The EarlyFive: Optimizing early-stage ROI

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Private investing under Title II of the JOBS Act is a relatively new field – one for which many investors are still developing and honing their investment strategies. Results-driven data in this sector can be hard to come by, so we’re pleased to share the findings of a recent study in the latest EarlyFive, our weekly feature on insightful content around the web.

According to findings from one private investment marketplace, companies that raise $2-to-$3 million are providing the highest return on capital to their investors, followed by those that raised less than $2 million.

We think that’s great news for investors on EarlyShares, since we specialize in selecting emerging-growth issuers that are raising $3 million or less. (Learn more about the study in the first EarlyFive article below.)

3 Tips to Finding Small Companies With Huge Potential
Matthew Milner, Daily Reckoning

Following the guidelines recommended by Milner, Founder of crowd-investing education site Crowdability.org, may help you optimize your return on capital.

Eric Ries’ Top Tips on Being Lean
Madeleine Lewis, Virgin Unite

Ries, founder of the Lean Startup movement, here advises entrepreneurs to experiment, plan for the pivot, and pay attention to accounting.

Condo Builders Fuel Land Rush in Miami
Robbie Whelan & Arian Campo-Flores, Wall Street Journal

Another week, another major headline on the resurgent real estate environment in our Miami headquarters. We’re pleased to see the rapid progress in our local market and to help investors get in on action around the U.S. through our real estate investing vertical.

When You Should Delegate, and When You Shouldn’t
Sara McCord, Mashable

Delegating can be scary – especially if you know exactly how you like things done – but it’s a critical aspect of effective management. Learn when to let go in this helpful article.

9 Hall of Fame Leadership Lessons
Steve Cody, Inc.

It’s the perfect time of year for baseball-themed business inspiration. Check out this collection of quotes for leadership advice from the 2014 inductees to the Baseball Hall of Fame.

EarlyShares CSO interviewed for MarketWatch News Break

Screen Shot 2014-07-17 at 6.42.37 PMThe emerging industry EarlyShares operates in is known by a lot of names. We prefer to call it General Solicitation or online private investing, but the prevailing moniker, “equity crowdfunding,” isn’t going anywhere. With that term comes the inevitable question: “How does this differ from other kinds of crowdfunding?”

If you’re wondering that yourself, check out our CSO Heather Schwarz-Lopes’ excellent new interview for MarketWatch News Break. In the audio podcast, Heather explains how equity crowdfunding enables accredited investors to achieve long-term alignment with a fundraising company and share in its economic returns. She also shines a spotlight on how companies can use the EarlyShares platform to simplify and amplify their capital raising efforts. Click here to listen.

 

The EarlyFive: Making investing less ‘invisible’

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My favorite selection from this week’s EarlyFive, our weekly collection of insightful content from around the web, was a reminder to entrepreneurs on the behind-the-scenes efforts (the “Invisible Game”) required to successfully raise capital.

Investors have to play an “Invisible Game,” too, when considering a private investment opportunity: researching the company and industry; checking out the business owner’s track record; getting comfortable with investment terms and exit timelines. Traditionally, the documents and resources investors need to make decisions have been housed in disparate places, so a lack of transparency has long plagued the private investing process.

Online platforms like EarlyShares, however, are finally providing investors with the tools and features to bring their “Invisible Game” out of the shadows. Learn more in the Benefits section of our site, and enjoy this week’s EarlyFive below.

July 14, 2014
It’s crowdfunding, but this isn’t Kickstarter
MarketWatch 
Our CSO Heather Schwarz-Lopes gives newcomers a terrific introduction to equity crowdfunding in this audio interview for MarketWatch News Break, sharing how new regulations are enabling investors to long-term alignment (and shared economic returns) with private companies.

July 17, 2014
5 Ways Big Data is Changing Real Estate
James O’Brien, Mashable
Like virtually every other industry, technology is transforming real estate. Big data, in particular, is injecting new intelligence into the real estate market and changing the way buyers, sellers, investors, and banks think about transactions involving property.

