they named the tool “Zap” and sold them in abundance. By 1996, their original charting package eventually merged with Roguewave Software and provided him with enough funds to start angel investing.

“The Original Business Plan Never Works…But that’s Okay!”

At the time, Angel investing was frowned upon and lacked structure. Him and his venture partner decided to be a lot more hands on with entrepreneurs by partnering up and offering additional support. Howard would launch startups with any candidate he thought had potential. They may polish the original idea, provide substantial funding, and even lead the first round. Howard values the character of individuals he works with because he believes the team is most important. Funding will come and go and the the idea constantly changes. Your team members on the other hand, will stay the same which is why it’s important that everyone’s compatible for the long-term.

6 Phases of the Startup J Curve: “Create, Release, Morph, Model, Scale, Harvest”

In his 35 years of entrepreneurship, Howard understands that startups either evolve or die. Many successful startups take time to eventually reach their peak and  popular “overnight success stories” such as Twitter and Groupon he feels are a misconception. Howard admires the efforts of startups creating a solid business plan but looks more for the ability to pitch their idea. What he looks for in a business pitch is the team’s resourcefulness; are they able to do a lot with a little? He also wants a sharp and open mind, ambition, passion along with an undeniable energy that can sustain the growth process. Above all, he feels that you have to like the individuals on a personal level before even considering investing time let alone money into their venture.

If you want to get more in depth with the most helpful entrepreneur insight available, watch the full interview now! 

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at@ApptologyCEO or attend a Startup Grind Sacramento Event.

Margaret Mackenzie Empowering Female Entrepreneurs: Seeing is Believing

Margaret Mackenzie was interviewed at Startup Grind Sacramento at the Urban Hive last September and enlighten the audience with well-needed entrepreneurial wisdom. Currently serving an executive role in Astia, Margaret also consults several early-stage startups with a specialty in finance, IT and artificial intelligence. She served as CFO at Paymo (now Boku) and JustInvesting along with being CEO to 3 financial market corporations. Her focus has been identity, digital/mobile transactions, and FinTech.

Born in Stockton and raised in Sacramento, Margaret founded her first startup named Paymo with the model that customers would be charged for their digital transactions on their phones rather than their credit/debit cards. Feeling that the idea was ahead of its time for the states, she raised most of the funding in the UK where it was already being practiced. In order to effectively acquire a user base, they targeted online and mobile gamers who were mostly too young to own a Visa but old enough to have a cell phone.

“If you can bring women up to the level of equality in business relations, we would add $25 trillion to the global economy.”

She co-founded Astia in 2008 as a nonprofit in San Francisco providing networks and capital to women who are managing or involved with high growth tech startups. After seeing the clear challenges for women to raise funds in the industry, she was compelled to help make it easier. Not only did it make sense morally, but from a financial standpoint, she feels that women can contribute a lot to the global economy but are largely underfunded. Astia offers free and low-cost services to female entrepreneurs and now have offices in Silicon Valley, Boston, London and more. She discussed how female entrepreneurs tend to underestimate their qualifications in favor of a man. This hinders the amount of examples that young women look up to and gain confidence in their abilities.  In regards to the value of programs that promote women and minorities, Margaret commented:

“Regardless of your gender or color, in order to believe it, you have to see it.”

Despite the obvious and not so apparent reasons why women struggle in the tech industry, Margaret understood that the difficulties of an entrepreneur remain gender neutral. The grueling task of working for little to no pay along with constantly trying to beat the odds are true regardless of your reproductive organs. She also emphasized the importance of a team and how significant it is for the well-being of a company.

Y Combinator COO Qasar Younis Discusses Entrepreneurship

Qasar Younis was interviewed at Startup Grind Sacramento and share how he has climbed the ranks of the entrepreneurial ladder. He is the CEO of Y Combinator (YC), an organization that provides seed funding for startups while linking them with potential investors and acquirers. Qasar reached success through Talkbin that was originally backed by YC before being acquired by Google 10 months later. He than became Google’s product lead for business facing product and has assisted dozens of entrepreneurs turn their ideas into a reality via YC.

