Entrepreneurial Thinking Posts

EarlyShares CEO Outlines ‘Overlooked Aspect of Private Investing’ on Entrepreneur.com

While dozens of industries migrated online over the last two decades, one sector – private investing and capital raising – remained firmly in the land of in-person meetings and handshake introductions. That changed when the Rule 506(c) general solicitation regulations took effect in September 2013, enabling the private finance market to (finally) embrace modern technology.

But while many refer to the new 506(c) landscape as the “equity crowdfunding” industry, general solicitation is a very different animal than rewards-based crowdfunding. Virality, mass appeal, and urgency lead campaigns to success in the world of Kickstarter, but in EarlyShares’ sector those qualities are less important.

What drives success in equity crowdfunding? One truism as old as time: People Invest in People. In a new article on Entrepreneur.com, EarlyShares CEO Joanna Schwartz highlights how an entrepreneur’s reputation and track record drive investors’ decisions in the private market. Click below to read the full post and share your thoughts with us in the comments.

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EarlyShares outlines ‘Who Invests in Private Companies’ on Entrepreneur.com

EarlyShares‘ emerging industry of “online private investing” (also known as “equity crowdfunding”) is connecting entrepreneurs to a growing pool of active private investors. The only thing left for entrepreneurs to wonder is “Who’s swimming in that pool?”

Our CEO Joanna Schwarz answered that question in a recent article on Entrepreneur.com. The post entitled “Who Invests in Private Companies and How Do You Reach Them?” is the first of many original contributions EarlyShares will be sharing with the Entrepreneur community.

Click here to read the full story and let us know your thoughts on the private investment market in the comments. (To apply to raise money on the EarlyShares platform, click here.)

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EarlyShares CEO spotlighted by Forbes for making “entrepreneurship happen in Miami”

Our hometown of Miami is (proudly) the only major city in the U.S. to be founded by a woman. 118 years later, women executives are helping transform our sunny city into a thriving community for technological innovation, economic growth, and entrepreneurship.

We’re proud to be part of the Miami evolution and even prouder that our CEO and Co-Founder Joanna Schwartz is one of the top women “leading the charge to turn Miami into an entrepreneurial hub” according to a recent piece on Forbes.com. Check out the article here.

Joanna was spotlighted alongside Laura Maydon of Endeavor Miami and Susan Amat of VentureHive as women who are helping entrepreneurs start, fund and scale businesses in the South Florida region. Tracy LaFlame Ortega of PREPWORKS was also showcased as one of our community’s high-growth female entrepreneurs. Click on the photo below to read the full story.

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From left to right: Joanna Schwartz of EarlyShares, Laura Maydon of Endeavor Miami, Susan Amat of VentureHive, Tracy LaFlame Ortega of PREPWORKS. Location: Perez Art Museum. Photo by Cristobal Herrera Ulashkevich.

How to Leverage the ‘Passionate Investing’ Trend 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.”

#MiamiTech Takes the Spotlight

Miami-Tech-EarlySharesHigh-potential startups. International conferences. Record-breaking investment activity. Recognition from respected, national media outlets.

The Miami tech community is having its day in the sun.

For proof, read the Wall Street Journal story from May 30: Would You Believe It? Miami Has a Real Tech Scene Now. (Check out mentions of EarlyShares’ closest #MIAtech colleagues, including Juan Pablo Cappello – a fellow member of our local crowdfunding community – and our friends at the Knight Foundation, Endeavor, Venture Hive, and more.)

This major WSJ publicity is remarkable considering the year “Miami Tech” has had in the media thus far. In January 2014, Miami Beach mayor Philip Levine stirred up controversy when he was quoted in the Washington Post saying that the concept of his city becoming a tech hub was “the dumbest idea in the world.”

Even though Levine was referring only to Miami Beach – an 18 square mile municipality – and not the greater Miami metropolitan region, his remarks got people talking (negatively) about South Florida’s tech hub potential. In March, Y Combinator President Sam Altman said Miami was “not a top start-up city” in comments on public radio. People close to the Miami tech scene were displeased, to say the least.

But as a handsome ad man on television once told us, “If you don’t like what’s being said, change the conversation.” In Miami Tech – we certainly have. The Wall Street Journal article shows that the conversation has shifted to embrace the tech-entrepreneurship movement that’s clearly afoot in our sun-drenched city.

There’s been a tremendous amount of activity over the last few months to help put Miami on the map for tech. At EarlyShares, we’ve been thrilled to be part of all of them – speaking at Start-Up City:Miami in March and at eMerge Americas Techweek in May; networking at meetups by Refresh Miami and Tech Cocktail; and hosting our own events to connect local entrepreneurs with investors.

Miami’s tech-entrepreneurship community is at an exciting place in its evolution – a time when one venture’s success translates into more success for all parties. Every early-stage company that receives investor funding will drive more and stronger investor interest in other ventures in the region. As a portal for private investing into early-stage companies, most of them South Florida-based, EarlyShares is playing a central role in making that happen. Our issuer BoatSetter, a startup that has closed on $1,104,050 of investor funding on our platform, is an example of that.

If there’s anything our waterfront Miami lifestyle has taught us, it’s that a rising tide lifts all boats. We’re doing everything we can to help more emerging-growth companies in our locale to set sail.

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