Tech Talk: Compiling the Equity Crowdfunding Numbers

Many are familiar with crowdfunding, with a version of that – equity crowdfunding – formalized with the Jumpstart Our Business Startups Acts (Jobs Act). Equity crowdfunding is defined as the “process whereby an entrepreneur, start-up or established business raises funds over the internet by offering and selling securities in exchange for an investment (stock, debt, revenue-sharing agreements, etc.) in their company.”

Here are some numbers regarding the progress since this portion of the Jobs Act went into effect in May 2016. For the first 100 equity crowdfunding campaigns:

  • Approximately 33% of companies were mobile app/internet services companies
  • Approximately 12% were consumer gadget companies
  • Approximately 60% were in business one year or less
  • A majority of companies was pre-revenue stage with a valuation of between $1.5 million and $4 million

A separate analysis of year one (May 2016 to May 2017) found:

  • Approximately 88% of filings were made by firms that were five years or younger
  • Approximately one-third of firms were six months or younger when they launched their crowdfunding campaign
  • Nearly 50% of firms were located in California, Florida or Texas
  • A total of 326 companies filed offerings during that span, including 17 businesses that conducted more than one crowdfunding campaign
  • The 326 companies employed a total of 1,574 employees (approximately five employees per firm)

Finally, a January 2018 summary from Crowdfunding Insider reports:

  • As of today, more than $100 million in capital commitments
  • 731 campaigns
  • 100,901 investors
  • Average is $992 per investment (up from $750 when the industry started)
  • Average raise is $360,691 (up from $250,000 when the industry started)
  • Total jobs supported is 3,608
  • It took 410 days for the industry to break $50 million and 209 days (50% less time) for the industry to raise the next $50 million

Tech Talk: Guidance, Insights From the ‘Rise’ Experts

Last week’s Rise of the Rest tour stop in Indianapolis was a powerful testament to the continued emergence of central Indiana’s tech and innovation prowess. Before sharing some of the panel insights and a few observations, a little dose of reality must be included.

This was the 31st stop in recent years for AOL co-founder Steve Case and his traveling team. That means a lot of other cities and regions are also upping their games. In other words, we must keep advancing. Plenty in the Midwest and beyond are also pulling out all the stops to attract innovators, entrepreneurs and the jobs that come with their ideas.

Union 525A daylong series of events included a fireside chat at The Union 525 (recall our BizVoice® story earlier this year on the then emerging venue). Case, author/investor J.D. Vance, Federal Communications Commission (FCC) chairman Ajit Pai and former U.S. chief technology officer Megan Smith shared these gems, among others:

  • Case referred to ExactTarget as the “type of breakout iconic success that puts cities on the map.” He added that Indianapolis should be proud of what has been accomplished “but the next five to 10 years is the time to really accelerate.”
  • Calling the internet the “great equalizer,” Pai contends: “To me, no issue for the FCC is greater than closing the digital divide.”
  • Giving the example of doctors serving in the surgeon general role, Smith reminds that it’s important to “make sure entrepreneurs are in the room when determining entrepreneurship policy.” (A dictionary entry on that might point to Indiana and the 2017 legislative session).
  • Vance, speaking of the “downstream effects of the start-up economy” and the need for additional talent: “How do we take that person who has been out of the labor force and bridge the gap – marshal the resources that are on the sidelines.”

Case wrote The Third Wave: An Entrepreneur’s Vision of the Future. He notes the first wave was a decade-long effort (with 300 partners) in going from 3% of Americans online an average of one hour a week in 1985 to truly getting America online. The second wave was building out software services with a focus on apps, not partnerships.

“The third wave is integrating the internet in a much more pervasive way. It’s not about software but getting people and companies to integrate. Companies that think they can go it alone will fail. It’s the old proverb: If you want to go quickly, you can go alone. If you want to go far, go together.”

Asked about lessons they were taking away from their day in Indianapolis, several agreed on the strong culture and passion in the community. Vance added, “Entrepreneurs who had success are reinvesting in the ecosystem. It absolutely makes a difference. It’s not just the money, but the mentoring and the relationships.”