Growing up in the rural environment of Pakistan and migrating to Michigan in the 80’s, Qasar’s initial background was in the automobile industry and virtually everything engineering-related. After leaving automotive in the early 2000’s, he gained skills in software and mechanical engineering ultimately attaining an MBA from Harvard. With a new focus, he launched a startup with a group of friends called Camisa in Chicago, Illinois. The business model was nearly identical to TeeSpring where users can sell and submit T-shirt designs via crowdfunding. Unfortunately, Camisa never reached the desired level of success and Qasar learned a lot from this failure.

“The Market Doesn’t Care about Your Vision.”

Qasar felt that his team was not well-balanced and he was trying to play a role that didn’t match his skillsets. In addition, not being in Silicon Valley severely hindered their degree of exposure. Camisa’s vision was not timed properly for the market to be attracted to what they were offering. This 3rd point is key because as entrepreneurs, it’s real easy to get wrapped up in our vision. However, he believes that building a successful business is based on supply and demand. If what you’re supplying isn’t demanded by the marketplace; the chances of success is zero to none. Once Camisa went down, him and his partner moved to Silicon Valley and zoned in on their soon-to-be success; Talkbin.

“If You’re Serious About your Brand, You Can’t do it Part-time.”

Qasar mapped out that he had exactly a year to put together a team, create a product and find funding. This led to entering the YC startup incubator where he received countless hours of mentoring and investment prospects. Although funding was an important element to the equation, it was the insight from YC supporters that he contributed most to his success. Less than a year later, Google randomly spotted them on the radar, recognized that his vision aligned with theirs and was immediately acquired.

You can view the full interview with Qasar here.

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at @ApptologyCEO or attend a Startup Grind Sacramento Event.

The Startup J Curve

The Startup J Curve

In his book, the Startup J Curve, noted entrepreneur and angel investor, Howard Love, essentially states that there is no straight line from startup to sustainable success.  Rather, it follows a J Curve where the company initially dips after it starts.  The dip can occur for several reasons:

  • Product takes longer to develop
  • Customers don’t embrace the initial product
  • The business model doesn’t quite work

Love describes this dip as the Valley of Death.  A young startup needs to be able to crawl out of it before they run out of cash.  Much of his book describes strategies in working through the Valley of Death.

Here is a description of the 6 phases of the Startup J Curve:

  1. Create: This is where the initial excitement occurs for a startup and the three elements come together: the idea, team, and the money.  This is the best time to raise money because the startup is selling the dream.
  2. Release: This is where a startup releases their product to market and where the market will provide feedback.  It’s where the rubber hits the road and reality hits.  It’s at this phase where founders really need to listen to their customers.
  3. Morph: In this phase, the startup needs to make adjustments on their product or business model based on customer feedback.  At this phase, there needs to be several iterations until product market fit is achieved.
  4. Model: In this phase, the startup needs to optimize their business model.  The goal is to get to a point where there is a direct ROI if more money is invested in the startup.
  5. Scale: After the business model has been nailed, this is where investment into the startup is able to scale the business.
  6. Harvest: this is where the startup graduates to a fully established business and is where the founders have the opportunity to reap the benefits of their labor. It is also where they need to decide on what direction they would like to take including IPO, acquisition, etc.

A startup founder needs to be aware where they are on the J Curve.  For example if they focus on scaling strategies before they actually nail the business model, the odds of success are diminished. This video is a great overview of the Startup J Curve.

If you like to meet Howard Love and get a copy of his book (while supplies last), he will be speaking at Startup Grind Sacramento on December 13, 2016.

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at @ApptologyCEO or attend a Startup Grind Sacramento Event.

Startup Lessons from Garage Ventures Bill Reichert

Silicon Valley icon Bill Reichert from Garage Technology Ventures recently spoke at Startup Grind Sacramento and offered some invaluable insight. With over 20 years as an entrepreneur and two public companies, Bill’s resume is quite impressive.

