In this section, we discuss more on the details of the variety of entrepreneurs that were successful on Symbid.
There are tips and tricks for a successful crowdfund as well as words of warning on how to avoid getting it dramatically wrong.
Equity Crowdfunding: The Insider’s View
Fin: What about the legal side? Is there a vetting process to make sure the entrepreneurs are putting up enough information to satisfy equity investors on Symbid?
I’m noticing that some companies are putting up information that barely covers the concept, never mind a business plan, and some entrepreneurs are putting up videos, pitches, plans, recommendations … what is your position in Symbid, about how much information entrepreneurs should provide for equity investors? What is your view on the quality of propositions that are placed on the platform?
Korstiaan: We do not have an opinion on the actual plans because if we did, that would constitute giving out investment advice. If we were to ban certain propositions on our platform, we would be giving out investment advice and we wouldn’t be eligible for that.
We would need a very tough license for that … basically a banking license … and we don’t do that.
We do have some requirements to fulfil, basically filling out your profile; uploading at least one media file but we just need a checklist to see that everything is there.
“I can assure you that if you were not willing to share any information, you will not get any investment”
Equity Crowdfund Successes
Fin: Tell me about the entrepreneurs that were successful. How about Enviu? They raised 100,000 euros in return for only 1% equity but that didn’t seem like a very interesting perspective from the equity player’s point of view. Do you think they were successful because their mantra was about “changing the world” and therefore got a big buy-in?
Korstiaan: The actual evaluation is quite accurate. Enviu already has three participations within that legal entity as well as 5.4 million euros in cash so the valuation of 10 million is spot on.
Fin: Wow, I also notice Enviu have been through an incubating process themselves with some heavy hitters to make sure their proposition was do-able.
Korstiaan: They actually own the incubator. It’s a very big proposition. They’re very well known within Holland for the work they do in the sustainable energy industry for example.
So, with the valuation we were also quite sceptical and there were some fairly sceptical questions regarding the valuation of 10 million and who was Enviu for that matter. But they were able to explain that to the actual investors, also to some of the more sophisticated investors and it worked.
Enviu got over 40,000 euros from their recredited investors. So the valuation was, to some extent, spot on.
Fin: And then there was Waka Waka. Waka Waka had already raised money on Kickstarter before coming to Symbid, isn’t that right? So their strategy was to raise money on a donations-based crowdfunding platform then with that money, go to an equity based platform to raise money there. And they were successful with both.
Korstiaan: Yes, these cases don’t come by very often. The people made a distinguished choice for crowdfunding. They also have an American on their management team so the road to Kickstarter was quite easy for them.
They are based in Holland and when we spoke to them they were so intrigued with the idea of crowdfunding and how to participate in this project, they said “Yes, we want to take this a step further. Further than beyond donations. We want these people to become owners of this company.”
And they did, successfully. Within 9 weeks they raised 75,000 euros, which was actually quite high in comparison to the Kickstarter crowdfund.
Fin: Yes, Waka Waka raised $40,000 on Kickstarter.
Korstiaan: Yes, we use the case quite often to illustrate the difference between donation based pledging and equity based pledging. What is more, you see an actual increase of 100% in the amount invested in the opportunity itself and you see a faster walk-through time.
I did think the interview would be all wrapped up within 3 posts but since I have a strict “nothing bigger thna 1,000 words policy,” it’s taking a bit longer.
Plus my clients are relentless! Thankfully. But it does limit my fun blog post time somewhat. Ach well, expansion is afoot so I should get more time to dedicate to this side of the business
Come back in a couple of days for more.
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Equity crowdfunding is a massive industry about to explode all over the entrepreneurial hemisphere so do jump in with your views, whether sceptical or evangelical. We all benefit from your perspectives. Leave a comment below and share with your friends and colleagues.
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