Want to know about Miami startups? A user's guide to this blog

Dear reader, Starting Gate has been providing and archiving South Florida startup and tech community news, views and resources since 2012. New to the Miami area? Thinking about relocating here? Just want to keep up with news, events and opportunities? We're there for you.

How to use Starting Gate: Besides scrolling the blog for the latest entries, you can access news and views by category. The "Funding" category will capture venture capital and angel funding news of individual startups as well as stories about funders. The startup categories chronicle news and my regular "Spotlights," and in Q&As you'll find interviews with CEOs and leaders in the entrepreneurship ecosystem. There are also categories for guest posts, views, accelerators/incubators, resources, events and more.

Have news? Have an idea for a guest post? Send it to me at [email protected]. (See my Facebook announcement here)

Thank you for your support through the years and please come back often. Follow me on Twitter @ndahlberg. - Sincerely, Nancy Dahlberg

Yes, it’s safe to go into the water with this startup’s invention

By Nancy Dahlberg / [email protected]

But who’s going to watch the stuff?

It’s a familiar question, if you are among friends at the beach who want to take a swim. One Aventura-based startup, AquaVault, has a solution for that – and the crowd gives it a thumbs up.

The crowd is fans on Indiegogo, a crowdfunding platform that lets companies solicit donations, with promises of thank you gifts, generally the products themselves, in return. Crowdfunders donated $235,598 to AquaVault, which plans to produce a new version of its portable safe that can be attached to beach chairs or other objects, safely storing electronics, wallets and other valuables. Strategically, AquaVault held its campaign in prime beach-going season.

Jonathan Kinas, Avin Samtani and Robert Peck founded the Aventura company in 2014 after their valuables were stolen while, you guessed it, they were cooling off with a swim at a South Beach resort. They brought their first product to market with the help of ABC’s Shark Tank in 2015, where they lured in an investment from Daymond John (pictured below with AquaVault team). Since then, nearly all South Beach hotels have been offering the safes to their guests, Kinas said.

The newest version of the startup’s safe, called FlexSafe+, is made with cut-and-slash resistant material and sports a motion sensor alarm and a water-proof solar charger. Like the other portable safe, FlexSafe can be locked to a beach chair, a golf cart or a bike, or even a rod in a dormatory or hotel room. It was offered at the $99 giving level.

With the Indiegogo campaign over, AquaVault moves into production with FlexSafe+. “We will be producing roughly 10,000 units and will be delivering in November right before the holidays,” Kinas said.

Crowdfunding has its fans, especially among consumer product makers. But few score funding at the level that AquaVault did, in its campaign that ended July 30. Although Indiegogo does not publish statistics, its more dominant rival Kickstarter does. On Kickstarter, only about 1 percent of companies launching campaigns raise more than $100,000.

Follow Nancy Dahlberg on Twitter @ndahlberg.

How a 305 native became 'Crowdsourceress'

Hear Alex Daly read from her new book and share tips about crowdfunding at Books & Books on Friday.

By Alex Daly

I grew up in Miami in the 1980s and ’90s, long before the invention of crowdfunding as we know it. My dad owned a company that created anti–money laundering software for banks and financial institutions, and my mom had her own company doing marketing for radio and television stations. Through my parents, I learned the value of hard work, which pushed me from job to job through different New York boroughs until I found my life’s work.

I never thought I’d be the industry’s “Crowdsourceress,” an expert in the field of crowdfunding. It wasn’t like I had a guidance counselor in college telling me I was perfectly suited to the role of “Kickstarter campaign manager.” And yet, just three years ago, I launched my company Vann Alexandra from my kitchen table in Brooklyn –– a creative services agency that helps clients raise money for their creative projects through crowdfunding. Since then, my team and I have managed over 50 crowdfunding campaigns across the design, technology, film, music, and publishing categories, raising over $20 million dollars for our clients from close to 100,000 backers worldwide.

The road here, like any entrepreneurial journey, was full of bumps and twists and turns. After college, I worked as a fact-checker for New York and WSJ. magazines. Then I tried my hand at film and worked as a production manager at a boutique documentary production company. My role included managing a team, working on several documentary projects, and writing lots of grants to raise money for these projects. Grant after grant after grant. So many grants. I was beginning to think this wasn’t the kind of work I wanted to be doing. 

Then one day an office mate I barely knew who was trying to raise money for his documentary asked me what I knew about Kickstarter. 

The short answer? Pretty much nothing. Still, I told him I was game to help. 