July 17, 2014
The Invisible Game
Brandon Gadoci, Disruption Corporation
This data-packed piece offers a hard-earned lesson every entrepreneur should take to heart: when you’re fundraising, there are two games being played – one you can see and one you can’t. Hustling hard on the “invisible game” can make it easier to earn investor funding.

July 13, 2014
How Can This Be a Billion Dollar Company?
Brad Feld, Feld Thoughts
In this provocative blog post, massively successful VC investor Brad Feld argues that many major seed investors are too focused on finding “unicorn” companies. Feld’s approach to early-stage investing, especially in regards to finding young companies with founders he believes in, is right in line with EarlyShares.

July 16, 2014
6 Ways to Connect With Really Important People
Peter Economy, Inc.
Building and growing your network is critical to your success, whether you’re an investor, entrepreneur, small business owner, executive, or any other professional. Check out these tips on connecting to the kinds of people who can help open new doors in your business life.

The EarlyFive: Skills for the future of business (and investing)

EarlyShares_blog_EarlyFive_01.2As we compiled this latest EarlyFive  – our weekly collection of insightful content around the web – we lingered on the top selection below: a thought-provoking infographic of the ten most important work skills you’ll need at the turn of the next decade.

Not only is it hard to fathom that 2020 is only six years away, it’s remarkable to consider just how much the U.S. business and economic environments may evolve in that short span of time. But it shouldn’t strike us as too much of a surprise knowing how much of a transformation our particular sector, the private finance market, is currently undergoing thanks to the implementation of the Title II General Solicitation rules.

Among the most valuable skills of the future: social intelligence, computational thinking, and virtual collaboration… which interestingly all come in handy for investors and issuers utilizing EarlyShares to engage in the Future of Investing.

July 8, 2014
The 10 Most Important Business Skills in 2020
Inc.

Share this infographic with your high school-age kids… they’ll be graduating from college around the turn of the next decade.

July 8, 2014
The WSJ 125 Archive
The Wall Street Journal

In honor of the publication’s 125th anniversary, the WSJ created this awesome interactive feature that lets you explore trends, issues, tragedies, and events since 1889 through the lens of the Journal. You may want to save this for after work – it’s easy to lose track of time when you dive in!

July 2, 2014
‘Disruption, Disrupted’: A Roundup
Andreeson Horowitz

“Disruptive” is Silicon Valley’s favorite term, but it’s not just a buzzword. Actual disruption theory can help a young company determine not only what to focus on, but why (and help investors assess early-stage opportunities). Browse this collection of discussions around the web for a primer on what “disruption” really is.

July 10, 2014
Raising Funding as a First-Time Founder
Buffer Blog

The takeaway from this compendium of advice: traction trumps everything. Buffer CEO Joel Gascoigne advises entrepreneurs to focus on product/market fit and put the thought of raising funding aside until there is substantial traction behind their company. We couldn’t have said it better ourselves.

July 7, 2014
EarlyShares & real estate crowdfunding make front-page news in Miami Herald
The EarlyShareholder Blog

Right on the heels of EarlyShares’ media coverage in the Wall Street Journal and on CNBC Worldwide Exchange came a Monday morning Miami Herald feature on growing interest in real estate crowdfunding. Read the piece, then tell us about your real estate (or other) investor interests in our EarlyShares user survey.

EarlyShares & real estate crowdfunding make front-page news in Miami Herald

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“This really is about giving direct access to investors in ways they never had before.” –Joanna Schwartz, CEO of EarlyShares

Right on the heels of EarlyShares’ media coverage in the Wall Street Journal and on CNBC’s Worldwide Exchange comes a Monday morning Miami Herald feature on growing interest in real estate crowdfunding. Read the article here.

In the piece, Herald writer Nancy Dahlberg not only pinpoints why developers are turning to crowdfunding as “a new access point for capital,” but showcases EarlyShares CEO Joanna Schwartz’s input on why real estate increasingly appeals to savvy investors who are chasing yield.