A student in the audience sought their advice for a young entrepreneur …:

Vance: “Don’t think you have to be the person with the idea. Being the fourth, fifth, 12th person in a high-growth company is a good thing.” (Stay tuned for a similar local sentiment in the coming weeks).

Pai: “Seek out people who fascinate you. People are happy to talk with you and share ideas.” (That is certainly the case in Indiana).

Case: “Pick a battle worth fighting. Don’t pick an easy problem. You only live once.” He recalls this comment from Nelson Mandela: “It always seems impossible until it happens.”

BizVoice Tech, Innovation Series Moves Forward; Reid Health Joins as Lead Series Advertiser

The Innovation Connector is a full-service business resource incubator focused on emerging tech and innovative companies in East Central Indiana. In January 2017, the group launched the Coding Connector for area students to promote discovery of coding and programming.

Part 2 of the yearlong BizVoice magazine series on technology, innovation and entrepreneurship is in the books. We encourage you to check out the March-April entries, with the focus on Outstanding Talent, the lead driver in the Indiana Chamber’s Indiana Vision 2025 plan.

For the remainder of 2017, we’re proud to have Reid Health on board as the lead series advertiser. Among the upcoming features: meeting the space needs of scale-up organizations, communities investing in their quality of place, financing options for entrepreneurs and more.

The March-April highlights include:

  • Powerful ‘Force’: The second of a six-part series on Recovery Force examines how both team members and advisors were added to the mix to fill critical roles. Also, learn how the co-founders blend their strengths in moving the organization forward.
  • X-Factor: Internship Program Showcases Jobs, City: The Xtern program takes recruitment beyond the job, showcasing Indianapolis and central Indiana to talented young people. The initiative continues to grow and succeed.
  • Vital Connections: Mentoring Snapshot Comes Into Focus: Entrepreneurial leaders in Muncie and Terre Haute discuss mentoring efforts and keys to helping others achieve their business dreams.
  • Quick Hits: A commercialization academy at the University of Southern Indiana, Trine University Hall of Fame and I-Light upgrades.

Access the full interactive version of BizVoice®. If you wish to receive the magazine in print, subscribe online.

VIDEO: Dustin Sapp is No Stranger to Start-Ups, Accolades

Dustin Sapp is now CEO of TinderBox. But he cut his entrepreneurial teeth while at Rose-Hulman, and built executive experience while at Vontoo. He’s now a leader in Central Indiana’s start-up scene, a mentor and devoted family man. See why he earned the Indiana Chamber’s first ever Indiana Vision 2025 Dynamic Leader of the Year Award.

Behold the Power of Productivity

10061396Penny pinchers make every cent count. So do productivity pros – but their currency is time.

If you want to work smarter and faster, don’t waste another second! An Entrepreneur.com story reveals 11 things ultra-productive people do differently.

Among the techniques (if you kick off your mornings by “eating a frog,” you’re on the right track):

• They Get Ready for Tomorrow Before They Leave the Office
Productive people end each day by preparing for the next. This practice accomplishes two things: It helps you solidify what you’ve accomplished today, and it ensures you’ll have a productive tomorrow. It only takes a few minutes and it’s a great way to end your workday.
“For every minute spent organizing, an hour is earned.” – Benjamin Franklin
They Eat Frog
“Eating a frog” is the best antidote for procrastination, and ultra-productive people start each morning with this tasty treat. In other words, they do the least appetizing, most dreaded item on their to-do list before they do anything else. After that, they’re freed up to tackle the stuff that excites and inspires them.
They Go Off The Grid
Don’t be afraid to go off grid when you need to. Give one trusted person a number to call in case of emergency, and let that person be your filter. Everything has to go through them, and anything they don’t clear has to wait. This strategy is a bulletproof way to complete high-priority projects.

“One man gets only a week’s value out of a year while another man gets a full year’s value out of a week.” – Charles Richards

Good tips. Good intentions. Good luck!