We planned the campaign on our lunch breaks and after work. Really, I knew almost nothing. I remember having to Google how to write a press release. But we worked really hard and launched a stellar project. When we went live on Kickstarter, we discovered there was a passionate audience who responded to our campaign and lept on board as backers. Meanwhile, we worked around the clock sending personal emails to friends and family and pitching press to cover the project. By the last day of the 30-day campaign, we surpassed our $35,000 goal by more than 150%, raising over $80,000.

I was immediately hooked. I managed another documentary campaign, and another. Both were successful. As word got out about my success rate, more creatives started coming to me for campaign management, and that’s around that time I was named the “Crowdsourceress” by the press. 

A big part of my job was connecting meaningfully with my clients, and gaining their trust by leveraging — or at least projecting — my growing expertise. I had to figure out what the essence of the project was so that I could talk about it effectively to potential backers. Then I had to frame the campaign pitch for those people — who were sitting at home online or swiping away on their phones — in a way that was so compelling that they couldn’t ignore it. I needed to give backers a feeling of real investment in these campaigns, and a sense that they were going to feel good about their donation. Over time, I was getting better and better at what I was doing.

Then one day, just two years after my first campaign, I got a text from my friend about handling a huge Kickstarter. The product was a high-resolution digital music device called the PonoPlayer, and the client was Neil Young. Yes, that Neil Young. 

I got the job and had to start immediately because the campaign was launching in just over a week. Then, for 35 days I managed Pono’s Kickstarter and helped them raise a whopping $6.2 million. At the time, it was the third highest funded Kickstarter project ever. 

It was after the Pono campaign wrapped that I finally realized it was time to launch a full-time, full-service agency. Since then, we have managed incredibly campaigns like the NYCTA and NASA Graphics Standards Manual reissues, TLC’s final album, the Joan Didion documentary, Eric Ries’ Leader’s Guide, the Maya Angelou Documentary, Makerarm, Bellingcat, the Today Clock, and many more. 

Now, I'm thrilled to share both my journey and top crowdfunding tips in my new book: The Crowdsourceress: Get Smart, Get Funded, and Kickstart Your Next Big Idea. This book will give you the tools not only to run your own successful crowdfunding campaigns, but also to build, launch, and grow your brand and your business. 

I will be reading and signing The Crowdsourceress at Books & Books in Coral Gables on Friday, May 5 at 7:00 pm. I hope to see you there!

Alex is the founder of Vann Alexandra and the industry’s “Crowdsourceress." Alex has shared her expertise at top film festivals, universities, and organizations, and is in the class of 2016’s Forbes 30 under 30.  

Find information on her book here: www.thecrowdsourceress.com

Find information on the Books & Books event here:

https://www.eventbrite.com/e/the-crowdsourceress-book-reading-and-signing-cinco-de-mayo-party-tickets 

Crowdfunding for all: What it means for entrepreneurs and economy

By Nancy Dahlberg / [email protected]

Sherwood Neiss and Jason Best (pictured above), along with a third partner Zak Cassady-Dorion, spearheaded the writing of crowdfund-investing legislation in the 2012 JOBS Act ratified by President Barack Obama. They have also authored “how-to” guides for entrepreneurs and investors looking to raise money from the crowd and invest in crowdfunded opportunities.

Since regulated crowdfunding was legalized in the United States — the third prong of the crowdfunding legislation that allows many more people to invest went into effect in May — the serial entrepreneurs have continued to champion crowdfunding. Working with governments and stakeholders in Mexico, Colombia, Turkey, Canada and the United Arab Emirates, they are helping to educate the world about harnessing the multibillion-dollar crowdfunding movement. Regulation crowdfunding allows any American startup or small business to raise up to $1 million on debt and equity crowdfunding platforms registered with the Securities and Exchange Commission.

Their company, Crowdfund Capital Advisors, is a partner in the U.S. State Department’s Global Entrepreneurship Program. Neiss and Best have testified in front of the U.S. Congress and presented at South by Southwest in Austin, Texas, the World Economic Forum in New York, the Global Entrepreneurship Forum in Istanbul and the Global Entrepreneurship Summit in Dubai.

In September, Neiss and Best conducted a daylong workshop on crowdfunding at Venture Hive, an entrepreneurship education company in downtown Miami. “The two of them saw this incredible need and have been fighting all of our battles to make it happen,” said Susan Amat, founder of Venture Hive. Venture Hive partnered with Neiss and Best on one of the first accelerated education programs for entrepreneurs navigating crowdfunding.

Neiss (pictured here) shared his own war stories about raising money the traditional way for one of his former startups, FLAVORx, when he spent months knocking on rich people’s doors and meeting with venture capitalists around the country. “It’s exhausting, and it totally takes your eye off the ball of your company.”

