Unless you’re rolling in it, money is just one of those things most of us have a love/hate relationship with. It can be a burden, a necessity, and a blessing, all in one.
But for all you aspiring entrepreneurs out there, money is no longer an excuse. As of the beginning of December, the opportunity for fundraising and investment has completely opened up for small-business owners.
It’s called ProFounder and I had the opportunity to talk to Co-Founder and President Dana Mauriello last week, as well as start-up entrepreneur Danny Bocanegra, who is planning to use ProFounder to raise more capital for his own business.
{r} Danny, tell us a little bit about the business you’re starting and helping to fund through ProFounder.
My business SelflessTee is a platform that combines the crowd of artist talent with non-profits and for-mission organizations, wanting to raise money through the sale of apparel.
For example, a non-profit goes to the SelflessTee website, makes a profile and includes a video. Designers from all over the world can submit a design that reflects their desired cause or mission in hopes of a cash prize and fame. The public votes on which design they like the best, we sell that design on a t-shirt for-profit, and the non-profit has a cool, professionally-designed, timeless t-shirt that’s sold online for them, for free. We then give back $10 per shirt to the non-profit.
{r} What obstacles have you come across in trying to fund a start-up? What methods have you used to build capital?
I started developing SelflessTee when I was in college, so I got the ball rolling with student loans (and cheap interest rates). After that, I explored my options with the angel investors in my network and ended up being pretty successful.
Then, I found out about the Pepsi Refresh Project. I made the decision to reject the angel money and take a shot at winning the $50,000 Pepsi Refresh Project prize. It was the most grueling, intense, and emotional month of my life, but turned out to be a great decision for myself and for SelflessTee. We ended up winning.
{r} What decisions did you make for your company, financially, after winning $50,000 from the Pepsi Refresh Project?
I knew that raising capital wasn’t over after winning the $50,000 dollars from Pepsi. It was a great start, but it didn’t stop us from looking for more ways to raise “free” money. We came across Profounder as an additional resource to move forward with investment options. We like the fact that working with Profounder will give us the opportunity to gain as many loyal community members centered around the company as possible.
{r} Dana, as co-founder and CEO, can you explain how ProFounder works?
ProFounder is a crowdfunding platform for businesses; we allow businesses to raise investment capital from their
communities. To do this, we provide two products: Private Fundraising and Public Fundraising. With both products, the entrepreneur creates a simple pitch on our site focused on telling their unique story. They also create a term sheet for the deal using our templates that allow for sharing a percentage of revenue over time with investors. The pitch and term sheet go onto a fundraising website and the entrepreneur can now invite potential investors to invest in their business directly through this website. ProFounder handles the back office work along the way including payment processing, compliance, book keeping, and investor pay outs.
{r} Danny, what’s appealing about working with Profounder?
Profounder allows you to raise a capital investment from your family, friends, and anyone else who visits your profile page on the Profounder website.
The first month is set up for private funding only, so anyone I know can invest in the upside of SelflessTee, under the terms that I set. This is an investment, not a loan, not a grant, not even a stake in equity. Anyone that gets in early on this investment will be able to secure a percentage of SelflessTee’s revenue forever.
Then, after the goal of secured private funding is met, our profile is released to the public, giving everyone else the opportunity to invest. The public contributes smaller amounts, so when those amounts are paid back the remainder of the revenue can be donated to a non-profit of SelflessTee’s choice.
{r} How is Profounder different than other investment options?
Profounder is the only company (I know of) that allows an entrepreneur in the United States to secure an investment from family, friends, and the “crowd” of people who visit the site.
Profounder turns “family and friends” casual investment terms into actual investments that are backed by a company that knows what it’s doing. What’s special is that they take care of all the disbursements of revenue from SelflessTee to its investors. This is something we don’t have to worry about.
It would cost over $5,000 to pay lawyers to handle the investment side of things on a yearly basis, and Profounder will do it for $1,000. The biggest perk is that I don’t have to close any doors on people who want to invest — I can have those angel investors in my pool, as well as my Grandma :)
{r} What is your advice to aspiring entrepreneurs who have their ‘big idea’ but don’t have the start-up capital?
There are free and easy ways to get money for anything you want to do. While you’re in the start-up or beta phase, take advantage of programs that allow you to raise money early on. Kickstarter or IndieGogo, for example, are platforms for individuals to get money to start their projects.
I made the mistake of trying to be too cool and raise angel investment before I even knew exactly how I was going to spend the money. (Don’t tell them that). But even now that we’re at a much “serious” stage, it would be dumb to give up 40 percent of a start-up company to outside investors when there’s so much access to free capital out there. Pepsi is holding the Refresh Everything Campaign for the 2011 year, try that! I am still looking for ways to qualify for free money, even before we set up a profile with Profounder. {r}
For more entrepreneurship and investment advice, you can follow Danny and Dana on Twitter: @DannyBoc @DanaMauriello @teamprofounder
Sarah: http://www.etsy.com/shop/katastrophicdesign
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