Originally from Chicago, Bill grew up spending quality time with his grandfather who exposed him to the adventurous world of entrepreneurship. He was in Silicon Valley when the PC was first released and arguably ran one of the first app development firms in United States history, which was apparently amazingly successful but eventually “crashed and burned.” In 1992, Bill and his buddy helped save a failing organization called “The Learning Company,” which later became the first business they took public for $60 million. Later down the line, the Learning Company was sold to Mattel for $3.6 billion. Ouch!  Bill eventually stopped kicking himself for selling too early and learned the ingredients to achieve success years later at the National Venture Capital Conference with Peter Lynch.

“I only invest in companies that even a complete idiot can run.”

This statement hit home for Bill, making him simplify his approach and become cautious with ventures that seem overly complex. When he looks for investments, he wants startups that have novel technology, a sustainable competitive advantage, and can make a significant impact in its designated sector.

Take for example Voke VR that “utilizes a synchronized multiple point-of-view stereoscopic panoramic camera system” technology. They’ve partnered with the Sacramento  Kings to enable mobile users in the stands or at home to receive an advanced VR spectacle without the bulky headset. The audience is able to pause, rewind and review the action from virtually any angle on the court.

When asked about ways for entrepreneurs to receive funding, his response was surprising:

“The best way to receive funding for your startup is to get endorsements from bigger companies for validation and reach out to venture capital sources.”

Bill firmly believes that by following these simple words of advice, you will be “head and shoulders” above your typical startup seeking that almighty dollar. Of course, you will most likely still need to meet the criteria that he mentioned when looking for a potential investment (i.e. novel technology, etc.).

Watch the full interview with Bill Reichert at Startup Grind Sacramento here.

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at @ApptologyCEO or attend a Startup Grind Sacramento Event.

Adobe Kickbox: Innovation in a Box

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Origin

Typically when an organization gets larger, it actually gets harder to innovate.  However, Mark Randall, VP of Creativity at Adobe, had a terrific track record.  In his interview with Startup Grind Sacramento, Randall stated that his boss at Adobe was amazed how quickly he was able to accomplish tasks and meet milestones. Randall was then tasked to develop a method that could show others how to do the same thing. The idea of automating complex processes was an attractive yet equally challenging endeavor that even Randall doubted would be possible to produce. After pondering on it for a few months, he wasn’t sure how something of that magnitude could be done until he looked at the project from a different perspective. “When I started to think about internal innovators at Adobe that were my customers and I wanted to make a product that could help them be an innovator, that sort of shifted everything mentally…to where I said I can do that, I can build that product.”

What’s in the Box?

Adobe Kickbox consists of a 6 step process that shows entrepreneurs the most effective ways to bring their product to the market. And it’s not just limited to the startup world. Government entities and nonprofit organizations all have downloaded this open-source system since offering it for free in February of this year. Randall explained it by saying, “It’s basically this system with essentially 6 levels and starts with level 1 about motivation and there’s a set of actions that you complete at the end of each level and their self-gaining so you check the boxes [required] and move on to the next…” Once all 6 stages are complete, users move on to the post “blue box” which helps you take your product to the next level. The entire system is void of a hierarchy and there’s no central source mediating or regulating how the system operates.

Streamlining Innovation

In a nutshell, Kickbox aims to eliminate the number of hoops innovators must jump through to get their idea approved. Adobe Research Scientist, Hailin Jin, said that, “Before, you had to get buy-in from your own boss, the product team, and other departments. Now, people work on projects without anyone’s approval.” Jin stated that before Kickbox, “risk taking was allowed. Now, it’s rewarded. That has really changed the way people think.” Randall illustrated how Kickbox simplifies tasks that more often than not, established organizations spend way too much time on. He recalls how General Electric asked him how many innovative coaches (out of the 300 available) should work with the Kickbox because they needed to deliver in a 6 month timeframe. He replied by saying that Kickbox doesn’t require many people to operate and it should only take about 3 weeks to complete. He concluded that like many companies out there, General Electric was overthinking an instrument designed to make business easier…much easier.