While crowdfunding can be a far more efficient tech-enabled solution to raising investment funds, Neiss is quick to point out that it’s not for everybody.

“Crowdfunding is not a fishing expedition,” Neiss said at the event. Instead, crowdfunding is raising money from friends, family and followers who are already engaged in what the entrepreneur is doing, he said. “You have to know your crowd.”

Best said he was happy to see that the final regulations contained significant measures aimed at lowering risk, such as income and investment caps and a test on risk tolerance. But make no mistake, he said: equity crowdfunding is a risky business for investors. While the rewards could be rich, the reality is that the majority of startup companies fail.

While donation-based crowdfunding has exploded in popularity, critics of regulated crowdfunding warned of a wild wild west of fraud. Yet, since May 16, when Title III (which opens regulated crowdfunding to the masses) was approved, more than $10 million in capital has been committed to campaigns, most of that into California companies, according to a new index that CCA publishes on its website, crowdfundcapitaladvisors.com. About a third of the 120 offerings so far have been funded. So far, the process has been slow and measured, Neiss said.

Here are excerpts of history, best practices and tips for success that Neiss and Best shared with workshop participants and in follow-up questions from the Miami Herald.

When most people think of crowdfunding, they think of Kickstarter, but you saw this as just the beginning. How did you get started?

Kickstarter and Indiegogo (unregulated, donation-based crowdfunding) can be incredibly powerful if you have a prototype. You can test the market and see if there is truly a customer for your product, as well as raise money to produce your product. As the product is up there, people are giving you valuable feedback, and you can use that product validation to go to retailers to sell your product.

The opportunity we saw was to create crowdfund investing not just for consumer products you can pre-sell through Indiegogo, but maybe you have a B2B startup or a traditional business and you need to expand your operations. In August of 2010, we asked ourselves, “If you can give away money on Kickstarter and lend money to entrepreneurs in developing companies via Kiva, why can’t you invest in businesses with products you use everyday?” That was the jumping-off point for us.

But setting out to change securities laws that haven’t changed in 80 years … takes equal parts stupidity and naivete, which we brought loads of to this process to make change. In 2011, we created the Startup Exemption Framework and began walking the halls of Congress and talking to anyone who would listen. … By opening the opportunity for regular Americans to invest in businesses that they know and trust, this could help spark job creation, innovation and American entrepreneurship. … In 2012 we were in the Rose Garden when President Obama signed the JOBS Act into law. It was a surreal moment.

Fast-forward, and in 2014 Title II of the JOBS Act went into effect. In 2015, Title IV, and in May of this year, Title III went into effect. In August, our firm launched an index that tracks crowdfunding on a day-to-day basis. We and Venture Hive are looking at the data results over time to continue to hone and build best practices. Now we are working with 37 countries around the world to change regulation in other countries, we are working with fin-tech companies in the industry, and we are investing in tech companies that are building this infrastructure.

What are the differences between the three crowdfunding JOBS Act titles?

Briefly, Title II provides the ability to raise money from accredited investors or wealthy individuals. Instead of having to know someone to know someone, I can go to one of these platforms. It saves the entrepreneur time, energy and money, cuts down on the funding cycle and brings the process online. … It can be appropriate for tech startups looking for connected investors.

Title IV, also called the Reg A-Plus, offers the ability for companies to raise up to $50 million, from accredited and non-accredited investors, but the documentation costs are substantial. It is more appropriate for large, sophisticated companies, such as a regional brand looking to expand nationally. … It allows for what is essentially a mini-IPO … But the reality is that most companies aren’t ready to do Reg A-Plus offerings, and the majority of them fail.

Title III offers the opportunity for regular investors to invest in companies they use every day or entrepreneurs they believe in. There are limits to how much you can invest, per investment and per year. Those are put into place to help people understand these are high-risk investments … but they also give you the ability to invest in those deals and participate in making the economy grow.

Crowdfunding can make entrepreneurs better entrepreneurs because it trains them early on on what investors need to make an informed decision. If they do it right, they get the capital that they need from the people that they know.

What are some tips for creating a successful campaign, whether it’s donation-based, such as Kickstarter, or a campaign seeking investments in exchange for a stake in the company?

Look for 10 successful campaigns that were similar to yours. What platforms were they using? How did they tell their story successfully? It’s also important to look at a few that failed. Understand where they fell short and what you can do to not repeat their mistakes. Call up the founders; you will be surprised how open they can be.

Your campaign video is incredibly important. "Watch a lot of videos to see what has been successful and what has not.

Your video is your front door to your offering. It doesn’t have to be expensive, but it has to look good. Plan 12 hours for filming that two- to three-minute video. No matter how well you think you know your business or opportunity, write a script. Take your time to get it right.