For more information on EarlyShares Real Estate, click here. To browse our curated selection of vetted real estate opportunities, click here.

The EarlyFive: Fueling a new playing field

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As we rounded up this latest EarlyFive – our weekly collection of insightful content around the web – we were reminded of how rapidly the U.S. business landscape is evolving. It can be hard to keep up with the changes, let alone become an expert.

The fact is that in today’s economy, we’re all students… and there’s a lot to learn. This week’s articles each offer a dose of education, whether it’s learning about the investment markets, getting acquainted with real estate, improving your capital raising acumen, or becoming a better entrepreneur.

June 30, 2014
The Law Of Unintended Consequences
Fred Wilson, AVC.com

This potent commentary from mega-VC Fred Wilson on the unintended consequences of Sarbanes-Oxley – namely, that it has made the stock market less attractive for the average investor by removing the best opportunities from the market – has made major the rounds in the investing community this week. We particularly agree with Wilson’s views on how private online investing is helping to “fix this mess” by opening up the private market.

July 2, 2014
How I Learned to Build and Appreciate a Good Board
Rebekah Campbell, New York Times

Entrepreneurs are sometimes leery (or uninformed) about the role a board can play in helping a young business reach success. This article shares the advice on board formation that one tech startup founder says she “learned the hard way.”

June 30, 2014
6 Acronyms Every Beginner Real Estate Investor Should Know
Time.com

Compared to other forms of real estate investing, crowdfunding can be easier for the average investor to become comfortable with. However, newbies still need to start somewhere. This list is a great primer for the uninitiated.

June 26, 2014
Crowdfunding (and Crowdfinance) 101
Luan Cox, Inc.com

Our colleague Luan Cox, founder of our partner Crowdnetic, wrote this smart introduction on things to know “before you ask for other people’s money,” whether your crowdfunding campaign is rewards- or equity-based. (Thanks to Luan for mentioning us as a Title II platform!)

July 6, 2014
Equity Crowdfunding: Leveling the playing field for female entrepreneurs and investors
Casper Arboll & Balthasar Scheder, CrowdfundInsider

UK-based equity crowdfunding platforms are finding that the number of female investors using their sites is growing exponentially – even doubling over the last nine months. It’s great news for women-led companies, since data shows female investors are likely to support female entrepreneurs. It’s all more evidence of equity crowdfunding’s potential to democratize access to capital for undercapitalized areas of the private market.

The EarlyFive: Emphasizing equity crowdfunding education

EarlyShares_blog_EarlyFive_01.2As dozens of articles on “equity crowdfunding” make the media rounds, EarlyShares continues to recognize (and emphasize) the need for education in our emerging sector.

To clarify, EarlyShares is an online platform for private investing. Many refer to this process as “equity crowdfunding,” which has become the de facto umbrella term for two different exemptions created by the JOBS Act – only one of which (Title II General Solicitation) is currently in place. True equity crowdfunding (Title III), which will allow the general public to invest, has not yet cleared the SEC’s rulemaking process.

EarlyShares is working under Title II to connect accredited investors directly to vetted opportunities in emerging companies and real estate ventures. It’s a field with tremendous potential, and our specialized processes for investors and entrepreneurs provide key benefits to both user groups – which you can read about here.

Learn a little more about our industry in this week’s EarlyFive collection of our favorite stories around the web.

June 13, 2014
CNBC Disruptor 50
CNBC.com Feature

This list of the “most innovative start-ups in business” is a staggering reminder of how rapidly technology is transforming industries as varied as aerospace, retail, hospitality, financial services, and more. We look forward to watching the growth trajectories of all 50 companies.

June 20, 2014
Talking Shop: Seven Entrepreneurs Reflect on Year One
Mashable/American Express OPEN

This slick interactive feature showcases the challenges and lessons of seven U.S. business owners’ entrepreneurial journeys. We especially like reading what advice they’d give themselves if they could go back to the earliest days of their young companies.