Randall feels that leading innovators at big companies are often denied the resources to innovate freely. Believing that innovating and creating is a natural human desire; organizations may stand in the way of employees carrying out the activities written in their job description. Why? Because company directors and presidents are afraid of taking risks which is not only irrational but can be counterproductive in the long run. Randall said in Fortune Magazine, “Ideally, you want to highlight that element of risk. Make sure everyone knows about it. Let employees know that you’re betting on them to come up with great ideas.” The most creative people out there can’t stand feeling limited and the bureaucratic structure of the workplace is usually the biggest obstacle when doing so.

Impact So Far

Still who would’ve imagined that a small red cardboard device, that looks similar to a restaurant “to go box,” could accomplish so much in a short amount of time? Inside the Kickbox, Adobe innovators find writing utensils, notebooks, snacks and a $1,000 prepaid debit card that they can spend however they choose. By placing innovators back in the driver’s seat, this allows them to do what they do best: create! However, only 23 of the 1,000 kickbox users have reached the mysterious blue box stage and so far, no Adobe products have been birthed from the concept. Nonetheless, the business model motivated organizations such as Cisco to adopt similar concepts such as “Adventure Kits” while launching a companywide “Innovate Everywhere Challenge.” In Q1 of 2016 alone, Adobe reported a 25% increase in revenue along with a 48% increase in profits. Although these improvements can’t be completely accredited to the Kickbox, it’s clear that Randall’s, “whole culture of experimenting” is catching on and empowering innovators nationwide.

It’s Free

One of the best things about Kickbox is that it’s free.  You can download all the materials here (minus the prepaid gift car).  It’s a great tool to help you develop that innovative idea that’s been spinning in your head and hopefully helps it become reality.

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at@ApptologyCEO or attend a Startup Grind Sacramento Event.

Kevin Nagle: Have Passion & Obsession

Kevin Nagle was able to swing by a Startup Grind Sacramento and enlighten us with some heartwarming tales of his past that contributed to the man he is today. Co-Founder of Envision Pharmaceuticals and Co-owner of the Sacramento Kings, Kevin gained recognition as Sacramento’s Executive of the Year. He’s also one of the lead investor in Sacramento Republic FC and on the board of Moneta Ventures; the Sacramento region’s biggest early phase venture fund.

Kevin Nagle speaking Startup Grind Sacramento

Born in Minnesota and raised in Long Beach, CA by a single mother in “borderline poverty,” Kevin’s ambitious attitude took shape at the age of only 6 years old. With his father out of the picture, he would collect golf balls from a nearby golf course and sell them to golfers in need. He had a plethora of jobs that he claimed all built character and humility. Kevin even recalls ducking out of sight when the popular kids would be his customers working weekends at Jack in the Box. As Kevin grew older, his entrepreneurial spirit would sharpen. He discussed how he strategically maximized profits from his older sister’s paper route and that laid the foundation for his future empire.

Entrepreneur Rule #1: “Have Passion & Obsession”

On the path to becoming a successful entrepreneur, Kevin says that a passionate attitude is mandatory. A personal example of how he demonstrated passion was early in his career. At the time he was working in corporate America making over $500 k / year with a grip of stock options. However, these perks did not fill the void in his heart and he abruptly quit shortly after entering a 3 year employment deal. He has had passion for every endeavor he embarked on which in most cases, required to make sacrifices. Still, he understood the importance of “diversifying your lifestyle” and always made it to his family’s special events.

Entrepreneur Rule #2: “Carving the market, Staking your Claim…And Thinking of the Next Generation”

Kevin’s medical background started in the pharmaceutical management benefit services where he sold his own Integrated Pharmaceutical Services (IPS) for $200 million that eventually turned into CVS Caremark. During the week of 9/11, there was limited airfare and he was stuck in Las Vegas planning for the next generation. Comparing his approach to Tom Cruise in Jerry Maguire, Kevin wrote a white paper outlining the vision and how his firm would be disruptive, transparent and compete with the big players on Wall Street. The early days of Envision aimed at bringing transparency to their customers and had a concept so disruptive that bigger companies falsely claimed their business models were identical to that of Envisions. Fortunately, his organization was well-capitalized and able to sustain the competition for 2 years but suffered severe losses. Refusing to throw in the towel, Kevin stuck the course and by focusing on his target market of senior citizens increased his revenue from $5 million to $78 million within a year.