Before a campaign starts and you are setting up the campaign page, begin establishing media contacts. You want to have a big first couple of days. Share your campaign before it is live; that is the way you get PR.

You need to bring your own crowd to your crowdfund. Most of your investors will likely be LinkedIn connections, people you already have a relationship with. You have to be able to connect with them emotionally so they understand what you are trying to achieve. Customer service is important, too. Your crowd already feels connected, so you need to spend the time answering their questions, listening to their suggestions, etc.

If things go wrong, and they will … get out in front of the issue and communicate openly and honestly with your crowd about what went wrong, how it went wrong and what you are doing to mitigate the problem.

Crowds often contain “smart money,” or investors with experience or connections that may be able to help you. Always communicate early and often with your crowd.

You talk a lot about post-campaign. What is some advice on that?

It’s really important to satisfy your first customers. They will be your brand ambassadors, and they will give you critical feedback.

Post-campaign, thank your supporters. Then communicate how you will communicate with them — is it emails, a LinkedIn group, Twitter? They need to understand how they can track your progress. You can use video, audio and photographs in your updates to them. You just raised money for your business, and you will need to raise more and build your crowd out over time.

Engage your crowd and you can can return to them over time, whether it’s for money or their expertise or their feedback.

What happens if your campaign doesn’t make it over the finish line?

First, thank those people who supported you. Then look at the campaign and the product or service or company and what you were trying to build. One of the the magical things about crowdfunding is the opportunity to understand what your product market fit is before you build thousands of products and try to scale a business. It may be that that product that you fell in love with, that you thought would hit its target, didn’t quite do that. Or maybe it just needs a tweak or a pivot.

Should you try again? The answer is maybe. Look at it to see if there’s a tweak or pivot, or it might be time to move on.

What are some other benefits?

We’ve worked with many different entrepreneurs around the world. In addition to learning a lot, they have gained press exposure, they made long-term business partnerships, found other types of investors over time, and they have found new customers.

What does the data you are tracking show about how equity crowdfunding has gone so far?

About $10 million has been committed to regulation crowdfunding campaigns since it launched May 16. Based on the number of offerings going live each week and the growth of investor commitments, we estimate by the end of the first year, May 2017, $100 million in capital commitments will be made. We think this represents a logical start to the industry. It shows that investors are being methodical with how they deploy capital and that companies, that otherwise wouldn’t qualify for bank financing or hit the sweet spot of Angels or VCs, are finding capital from engaged communities.

What are some key trends you are seeing in the early campaigns?

Looking at all the campaigns, you can tell that those that have well-produced videos — that include the entrepreneur and discuss the market opportunity and how they will use the proceeds — get funded over campaigns that just show videos that explain the product or service.

The data also show early signals that regulation crowdfunding is living up to its expectation that it will help main street businesses that don’t qualify for traditional financing. Those companies that have realistic valuations are getting funded three-times faster than companies that have set unrealistic valuations for their firms. And companies that have robust disclosures are getting funded over those whose disclosures seem almost whimsical.

Nancy Dahlberg: 305-376-3595, @ndahlberg

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Want to learn about crowdfunding? Daylong workshop coming to Venture Hive

What are the opportunities and the challenges in the new crowdfunding frontier? How about some practical how-to's for implementing a campaign? Hear it from an expert who spearheaded the legislation. 

In partnership with the Knight Foundation and DLA Piper, Venture Hive will be hosting a free daylong Crowdfund Investing Workshop led by Sherwood Neiss on Tuesday, Sept. 13.

Neiss’ experience is vast: through spearheading the writing of Crowdfund Investing legislation in the 2012 JOBS Act ratified by President Barack Obama, to authoring preeminent “how to” guides for entrepreneurs and investors looking to raise money from the crowd and invest in crowdfunded opportunities, his expertise provides an unparalleled opportunity for participants to learn about this growing global opportunity. He is one of the most powerful champions and thought leaders for Crowdfund Investing (CFI) in the world and a highly sought-after consultant for Crowdfund Investing.

 Workshop participants will receive an 8-hour workshop full of expert-guided seminars, best practices, and “how-to’s” for practical implementation of crowdfunding principles for their enterprise or supporting others in launching their own campaign  or investing. Doors open at 8:30AM. Lunch is free for participants and is sponsored by LUGLOC- The Luggage Locator (www.lugloc.com). Venture Hive is located at 1010 NE 2nd Ave, Miami, FL 33132.

Find out more about Venture Hive at www.venturehive.com. If you have any questions about this event, please email [email protected]. CLE Credits are available.