June 23, 2014
Your next real estate investment fund neighbor could be a crowd
Arleen Jacobius, Pensions & Investments

Depending how big the real estate crowdfunding investment market becomes, institutional investors may soon find that their real estate funds are co-investing alongside publicly raised capital. Given how popular real estate is proving to be on the EarlyShares platform, we agree this will happen sooner rather than later.

June 25, 2014
The Promise – And Challenges – Of Equity Crowdfunding
Matt Dellorso, Forbes

This insightful article addresses the evolutionary forces facing our online investing industry – including the common conflation of our field with rewards-based crowdfunding. We were pleased to be included in the piece, though we’d presently estimate our “amount raised” to be much higher than reported from April.

June 26, 2014
The ‘Passionate Investing’ Trend… And How to Use it to Your Advantage
The EarlyShares Blog

The new General Solicitation regulations are facilitating “passionate” investing like never before, but industry trends have been proving its popularity for years. Learn how you can leverage passionate investing yourself, whether you’re an accredited investor or an entrepreneur.

The ‘Passionate Investing’ Trend… And How to Use it to Your Advantage

investing trendTraditional private investing by VCs and institutional investors has long been perceived as a place for the head, not the heart. Sure, a VC might really like a company and believe in its mission, but ultimately his or her investment decision is a matter of money, not passion… right?

Well, yes and no.

“There are lots of factors that go into any investment decision – team, market, product,” writes David Hornik, a successful VC from August Capital. “But in the end it is all about passion. Am I passionate about the company or not? Am I passionate about the team? Am I passionate about what they’re building? Am I passionate about the problem they’re trying to solve?”

Turns out, we haven’t been giving investors – institutions and individuals alike – enough credit for supporting the companies and projects that drive their passions. Consider the data:

  • Socially responsible investing (SRI) – also known as “sustainable investing” – reached $3.74 trillion in total managed assets in 2013, a 22% growth over a two years period.
  • Impact investing, a subset of SRI focused on generating a measurable, beneficial social or environmental impact, is also on the rise. According to a recent survey from J.P. Morgan Securities and the Global Impact Investing Network, a group of 125 impact investors committed $10.6 billion in impact investing in 2013. They plan to increase that by 19% in 2014 to $12.7 billion.
  • Retail investors, high-net-worth individuals and family offices made up 32% of the impact investors in the study referenced above. Pension funds and insurers made up 22%, and the rest included foundations, banks, and other financial institutions – proof that it’s not just first-time angels or friends and family investors who are funding projects near and dear to their hearts.

Importantly, passion investments are often a smart, return-driven, and well-researched addition to an investment portfolio.

Investments in so-called alternative assets (which include anything other than publicly traded stocks, bonds, or cash) have long been a staple of the portfolios of the wealthy. Common alternative investments are luxury items: art, wine, jewelry, classic autos, and the like. Those may sound like little more than collectibles or “toys,” but they’re actually oft-profitable investments. According the Coutts Index released earlier this year, investments in classic cars, watches, and luxury properties have returned 77 percent since 2005, compared an industry investing benchmark of 53 percent returns.

Making passion work for you

Now that the ban on the general solicitation (or public advertising) of investment opportunities in private ventures has been lifted, individuals can invest with passion into private entities in addition to public SRI initiatives or luxury items. So how can you capitalize on the passionate investing trend?

If you’re an accredited investor

Diversify your portfolio by funding private ventures you believe in. Start by getting informed on the new opportunities available to you.

Access educational resources to understand the rules for Title II of the JOBS Act and consider what kinds of companies and industries spark your interest. Read blogs by successful VC investors to find out what sectors experts think are poised for growth, then browse open opportunities on platforms like EarlyShares to get to know the missions and visions of various companies raising capital.

If you believe in a particular business that’s conducting general solicitation and want to be part of it, do the necessary research, due diligence, and investment transactions online to join the ride of that company’s future. (It may sound simple, but it’s actually unprecedented; individual investors were largely barred from publicly participating in the private finance market for 80 years under the US securities laws.)

If you’re an entrepreneur raising funds

Lead with your passion and commitment to making your business a success. No investor will be passionate about your business unless they believe in your drive as a leader.