Entrepreneur Rule #3: “Biggest Deal Killer is not Being Over Prepared”.

Kevin reminded us of the competitive overzealous nature of today’s market. Being able to articulate your idea in a clean and concise manner is so important to at least getting your foot in the door. He used Costco as an example and how they only allow startups 8 minutes to pitch the business idea and determine whether or not it should be on their store shelves. Therefore, Kevin firmly believes that every aspiring entrepreneur should constantly “shine their deck” and make it presentable to anyone under any circumstances. This aligns with his core principles of passion and obsession and how that will catapult you into a heightened degree of success.

Watch the full video interview for material not mentioned in this article!

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at@ApptologyCEO or attend a Startup Grind Sacramento Event.

500 Startups Co-Founder Dave McClure: Have Fun, Get Sh*t Done

Dave McClure is a Silicon Valley icon that is recognized as one of the region’s super angel investors. Over the years he has advised and managed a number of successful startups which includes 3 unicorns (Twilio, Credit Karma, and Grab) . He’s the co-founder of 500 startups and invested in more than 1500 companies around the world. Three companies  have evaluations over $1 billion with over 300 with a valuation $10-$999 million range. He was recently a guest speaker at Startup Grind Sacramento and offered wisdom that was practical, to the point with a hint of humor.

“As an entrepreneur, you realize that you’re kind of clueless.”

In his humble manner, Dave explained how his path to success was a confusing and gradual process. He laughed about his past mistakes and launched 500 startups as a vehicle to guide entrepreneurs that are still wet behind the ears. It is a personal conviction to compensate for what he perceived was his failure of creating a large scale startup. “Looking back on the last 10-15 years and realizing that I could’ve figured out problems faster, part of it was trying to help people figure it out faster…and make [entrepreneurship] a little more approachable…for geeks.”

While many successful entrepreneurs glorify the ambitious startup lifestyle, McClure understands that it’s not all sunshine and ice cream. His ability to relate with entrepreneurs at any career stage allows him to connect with his audience and keep them grounded in reality. He recalls how difficult it was raising funds for his first startup saying, “We raised $30 million in 2 years and the first $5 million in the first year….It was a bit challenging.That’s a complete understatement, it was a ****ing pain in the ass.” His witty remarks kept the audience laughing and was a reminder that behind all of the clout in the industry, successful entrepreneurs are regular people just like us.

“When making a lot of investments, only a few will work out.”

As the perfected imperfect creatures that humans are, we try to make the best decisions in business, relationships and life in general. However, the truth is that more often than not, investments will fail to deliver as anticipated. “[We] know we’re gonna be wrong…and might not find an outcome that frequently but we hope that 20-30% of those get to a series A or larger investment and 5-10% in total get to $100 million plus sort of outcome…Maybe if we’re smart we can steer in of some of the capital into winners…but it takes about 10 years.” McClure’s calculated approach to business signifies he has well accepted that with investments, slow and steady wins the race.

“We do diversity because it’s a good investment not necessarily of social impact, that might happen and we hope it does but [ultimately] we’re trying to make money.”

McClure recognizes the potential in people from all backgrounds which has resulted in a diverse global network of entrepreneurs. Saying that more than 50% of his founders are non-white and 20-30% are female, his business model is shifting the traditional standard of gender/race dynamics in the workplace. “We actually think that there’s a lot of smart people that don’t have a penis and there’s a lot of smart people that aren’t white and went to Stanford…we just wan’t to make money…we like to say we’re arbitraging racism and sexism for our own economic benefit…” For example, one of his current endeavors has been developing a platform for Black and Latino entrepreneurs. Despite that sounding like a social effort, it’s commercially viable given that these demographics make up 30% of the American market.

Moreover, McClure believes that his foreign outreach into less developed countries will become profitable as well. Places like Pakistan, Nigeria and Indonesia have huge populations with markets that continue to increase their internet usage. By strategically investing a couple million dollars here and there, he hopes to establish a solid foundation for when these markets begin to take off. “If we’re willing to deploy capital in those markets for an extended period of time and learn, we are going to find some things that work. When those things start to work, we would want to have already done a hundred investments, made friends, built our brand, have people on the ground and understood how those markets work.”

