|

Crowdfunding Components & Risk Assessment

NO RATINGS
View comments: threaded view | newest first | oldest first
Hospice_Houngbo
User Rank
Supply Network Guru
Very limited
Hospice_Houngbo   2/16/2013 8:35:43 AM
NO RATINGS

"the potential investor-audience is a lot smaller."

It seems like not many believe in crowdfunding. The concept may only take off if investors are sure they can get their money back.

Hospice_Houngbo
User Rank
Supply Network Guru
Re: Consolidated is
Hospice_Houngbo   2/16/2013 8:45:00 AM
NO RATINGS

Consolidated also means stability and stagnation. The industry does need new and creative minds. But consolidation is not a bad thing as it reassures the big investors.

Hospice_Houngbo
User Rank
Supply Network Guru
Re: Consolidated is
Hospice_Houngbo   2/16/2013 11:46:34 PM
NO RATINGS

@Rich,

"Another grand and glorious Golden Age of Prosperity."

That is a way to see this, I wish I were part of that "grand and glorious Golden Age of Prosperity". I guess it is something to be grand and prosperious.

tech4people
User Rank
Supply Network Guru
We need a Better measure of ROI
tech4people   2/17/2013 6:40:03 AM
NO RATINGS

Brian,

Please do correct me if I am wrong about this issue but this Crowdfunding Idea recieved a massive fillip thanks to the Obama Jobs Act.

Correct?

Why can't the inventors offer Shares in the Venture in return for Cash donations?

They can decide well in advance how many Shares they believe Venture has and how much should each share be worth.

I am sure offering Partial Ownership here will make This Crowdfunding idea even more attractive for Funders.

Regards

Ashish.

Mr. Roques
User Rank
Supply Network Guru
Re: We need a Better measure of ROI
Mr. Roques   2/17/2013 9:59:34 AM
NO RATINGS

first of all, i love the crowd funding idea. Is it here to replace angel investors? Half way between them and venture capitalists? Substitute everything? You need more than an idea to succeed.

tech4people
User Rank
Supply Network Guru
Re: We need a Better measure of ROI
tech4people   2/17/2013 10:18:10 AM
NO RATINGS

Mr Roques,

I like the idea too.

It just adds more variety to the list of Fund-raising Option available to American Entepreneurs today.

That's just the way I look at it.

If you have actually given a Sales Pitch to a VC or Angel Investor;then you know how difficult it to raise funds from those two sources.

Also,now with Banks having reduced Lending to unconventional sources sharply since the recession started in 2008;They have become more selective in which assets they invest in.

In that scenario it makes sense for Crowdfunding to pick up atleast some of the Slack that these VCs have given up on.

 

Mr. Roques
User Rank
Supply Network Guru
Re: We need a Better measure of ROI
Mr. Roques   2/25/2013 2:51:54 PM
NO RATINGS

I would go to those crowdfunding sites first, mainly because they don't require a return, just some perks. Then angel investors (family, friends) and then, VCs to help build the company.

Brian Fuller
User Rank
Blogger
Re: We need a Better measure of ROI
Brian Fuller   2/18/2013 3:03:23 PM
NO RATINGS

Ashish, I think that's part of it, but the other driver is the fact that VCs just aren't funding electronics ideas the way they used to. Semi/electronics startups are seen as more expensive propositions (compared with pure software plays) with longer return cycles. 

But I think your shares concept is a good one once the community figures out the legal issues surrounding that. Right now it's a lot easier if your "shares" come in the form of a prototype or early-access product. 

 

tech4people
User Rank
Supply Network Guru
Re: We need a Better measure of ROI
tech4people   2/18/2013 3:07:34 PM
NO RATINGS

Brian,

Can I make a request?

Can you do a a followup post for this Blog on the topic of  Obama's JOBS act?

I believe Crowdfunding plays a very vital role in that act.

Many Thanks

Ashish.

 

Brian Fuller
User Rank
Blogger
Re: We need a Better measure of ROI
Brian Fuller   2/18/2013 3:10:00 PM
NO RATINGS

Ashish, excellent suggestion. I'll put that on my list of posts for the week... 

Thank you!

 

TaimoorZ
User Rank
Supply Network Guru
Re: We need a Better measure of ROI
TaimoorZ   2/19/2013 6:20:49 AM
NO RATINGS

I think the problem with issuing shares to the public is that the company needs to be a public-listed entity if it wants to float a large number of shares in the market. Normally, companies tend to be private for the initial period and later go for IPO once they're successful. This is why I believe the crowfunding idea cannot work with the shares model.

syedzunair
User Rank
Supply Network Guru
Re: We need a Better measure of ROI
syedzunair   2/20/2013 1:18:42 PM
NO RATINGS

That depends on the model you are using to raise money. Companies may opt for an intial IPO too to raise money in the short run. 

prabhakar_deosthali
User Rank
Supply Network Guru
Re:
prabhakar_deosthali   2/18/2013 12:11:41 AM
NO RATINGS

I do support the idea of crowd funding as it provides the required capital to convert an idea into a salable product . As against the venture funding or equity allotment, there will be no undue pressure or interference from the crown funding to the creative design team and that gives the total freedom for the tech people to work their way to the product.

FLYINGSCOT
User Rank
Supply Network Guru
interesting idea
FLYINGSCOT   2/18/2013 4:46:44 PM
NO RATINGS

I have heard of crowdfunding for things like small personal loans to higher risk people but never really seen crowdfundind applied to successful electronics companies.  Are there any good examples of companies that started this way and are now at the next stage of company development?

Brian Fuller
User Rank
Blogger
Re: interesting idea
Brian Fuller   2/18/2013 5:48:18 PM
NO RATINGS

@flyingscot, the only two examples I've come across so far are Adapteva and Elliott Small's endeavor, both referenced in the story.