Mickey Speaks; You Should Listen

One can learn a lot in a 30-minute conversation with Indiana entrepreneur extraordinaire Mickey Maurer. The summary:

  • He doesn’t follow his own advice to "find something you do well, you like, and do that forever." Maurer’s career has taken him from cable television and racquetball facilities to banking, newspaper publishing and more.
  • He refutes any description of aggressiveness, but embraces the label of competitive. "That’s essentially the game we play, the game of entrepreneurism. We keep score with money. … I  do like to play the game — and win."
  • Barriers to entry is a business principle that is learned through experience.

For a complete understanding of the importance, or lack thereof, of barriers and the full story with Maurer, check out our current BizVoice magazine.

Do You Know About These Tax Write-Offs?

‘Tis the season to file your taxes. Even though Vice President Joe Biden says it should make you feel "patriotic," it’s possible you may feel a little like something else when you see how much you owe. Entrepreneur.com has at least a few useful tips for business owners that may help you get a little back.

Entrepreneurs might find tax time a bit less taxing this year and next due to some new write-offs covering a range of common expenses for growing businesses.

Here’s a quick look at five breaks aimed at certain businesses that you’ll want to know about:

1. New-job creators
A new-hires tax credit can give employers a break on their payroll tax if they hired new workers into new job slots between Feb. 3, and Dec. 31, 2010. These workers can’t have replaced people who left. They have to add to your headcount. And they have to have been unemployed for 60 or more days prior to you hiring them.

If your business qualified for this deduction, which amounts to 6.2% of your payroll tax, you should have taken from your quarterly payroll tax estimates during 2010. But if you missed it, it’s worth going back and amending those quarterly payments to account for the credit, says Jeff Anderson, a partner who works with entrepreneurs at Padgett Stratemann, an accounting firm based in Austin, Texas.

What’s more, an additional $1,000 general business tax credit may be available in 2011 if you keep these new employees for 52 weeks or longer. So if you qualified for the first credit, make sure you qualify for the second one as well, says Stan Ginsberg, a partner in New York with the accounting firm Metis Group.

2. Cell-phone users
Mobile phones used to be counted among items the Internal Revenue Service refers to as "listed property," such as laptops or cars that might be purchased for work or provided by an employer but that lend themselves to personal use. Users had to keep track of their business and personal use for these items and write off the former proportionally.

The IRS has removed cell phones from this onerous list, which means that if you provide employees with cell phones or use one for business yourself, "Your business can write it off directly," says Anderson.

3. Large sport-utility vehicle buyers
This is a great break for entrepreneurs who need an SUV that’s heavier than 6,000 pounds for their business, such as a Chevy Tahoe or Ford Explorer. If you bought or plan to buy a new one between Sept. 8, 2010, and Dec., 31, 2011, you may be able write off the full value in a single tax year, rather than having to depreciate it over a few years, as has been the case previously.

"This is a loophole for a lot of taxpayers," says Anderson.

If you really do need this kind of horsepower, this credit could go a long way toward defraying the cost of owning one of these gas guzzlers.

4. New-equipment buyers
In a bid to get business owners to open the till and spend a little, the IRS is offering "bonus depreciation," which is the temporary ability to write off more equipment in a bigger way.

If a business bought or buys new equipment between Sept. 8, 2010, and Dec. 31, 2011, it may be able to write off 100% of the cost all at once. We’re talking big items like computers, office furniture and manufacturing equipment. "This was enacted to help manufacturers and help to spark the economy," Anderson says. For this reason, the items have to be purchased new, not used, and put into use during that same period.

Better still, the write-off has no limits on how much you spend and isn’t capped by your taxable income, as is the case with the write-off rule this one temporarily supersedes, says Anderson.

5. Employee health-insurance buyers
The small employer health-care credit lets very small businesses write off 35% of the premiums you pay for employees’ health insurance. It sounds great, and it is, if you qualify, but there are limits, says Anderson.

To qualify, a business must have fewer than the equivalent of 25 full-time workers. So, for example, you could have 50 part-time workers. The average annual salary across your employees can’t top $50,000, and you must be covering more than half of your workers’ health-care costs.