“Have fun get sh*t done…When we have fun, other people have fun.”

500 Startups has a reputation for being a fun and festive accelerator.  McClure may be a bit unorthodox in his approach to business but understands the value of hard work and creating a solid product. He feels that no amount of money is worth sacrificing fun and personal sanity. Still, there has to be a balance between fulfillment and progress that his organization instills into the minds of his employees. When asked why do many startups fail, he said it could be for a number of reasons. However, he insisted that the main cause is usually because “they build stuff people don’t want or build it for the wrong customer.” He assures the crowd that in order for any VC or investor to take an entrepreneur seriously, they must have gotten their product out the door and have some type of customer base. He emphasized that although this truth may sound basic, they’d be surprised how many people miss this point.

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at@ApptologyCEO or attend a Startup Grind Sacramento Event.

Equity Crowdfunding: A New Funding Source for Startups

Spend a little time in the startup world and you’ll quickly become familiar with crowdfunding, from consumer platforms like Kickstarter or Indigogo to the new equity crowdfunding models. Launching a crowdfunding campaign is becoming a great way for startups to gain exposure while generating financial support for their project – and in the same time, validating it.

So how does it work? Supporters that contribute funds for a startup’s cause, known as “backers,” generally receive an item in return, whether a token of the startup’s appreciation or an early version of the product.

For a famous example, consider the Oculus Rift. In 2012, Oculus Rift ran a KickStarter campaignthat raised $2.4 million. Contributors received everything from T-shirts to a prototype kit. Just four years later, Oculus Rift was acquired by Facebook for $2 billion. If this was an equity situation, investors would have received a 145x return. And that’s where equity crowdfunding comes in

Image Source: Edison Awards 

Over 3 years ago now, the U.S. Security and Exchange Commission (SEC) compiled the JOBS Act laying the foundation for investment opportunities in the 21st century. Title III of this bill had language geared towards equity crowdfunding but lacked clarity until earlier in July. Of course hundreds of pages of legal jargon isn’t something me and you would enjoy “clarifying” per se, so let’s overview some of the most exciting provisions of this bill.

Startups Can Raise $1 Million Max Per Year; But There’s a Catch

“Only $1 million?! Really?!” If you were one of the individuals hoping that the SEC would increase the maximum higher than $1 mill, Title III does not allow such terms. However, Title IV (Regulation A+) of the JOBS Act mentions that startups have the opportunity to raise up to $50 million by holding a mini Initial Public Offering (IPO) for their campaign.

Image Source: CDN1

Accredited Investor? I Think Not!

Over the past couple of years, there has been debate over who can partake in equity crowdfunding. At first, if you weren’t an accredited investor, you were not eligible to contribute towards an equity crowdfunding campaign. In order to fall into this category, you had to make at least $200,000 per year and have a working networth of a minimum of $1 million. This requirement greatly limited investor access considering less than 3% of American citizens are presently considered accredited. The JOBS Act eliminates this criteria so now anyone can contribute regardless of their annual income. However, there are still limits to how much a backer can contribute.

Crowd Limitations

The SEC actually tightened the limits allowed for contributors to invest. According to the codes, investors are limited to, “(a) the greater of $2,000 or 5 percent of the lesser of their annual income or net worth, if either the annual income or the net worth of the investor is less than $100,000 and (b) 10 percent of the lesser of their annual income or net worth, if both the annual income and net worth of the investor is equal to or more than $100,000.” In other words, the ceiling stops at $100k for individual investment.

Equity Crowdfunding is Affordable for Startups

One of the biggest concerns was a past proposal requiring startups to conduct a full financial audit before launching a campaign. Of course this would cost tens of thousands of dollars that could be better channeled towards more important business expenses. Fortunately, the SEC agreed that this proposed requirement was a little excessive and not realistic for many emerging startups. They rejected this provision and replaced it with much more reasonable provisions. If a startup using equity crowdfunding wants to raise more than $100,000, financial review records are required. In addition, if a company’s end goal is less than $100,000 they have even fewer financial requirements.