Sign up here: https://www.eventbrite.com/e/crowdfund-investing-workshop-with-sherwood-neiss-tickets-27094361966

Raising money through a portal may be better route than crowdfunding

By Jason Stark

We know how difficult and time consuming capital raising is for a new startup, and South Florida is no exception.  It takes vital time from a founder’s schedule.  You of course should try the local investor groups like Endeavor, the Knight Foundation, AGP Miami, New World Angels and Tamiami Angels.  However, those efforts may not net you the vital funding you need.

What else can you do?  Give up?  Of course not.  In the glacial world of the securities laws, we now have CROWDFUNDING.  Well, that at least is the word on everyone’s mind.  I will help clarify distinction between Crowdfunding (which finally begins on May 16, 2016), and using Internet portals to raise through traditional accredited investor offerings.  You may find that you may be really interested in raising through an Internet portal, but not through Crowdfunding. 

Below I describe various pre-IPO fundraising options.  The Rule 506(c) offering may be the sweet spot for your capital raise.  Rule 506(c) permits general solicitation (advertising), which allows an Internet portal to communicate your offer to its accredited investor base, but without your company jumping through all the hoops required under Regulation Crowdfunding. 

By “Internet portal”, I mean an online marketplace that facilitates the sale of securities.  Examples include SeedInvest, Circle-up and Crowdfunder.  This differs from Kickstarter (which allows companies to fundraise through the pre-sale of a product or outright donations), by permitting the actual sale of stock through the Internet.    

A year ago, I had worked with clients on zero Internet portal deals.  Over the past few months, we’ve seen them more and more frequently.  Clients that were not able to find adequate funding elsewhere have found new life through small Rule 506 rounds using Internet portals. 

Pre-IPO Fundraising Options under the Securities Laws

Raising money through Internet portals requires compliance with the same securities laws as traditional fundraising.  Below is a brief description of the most commonly used exemptions, and a cost/benefit analysis of each. 

Rule 506(b) is the typical exemption used in venture capital deals that was available long before JOBS Act 506(c) and Regulation Crowdfunding.  It permits raising unlimited capital from accredited investors (generally, a person with $200k income ($300k with a spouse) or $1 million in assets, excluding the value of such person’s home).  Under this exemption, an issuer may sell its securities to accredited investors and up to thirty-five sophisticated non-accredited investors (however, if you have even one non-accredited investor, you will need to provide disclosure documents (i.e., now you must prepare an offering memorandum with financial statements and we’re looking at a more expensive round)).  

Rule 506(c) is similar to the traditional 506(b) accredited investor offering.  The major benefit to 506(c) is advertising the round (which allows an Internet portal to reach out to its investors).  The additional requirements compared to 506(b) are reasonable: a simple Form D must be filed 15 days in advance of the deal instead of after the deal; and accreditor investor status must be verified using records like W-2’s, tax returns and bank statements (under 506(b), you could rely on self-reporting by the investor).  The Internet portal should already have the procedures in place to verify accredited investor status, and therefore, if you are raising through an Internet portal, it should not be too much more difficult to conduct a 506(c) offering than a 506(b). 

Regulation Crowdfunding allows the sale of securities to almost anyone, and not just the small minority of accredited investors.  A major benefit.  However, there are significant new requirements not required for a 506 offering, including the following:

• * Maximum of $1 million raised through crowdfunding in any 12-month period.
• * Reporting and financial disclosure requirements (information regarding the offering, the company and its financials), for rounds over $100k, financial statements that in some cases are reviewed by an accountant and in others, audited, plus ongoing disclosure requirements.
•  * Limits to the amount an investor may invest through Crowdfunding based on income.
•  * Limited advertising (only may directing to the funding portal and limited factual terms).
•  * The issuer must be a U.S. company.

 

Other Offerings.  There are a few other private offering methods that you might consider, but that are not available through Internet portals.  Regulation S may be used if the offering is made entirely to non-U.S. citizens/residents and the securities are offered outside the U.S.  Regulation A+ is often used for larger rounds, given that it requires certain offering documents and filings (somewhat like a mini-IPO – also expensive compared to 506 offers). 

For more specifics on these exemptions, check with your attorney.  See also: https://www.sec.gov/answers/rule506.htm regarding Regulation D, Rule 506(b) and 506(c); https://www.sec.gov/news/pressrelease/2015-249.html regarding Regulation Crowdfunding; and https://www.investor.gov/news-alerts/investor-bulletins/investor-bulletin-accredited-investors for a description of accredited investors. 