The credit will rise to 50% in 2014, but it will also phase out for employers who pay an average annual employee wage between $25,000 and $50,000. "It’s meant to give a tax credit to business owners who provide health insurance to lower-wage workers," says Ginsburg, "But it’s too onerous to qualify for it. It isn’t going to get a lot of play [in places where wages are high]."

Even so, with the number of new tax breaks this year, many entrepreneurs are likely to find at least one that could come in handy this spring.
 

Be Sure You Can Put the ‘Family’ in Family Business

In writing BizVoice articles and meeting many of our members at events through the years, I can tell you that quite a few thriving Hoosier businesses have been passed down through families for one, two, or even three generations. Entrepreneur.com offers an article about the importance of succession plans, and it’s worth taking note if your business may one day be in the hands of a child or younger relative:

You may already have several children and other relatives gainfully employed in a multitude of positions within your company, some of whom are also being either groomed for or are already in higher-level jobs. But to stay on course, you need to periodically evaluate both the impact to date and the potential of each employee (family member or not) in the organization. There is a huge difference between filling tactical jobs within the organization with trusted family members vs. considering them as viable candidates to one day strategically lead the company or join the senior executive management team. 
 
All too often there are no viable candidates from within the respective ownership family trees to be ideal successors. And yes, I hear you loud and clear: There are perceived checks and balances already in place. For example, you may already have (or plan to hire in the near term) professional managers from outside the family in certain pivotal operational, finance, sales and marketing positions. Nonetheless, family members are still systemically being placed in key roles or are being seriously considered without much rational thinking taking place. The emotional aspect of children or a spouses pleading on their own account or for other loved ones can take its toll on the objectivity of even the most seasoned of owners.

It is only when you look at your own life map that you realize that being born into a family business is merely the starting point. It is nothing more than drawing an inside post position for a highly competitive horse race. Regardless of the nurturing provided as a child becomes an adult in terms of education and on-the-job training, there is no guarantee that such family members will ever be suitable for the company’s most prestigious positions. Ask yourself a few questions:

• Are all viable candidates (including family members) to fill critical positions thought of by senior management and their trusted advisors as enhancing the chances of the company’s continued success?

• Is a process already in place that never makes exceptions for permanent hires who cannot meet the standards of a detailed job description and desired qualifications, with extra enforcement emphasis on the most critical positions?

• Have the owners provided the company a documented plan and timetable of succession planning for key positions in the event of both timely and untimely separations of individuals (including themselves) in such key positions?

Indiana Small Business Fair Set for May 11 in Carmel

The Indiana Small Business Fair on May 11 is intended to educate small business owners and staff about starting and building a business. Additionally, a drive to help Gleaners Food Bank will coincide with the event. Here is some more information from an email sent by the Yougo Network:

The Indiana Small Business Fair May 11th, 2010 is to support the start up and continued growth of small business in Indiana. The   goal is simply to provide the right resources and knowledge through the exhibitors and free seminars.  

The exhibitors will be organizations and businesses who can provide a service or product for small businesses. The fair will limit the exhibitors to 2-3 businesses in the same field in order to provide as much information in various fields as possible.

The Business Fair committee is inviting networking groups to be a part of this event to inform individuals about organizations who help people connect and grow together.

Seminars will be ongoing throughout the day to enlighten people on starting a business, advertising, sales, home based business, marketing, social media and networking.

We invite you to help support the Gleaners Food Bank Drive at the Indiana Small Business Fair!

We are asking small business owners and supporters of small businesses in Indiana to rally in support of hunger relief in Indiana. Bring any nonperishable food items to donate at the fair, and help Hoosier families who need assistance.  We CAN make a difference!

The exhibit floor is open from 10:00 a.m. to 6:00 p.m. for people to come and go as they please, to gather information, and grow. Networking is encouraged for everyone.

Our keynote speaker Scott Abbott will be kicking off the event from 9:00 a.m. to 9:45 a.m.!

This has been well planned and thought out to make the Indiana Small Business Fair a most valuable and fun event for everyone. Open to the public.

Hat tip to our Cam Carter on the info.