Startup Responsibilities

With great opportunity comes great responsibility so please don’t cut corners on what’s required with equity crowdfunding. Startups have to disclose all of the campaign’s information from start to finish. This includes security values, the target amount, target deadline, and other important variables. The SEC needs to stay in the loop at all times so there will be a lot of logistics, business descriptions, employee profiles and other assignments that entrepreneurs will have to complete. Most importantly, equity crowdfunding is the sale of securities and these laws vary by region. You want to assure that you have crossed your T’s and dotted your I’s on all of the state and federal requirements for the sale of securities. If not, it is possible to be charged for violating a required financial mandate. And believe me, that’s no fun. Your best bet is to educate yourself and your team on what’s required on a state and federal level to avoid any complications.

The JOBs act has become law as of May 2016.   I expect to see a surge of crowd funding platforms to emerge in the near future. Indiegogo has announced that they will develop an equity crowdfunding service.  The Startup Hour is planning a Shark Tank like television show that will allow the audience to vote on featured startups with their dollars and receive equity in return.  For startups, equity crowdfunding will be another great resource to raise funds.

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at@ApptologyCEO or attend a Startup Grind Sacramento Event.

5 Challenges of a Startup Appreneur in 2016

Source: http://www.kic-innoenergy.com/

The new millennium has opened up the market for mobile application development transforming entrepreneurs into appreneurs. In the last decade, we’ve seen the rise of Billion Dollar App Companies such as Uber and Airbnb. Setting sail on your very own appreneurship comes with challenges exclusive to the tech community. If you’re thinking about launching a startup or developing your very own mobile app, here are some common challenges to be aware of.

 App Development Challenge 1: The Need for Speed

A typical theme is the demand for having things not now, but yesterday. The demand for faster and more efficient solutions will only increase as time moves forward. As such, there’s an advantage to being being quick and beating your competitors to the punch.  If you streamline your product and cut down on features by focusing on developing a Minimum Viable Product, you’ll find a swifter time to market.

App Development Challenge 2: The Need for Cross platform and Backend Development

An app based startup up must realistically develop apps for both Android and iOS devices (which make up 98% of the smartphone market). In addition to developing an app, typically it needs to have a cloud-based backend to support it. It’s rare for one developer to be proficient at all so you typically need a team of developers.

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Image Source: unpauseasia

App Development Challenge 3: Focus on Design and Usability

The simple truth is that your app needs to be visually attractive.  If it ain’t people won’t download it. After they’ve downloaded it, it has to be intuitive and user friendly. If it ain’t, it won’t be used again.  Before your team starts coding, nail the user interface.

App Development Challenge 4: Nail it then Scale it.

One of the things that an apprenuers needs to do is a plan to grow their business. I’ve seen many startups fail because they didn’t have a growth plan. My suggestion is to focus on growing your concept in a certain geography. Once you figured out a successful formula, you can attack other geographies. This is how Uber, Facebook, and Airbnb grew their businesses.

mobile-cash

Image Source: CapitalFM

App Development Challenge 5: Cash is King

Cash is the oxygen for any business. Not enough and it dies. Typically, I see appreneurs bootstrapping (and working day jobs) while working on their MVP. Once the product goes live, it’s a race between burn rate and generating revenue and it’s game over when the cash runs out. This is where you need a CFO that will help you navigate expenses, revenue and fund raising.

 

Being an appreneur isn’t for everyone but with a lot of fortitude, courage and a good dose of luck, your startup has the potential of being the next Uber. By recognizing these challenges, build a team with the proper skills and strengths. Also if you have an app already in the works and are looking for stakeholders, check out 4 tips how to not scare away investors. Believe me, we see it happen all the time.

 

By Rich Foreman, CEO / Apptology and Director of Startup Grind Sacramento. Rich co-authored the book Tap into the Mobile Economy and his blog has been listed in the Top 20 Mobile Marketing Blogs of 2014.  Follow Rich on Twitter at@ApptologyCEO or attend a Startup Grind Sacramento Event.