Deciding whether to fund raising through an Internet Portal

When deciding whether to fund raise through an Internet portal, you must weigh the benefit of quicker access to investors and valuable time savings (locating and speaking with such investors, networking, meeting with Angel groups, etc.) against the associated fees (some combination of cash and equity).  An Internet portal develops its own database of accredited investors - a very helpful resource you could not hope to replicate.  Regarding services, some Internet portals are more involved and help run and champion the round, while others are more like LinkedIn for investors and just provide access.  Make sure to do your research on the Internet portal’s network of accredited investors, the services provided and the fees.

Summary

Internal portals can be a great way to raise money.  Certainly explore all your options, but using an Internet portal can save you quite a bit of your precious time and sanity, and that may well be worth the cost.  Don’t get caught up in the whole “Crowdfunding” concept.  Traditional offerings to accredited investors may well provide an easier fundraising avenue with significantly less hoops to jump through, and may be accomplished through an Internet portal, the same as for Crowdfunding.

Jason Stark is a partner at Private Advising Group, P.A., a law firm in Miami.  Jason is an attorney (and also is a non-practicing certified public accountant) who advises emerging and growth companies.  He can be reached at [email protected].  The information in this article is provided for informational purposes only and does not constitute legal advice.  You should not act or rely on any information contained in this article without first seeking the advice of an attorney.

YellowPepper launches #MiamiTech relief effort for Ecuador - How you can help

By Daniela Ron

As you all are aware, Ecuador was struck with a 7.8-magnitude earthquake. The powerful Earthquake killed at least 570 people, 163 are still missing and as many as 2,500 were injured.

With such tragedy, there are numerous small cities with over 80% destruction to which limited assistance has been provided, such as Jama, El Matal, La Division, Don Juan, Canoa, Camarones, and Briceño

YellowPepper has a special bond to Ecuador as it started its Latin American operation there in 2006 and it has now grown to a 20-person operation in Quito. In an effort to give back to the country that has given us so much, YellowPepper is coordinating with the Miami Tech scene and beyond to assist Ecuador in these hard times. 

Our mission as YellowPepper is to contribute to reconstruction of these vibrant cities through supplies and monetary aid. With the help of logistics of the Consulate General of Ecuador in Miami, we will be sending all of this aid directly to the ‘ Taller del Cielo”.

I, as an Ecuadorean-born, personally got in contact with several organizations and concluded that Taller del Cielo, a church located in Quito would be the best choice to distribute the donations due to their various connections. The organization already has all the logistics from to take all donations by helicopters to these small towns. 

We will receive video and photographs of all of our aid donated directly to the affected towns. The images I received of these towns (see photo of Jama above) are truly heartbreaking; they are in severe devastation and have asked for a lot of help. Our employees have already raised the first $2,500 of matching funds; we have brought on MxHero, Pinta and Isofruit as partners.

This is the link for readers to be able to support and contribute in this great effort is:

https://www.gofundme.com/EcuadorEarthquakeM

Our hope is other Miami Tech Communities also join this effort. 

Daniela Ron is office manager US / public relations for YellowPepper based in Wynwood.

Crowdfunding for startups: When to start?

By Michael Karavolos

With over $16 billion raised globally in the crowdfunding industry last year, it’s easy to understand why entrepreneurs and startups are increasingly turning to this practice as an attractive alternative to conventional mediums for financing the launch of new products and ventures. The barriers to entry are relatively low since you don’t have to be a well-connected entrepreneur in Silicon Valley to convince an angel investor to hand you a large sum of money. Instead, you’re putting your marketing skills to work by asking a larger pool of people to support your product.

It’s no secret that the crowdfunding industry is booming. It seems like every day you hear about an exciting new startup crushing their campaign goals and launching their company via Kickstarter or Indiegogo. Still, crowdfunding isn’t for everyone and not every successful product needs crowdfunding. It requires significant financial investment, time, and energy.  As such, here are four things every startup must do before launching a crowdfunding campaign.

1. Prove your product’s market fit. When we create a product it’s like falling in love. No one can tell you it’s not the best thing in the world—well, no one but the market. That’s why you have to have that conversation, early, and often. I always advise startups to build a qualified list of their first 1,000 leads. If you can’t do this, or if it proves to be really hard,it’s a warning that there is rough road ahead. Learn, pivot, and improve. Give them what they want (not what you want) and they will give you what you want.

2. Determine if it possible to make (and for how much). Before launching a crowdfunding campaign, you need to know whether what you intend on building is even possible in the first place. Before seeking crowdfunding, I recommend that you do some research to determine if making your product is even possible, and if it is, how much will it cost? It’s not going to be pretty if you raise $100K but need $200K to make the product into a reality because now you have a commitment to your backers. They want their product and people can quickly become irate if they don’t get it.