I think it's early in the arc of crowdfunding for our industry, however, Adapteva Kickstarter project was a success, so I anticipate more.

Let us know if you come across any!

 

TaimoorZ
User Rank
Supply Network Guru
Re: interesting idea
TaimoorZ   2/19/2013 6:22:12 AM
NO RATINGS

"I think it's early in the arc of crowdfunding for our industry, however, Adapteva Kickstarter project was a success, so I anticipate more."

@Brian: Did these companies receive multiple rounds of funding through the crowdsourcing methods? Did the confidence from the investors remain stagnant throughout? Also, what about the quality of returns on such projects?

Brian Fuller
User Rank
Blogger
Re: interesting idea
Brian Fuller   2/20/2013 1:09:42 PM
NO RATINGS

@taimoorz, these are two distinctly different crowdfunding experiences. In the case of Mr. Small, he's trying to raise a relatively small amount of money and may or may not be getting traction right now. 

In Adapteva's case, Andreas Olofsson had already built a small DSP company with his (and other founders') own capital. He went the kickstarter route to help fund a rev of Adapteva's technology that, I believe, he couldn't get from potential or existing customers. 

The return for the investors was early access to design kits, product and so forth. 

It's early to gauge the quality of the returns on such projects, but the approach, in my opinion, has been proven to work and the incentives--whether a consumer product or access to design schematics/boards/etc.--seem to be the right ones. 

 

TaimoorZ
User Rank
Supply Network Guru
Re: interesting idea
TaimoorZ   2/26/2013 4:10:01 PM
NO RATINGS

"The return for the investors was early access to design kits, product and so forth"

@Brian: That's interesting. Normally, the investors tend to look for return in monetary terms so that they can compare it with other investments. This doesn't seem to be the case with this company.


TaimoorZ
User Rank
Supply Network Guru
Timing Issue
TaimoorZ   2/19/2013 6:18:40 AM
NO RATINGS

@Brian: Don't you think convincing the public about a certain idea and then gathering funds from them can take a considerable amount of time? Would it not be much quicker to get funding from a single VC or a few of them? Have the companies you mentioned faced this issue?

Brian Fuller
User Rank
Blogger
Re: Timing Issue
Brian Fuller   2/20/2013 1:13:51 PM
NO RATINGS

@taimoorz, good question partially answered in my other reply. Here's the issue with the timing: The crowd-funding sites I've heard of (Kickstarter/Indiegogo) put a strict time limit on the fund-raising period. In some cases, you don't get the money unless you surpass your goal; in other cases you can still keep some of the money if you don't. It depends on how you set it up. 

VCs won't be interested in the vast majority of these ideas because they're small, or not as potentially lucrative as they're used to. 

For the entrepreneur, no VCs means a little more control over his/her destiny. 

 

syedzunair
User Rank
Supply Network Guru
Re: Timing Issue
syedzunair   2/20/2013 1:23:22 PM
NO RATINGS

Brian: 

You are correct. Most of these projects will be so small that they would not appeal to the VC's. The VC's are considered by many to fund only projects that have a guaranteed future. 

Brian Fuller
User Rank
Blogger
Re: Timing Issue
Brian Fuller   2/25/2013 4:54:45 PM
NO RATINGS

@syed: have you considered using this crowdfunding approach? I'd love to hear from people who are. 

 

TaimoorZ
User Rank
Supply Network Guru
Re: Timing Issue
TaimoorZ   2/26/2013 4:13:24 PM
NO RATINGS

"For the entrepreneur, no VCs means a little more control over his/her destiny"

@Brian: I think there's still a trade off here. VC's might be taking away some control but they bring with them expertise and guidance and that's important for startup companies to grow. This might be missing in this case.


Brian Fuller
User Rank
Blogger
Re: Timing Issue
Brian Fuller   2/26/2013 6:03:26 PM
NO RATINGS

Absolutely. No argument there. 

In the case of Adapteva, I don't think that's an issue. But in cases like Elliott's that's a tradeoff you have to weigh. 

Good point and thanks for raising it!

 

syedzunair
User Rank
Supply Network Guru
Re: Timing Issue
syedzunair   2/20/2013 1:21:05 PM
NO RATINGS

Convincing people might take time but it will aslo ensure that shares are diluted in public and no one holder has a considerable say in the company. Initially people like to keep exclusivity to themselves and share as little of the firm to shareholders as required. 

A VC may be a good option but it would give a large chunk to a single vendor/person. 



More Blogs from Brian Fuller
The semiconductor industry needs to make big changes to ensure success.
If it's going to be mainstream, solar just has to get more efficient.
Today's students are tomorrow's engineers. Here's a look at the history of the effort to get students into STEM.
A quick conversation with a leading engineering educator about a couple of hot topics: the state of basic research and aircraft innovation.
If innovation is going to be more than just a buzzword, you have to put your money where your mouth is.
Twitter Feed
EBN Online Twitter Feed
EBN Dialogue / LIVE CHAT
EBN Dialogue enables you to participate in live chats with notable leaders and luminaries. Open to the entire EBN community of electronics supply chain experts, these conversations see ideas shared, comments made, and questions asked and answered in real time. Listed below are upcoming and archived chats. Stay tuned and join in!
Archived Dialogues
Live Chat 01/15: CPOs Re-Shape Their Business Roles
Increasingly chief procurement officers (CPOs) are re-shaping their organizational role to focus on creating results far beyond cost controls. A new IBM survey explores how.
Live Chat 11/12: Examining the Cyberthreat to Supply Chains
The number of cyberattacks is on the rise and hackers are targeting the supply chain. Drew Smith, founder and CEO of InfoArmor, will be on hand to discuss the reality of today's threat landscape and what to do about it.