“70 percent of my investment decisions are based on the quality of the entrepreneur more than the idea,” writes VC and former entrepreneur Mark Suster. “I simply won’t fund if I don’t believe the entrepreneur is authentic and passionate about the problem he or she is solving.”

Suster is far from alone in this mentality. Successful VCs often say they invest in the people, not ideas, behind a company. If you conduct a general solicitation investment offering, every accredited investor will be investing like a VC – so give them every reason to believe in you.

Showcase your mission, vision, and entrepreneurial ‘story’ strongly in your offering materials to captivate investors’ passion. And – difficult as it may be – turn away those investors whose mentalities, attitudes, or time horizons don’t align with your business. The greatest value a passionate investor brings to the table is not his checkbook; it’s his zeal to help your business succeed.

As David Hornik writes, “that kind of zeal is rare, but it is unbelievably exciting.”

The EarlyFive: What are your investing goals?

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The vibrant energy surrounding the World Cup this week has gotten us thinking about goals. What are yours? At EarlyShares, our goal is to provide investors with all of the tools and resources they need to discover interesting new opportunities and invest with confidence.

That’s why we’ve carved out a niche for ourselves as the trusted platform dedicated to connecting accredited investors directly to vetted private offerings and real estate deals, enabling you to diversify your alternative investments all in one place.

The most exciting news last week was my opportunity to discuss the potential of the US real estate crowdfunding market on CNBC’s Worldwide Exchange segment. We hope you enjoy it… and that your favorite team is scoring goals, too!

June 6, 2014
Up-and-coming Cities for Real Estate
Alanna Petroff, CNN Money

It’s always exciting to see our hometown highlighted on a global list. Miami clocks in as 10th on the list of cities poised for tremendous real estate appreciation. The only other US city to make the cut was Chicago in 4th place. See the article to reveal the surprising #1 selection.

June 13, 2014
Great Entrepreneurs Know How to Manage Setbacks
Martin Zwilling, AlleyWatch

This piece is a great reminder that managing and motivating a team is about far more than just interpersonal skills. As the author puts it, “sometimes you have to manage progress, not people.”

June 13, 2014
5 Dos And 5 Don’ts Of Entrepreneurship Every Startup Needs To Implement
Vishaal Melwani, Elite Daily

Entrepreneurs are most definitely the new rockstars! Especially when it seems like almost every gadget, solution or service has already been invented. We salute those entrepreneurs who are willing to take risks, work hard and who believe that the execution of their ideas is just as important as the idea itself. A lot goes on behind the scenes at a startup, and these Dos and Don’ts are crucial.

June 19, 2014
This Map Shows The Largest Company By Revenue in Every State
Christina Sterbenz, Business Insider

We found this map interesting, enlightening and even a little surprising. Can you guess the biggest company in your state?

June 20, 2014
EarlyShares on CNBC Worldwide Exchange: US real estate crowdfunding is ‘taking off’

On the eve of our real estate platform launch, it was so exciting to share the progress of real estate crowdfunding has had in the first two quarters since the implementation of the JOBS Act. We told Julia Chatterley from CNBC Worldwide Exchange that real estate is the sector in crowdfunding that is really taking off, “outpacing all other sectors by threefold numbers.”

EarlyShares on CNBC Worldwide Exchange: US real estate crowdfunding is ‘taking off’

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Joanna Schwartz, CEO of EarlyShares.com, shared with Julia Chatterley of CNBC Worldwide Exchange the progress of real estate crowdfunding in the first two quarters since the implementation of the JOBS Act. She explains that real estate is the sector in crowdfunding that is really taking off, “outpacing all other sectors by threefold numbers”. 

This is a not a surprise as accredited investors, who now have direct access to private investment opportunities, have demonstrated they are most interested in chasing yield. Joanna explains “the fundamentals of Real Estate transactions really match what our investors are interested in: cash flow, returns, collateral and an investment horizon that makes sense to our investors”. See the extended interview by clicking the image below. 

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