3. Set a realistic time line. Many clients come to me with the idea that we can launch a crowdfunding campaign and get some quick money in two weeks. Getting people to give you money is not magic and it isn’t easy, no matter who or how. It takes time, effort, dedication, resources, and a strong plan. Expect to spend 12-16 weeks on the campaign from the launch meeting to the day the campaign ends. That’s not nights and weekends; it’s full-time weeks.

4. Assemble your A-team. A great man once said “a small group of determined and like–minded people can change the course of history.” Well, the same goes for the course of a crowdfunding campaign. These days, no campaign is conceived, created, and managed by one person. There is a lot of competition, and campaigns are getting bigger and better. You need an A-team: PPC, Design, Copy Writing, Email, Social Media, Video, PR, and Customer Service. Assemble the right team and you’re 80% of the way there.

Michael Karavolos is the VP of Digital Marketing and leads the Miami office of Trident Design, LLC., a full-service invention incubator that works with inventors, startups, and corporations to develop and market products ranging from housewares to consumer electronics to medical devices. If you have any questions or feedback, drop Michael a line on Twitter at @socialevolution or email at [email protected]

 

 

South Florida natives start New Story to crowdfund homes for Haiti

The New Story co-founders: from left: Mike Arrieta, Matthew Marshall, Alexandria Lafci and Brett Hagler in front of one of the tents in Lévêque, Haiti.

By Nancy Dahlberg / [email protected]

Brett Hagler saw the squalid and unsafe conditions that Haitians live in every day in vast tent cities. And now with the power of the crowd, his tech startup is moving the families one by one into homes of their own.

Hagler, who grew up in Coral Springs, started New Story, a nonprofit crowdfunding site in which 100 percent of donations go to building small, hurricane-resistant concrete houses in Haiti. Seven months ago, he and his small team quickly built a website, newstorycharity.org, and tested the model with one family and one home. That worked and New Story kept going.

Now in San Francisco and part of the summer class of the well-regarded Silicon Valley accelerator Y-Combinator, Hagler and the team have finished 62 homes and are scaling up with an ambitious summer goal: 100 homes in 100 days. Right now, New Story is focused on a large tent slum in Lévêque, Haiti, 40 minutes from Port-au-Prince.

“We are moving the families from the tent slum to a new community nearby,” said Hagler, New Story’s CEO. “We have 152 to go. Our goal is to deplete that as soon as possible, and when we’ve done that we are starting a new story for these families.”

New Story works like this. A family needing a home is featured on newstorycharity.org. For example in one current campaign, you could meet melon farmer Marie Odette, who has been living in a tent and separated from her children because of the tent city’s unsafe conditions. Once the family is funded — when it reaches $6,000 in donations for a 388-square foot, three-room concrete home built to Miami-Dade County building standards, Hagler says — Haitian construction workers get to work and a home with a front porch and garden for the family goes up within about two months. Funders, whether they donated $5 or $6,000, see the progress of their project every step of the way, and are sent a video on move-in day. New Story partners with Mission of Hope, a local organization that has been building homes in Haiti for 16 years.

 

Hagler started New Story with his best friend since middle school, Mike Arrieta. Both went to high school at Coral Springs Christian Academy, graduated in 2008 and then went off to different colleges (Hagler to Florida State and Arrieta to Alabama). Arrieta is also living in San Francisco and is on the board of New Story. Also on the team: Matthew Marshall and Alexandria Lafci.

Hagler and Arrieta visited a tent city as part of a personal trip in the summer of 2013, three years after the devastating earthquake that killed more than 300,000 and left 1.5 million homeless. “You don’t have a safe home in this environment — theft, child abduction, rape. Kids couldn’t go to school. Parents couldn’t work a full day because their kids weren’t safe,” said Hagler. “That broke my heart.”

Their solution: to give the Haitians new homes and change their life trajectory. “The best way people can help is to fund a home,” Hagler said.

New Story is focusing first on Haiti, the poorest country in the Western Hemisphere. Building permanent houses has been the biggest challenge in Haiti since the Jan. 12, 2010 earthquake, and problems with housing and fund-raising efforts have been well documented, including a recent report by ProPublica and NPR that the Red Cross had raised $500 million but only built six homes. Not surprisingly, people may be wary of fundraising efforts in Haiti, even though about 60,000 are still living in tents five years after the disaster. New Story attempts to make the process as transparent as possible, not only with frequent updates to donors but a cost breakdown on the website. Said Hagler: “Don’t let headlines deter you from giving because these people still need homes, and we are going to do it with full transparency and accountability and show it to you.”

New Story says 100 percent of donations ($372,000 so far) go to the projects; New Story also has raised money from its “investors” — so far it has raised $140,000 for operations and administrative costs, most of that from Y-Combinator.

New Story was set up as a nonprofit, but Hagler says it operates no differently than any of the high-growth for-profits in the Y-Combinator accelerator or elsewhere. The goal is revenues, lots of them, and rapid expansion to other areas of the world. The only difference is that all the revenues are going to the families and New Story’s investors are getting a social ROI, he said.

New Story plans to expand to help other areas in the future but that summer trip to Haiti in 2013 left a lasting impression on Hagler: “New Story will always be in Haiti.”

Follow Nancy Dahlberg on Twitter @ndahlberg.

One of the small homes funded by New Story's crowdfunding platform, above. New homes mean income opportunities for Melicia, who sells food and sweets at her stand, below. 

 

FIND OUT MORE

To fund a family: newstorycharity.org

More info: Reach Brett Hagler at [email protected]

 

Florida Legislature passes intrastate crowdfunding bill

Joining a growing list of states that have passed intrastate crowdfunding laws, the Florida Legislature passed its own bill and it is expected to be signed by Gov. Rick Scott this week.

With the Florida Senate and House passage of SB 914 and HB 275, investment in private Florida companies is no longer restricted to “accredited” high net worth investors. This new legislation allows online crowdfunding platforms to register and conduct business in Florida as long as both the investors and businesses using crowdfunding reside in the state and that certain consumer protections are in place.

A Florida intrastate crowdfunding law has been in development for over a year. In 2014, the “Florida Crowd Finance Act” was initiated by Miami-based Funding Wonder, a small business lending platform, with the support of the Florida Crowd Finance Association. While support was strong among the bill’s sponsors and many legislators, the Florida Office of Financial Regulation, which reports to the governor, opposed the bill effectively postponing action on the matter until 2015.

The new law provides capital-raising opportunities for small businesses that lacked access before, but it also allows  residents a chance to invest in small businesses and startups in their own communities, Funding Wonder’s executives said.

“There is tremendous momentum behind crowdfunding as a tool for business finance and it makes sense for Florida, with the country’s fourth largest economy, to be an active participant,” Funding Wonder CEO Michael Mildenberger said in a news release.

Nancy Dahlberg

Urban Drones' water-loving drone makes giant splash on Kickstarter

A Coral Springs company’s water-loving drone has made a crowd-funding splash with fans on Kickstarter. With about six days still to go on Thursday,Urban Drones has raised more than $218,000 for its new product — and surpassed its original fund-raising goal by $200,000.

Called the Splash Drone, the waterproof quad copter is capable of landing and floating on water and can help boaters in distress. It would also appeal to outdoorsy types who use a GoPro camera to capture their adventures, said Alex Rodriguez, CEO and co-founder of Urban Drones (shown here), who has been developing and designing drones since 2007, before most people knew what a drone was. This drone is for hobbyists, as Federal Aviation Administration rules for now limit commercial drone use.

While there are plenty of companies that develop and manufacture drones, few focus on waterproof drones, said Ryan Perez, co-founder in charge of marketing for the company, which has four employees plus contract labor. “Given our location and proximity to the water, this niche seemed like a natural fit. Thus the idea of the Splash Drone was born,” Perez said.

The Splash Drone will have an emergency flare mounted on the drone and it can hover and follow a boater in distress for 15 minutes, the co-founders said.　It can drop a life preserver to a swimmer in distress, and the drone operator can be up to a half mile away. The Splash Drone will also feature a waterproof camera stabilization gimbal, a live video feed directly from the GoPro, and the Splash Drone can be flown from a phone, said Rodriguez, who has been building drones since 2007. Discovery Channel this week featured a live demo of the drone in action.

Urban Drones partnered with a Chinese manufacturer and took its concept for its “Splash Drone” directly to the public through Kickstarter, a global crowd-funding platform. Through Kickstarter, backers — 226 so far — pledge funds and are promised gifts in return for various pledge levels, such as a T-shirt at the $25 level or a ready-to-fly Splash Drone at $799. Want more bells and whistles and a flying lesson, too? That’s $1,999. At least four backers do. The campaign will end at 11:42 a.m. April 8, and then the real work begins: Getting the drones manufactured and into fans’ hands.

“The Splash Drone is the first iteration of a range of waterproof drones we will bring to market over the course of the next 18 months,” said Perez. “Our goal is to expand the use and capabilities of drones.”

See the Splash Drone Kickstarter campaign here.

 

Follow Nancy Dahlberg on Twitter @ndahlberg.