 Entrepreneur posts project including funding amount and time (1 to 90 days)

 Backers fund the project (money in escrow account)

 At project completion date, entrepreneur receives funds

 Often is “All or Nothing” – if project under-funded entrepreneur gets NOTHING, if over-funded gets the over funded amount

What Types Of Ventures Can You Get Funding For?

 For-profit ventures, non-profit ventures, creative ventures, ambitious ventures

 Restrictions placed by platforms

- E.g., on Kickstarter.com, no ventures dealing in like pornography, violence,firearms, weapons, lotteries, raffles, etc

- Kickstarter: project should achieve a goal (not pay (medical) bills, or go onvacation)

How Much Money Can You Raise Via Crowdfunding? Excluding Equity based Crowdfunding

 Review of sites worldwide

- As little as $500 as much as $200,000 and more

 Possibilities

- “Sweet spot” seems to be $4000 to $25,000

 Doesn’t have to provide all the funding

- Can have other sources and followup sources too (e.g., bank loan)

Why Does the Crowd Donate or Invest?

 They like you (Friends, family, acquaintances)

 The like your story (Friends, family, acquaintances, others)

 Rewards (Tangible and intangible rewards given to backers)

Why is Crowdfunding occurring now?

 Initial donation-based crowdfunding platforms weren’t even built until late 2009

 Key trends for crowdfunding growth

- Simplicity of posting content online

- Massive growth of social networking (MySpace, Facebook, Twitter) gives individuals massive reach that they didn’t previously have

Essentials for a good Crowdfunding campaign

1. A Compelling Story and Prize

2. A Passionate Individual orTeam

3. Impressive Credibility

4. Lots of Suitable Followers

5. A Proven Process and Platform

What are the Fundamentals of a Crowdfunding Raise?

1.Choose your platform (e.g kickstarter, profounder, see Alchemy list)

2. Create an account

3. Create your funding project

4. Categorize your project

5. Create your project tagline

6. Create your project teaser text

7. Create your full text project summary

8. Determine the right fundraising amount

9. Determine the right donation time

10. Develop your list of rewards

11. Create your project visuals

12. Create your project video

13. Promote your project to your network

14. Maintain and update your project

Links to successful crowdfunding campaigns:

http://www.pozible.com/index.php/archive/index/3701/description/0/0

http://www.kickstarter.com/projects/1060514964/escapecapsule-waterproof-iphone-4-case

http://www.pozible.com/index.php/archive/index/2454/description/0/0

http://www.crowdcube.com/investment/kammerling-s-10425

http://www.crowdcube.com/investment/bubble-balm-10394

http://www.kickstarter.com/projects/revolights/revolights-join-the-revolution

http://www.kickstarter.com/projects/1615737438/kammoktm-no-longer-bound-to-the-ground

If you have any questions or queries, or would like some assistance to implement a crowd funding raise pleas call 1300 308882 or send an email to admin@alchemyequities.com.au and

someone from the Alchemy team will assist you.

You will be asked to complete 40 questions about your idea.

It is easy to get excited by the prospects of a new idea, so you need to be aware that your judgement might become distorted by your enthusiasm.

Your objective is to select the most accurate and honest response to each of the questions.

1.            For each section your answers will be plotted on a spider graph to enable you to review and interpret your responses.

2.            The answers will also be used to determine a number of diagnostic assessments that are presented as a series of graphs and text interpretations. These will help you to better understand the commercial feasibility of your idea, identify viable markets, anticipate risks, and find the right business model.

3.            An ‘Overall Assessment Summary’ is produced after you complete all 40 questions. It includes a Commercial Feasibility Rating, an interpretation of this and a ‘Next Steps’ area which contains a number of suggestions, contacts and ideas for you to consider to help you pursue your business idea.

Whatever the likelihood of your idea succeeding in the marketplace, you should seek advice from a professional adviser or contact the NSW Innovation Advisory Service – the initial consultation is free if you are from New South Wales.

Enter Ideas Online

The NSW Innovation Advisory Service is funded by the NSW government to support small business and innovators develop their ideas.  Go to www.ausinvent.com for more information or to book an appointment

Major cashflow boost for small companies from the new R&D Tax Credit

Alchemy Equities, an expert in small business finance, asked Gerry Frittmann – Managing Director of TCF Services, a leading industry specialist in R&D Tax Credit and government grants for small business, to update us on the changes to the Australian R&D Tax Credit program.

Tax Status ($1m)

While claimants with grouped turnover over $20m will receive a non-refundable Tax Credit equivalent to a 10% net benefit, up from 7.5% under the current scheme, the R&D Tax Credit has come down squarely aimed at fostering an increase in R&D for smaller companies. Of course, the king’s largesse is rarely extended without an increase in the complexity of the rules and regulations.

In this case, there is a change in the definition of R&D; a split between Core and Supporting R&D, and a dominant purpose test which will qualify or disqualify the Supporting activities and their cost.

Core R&D activities are defined as experimental activities:

•             whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:

–             is based on principles of established science; and                                                 –             proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions;  and

•             that are conducted for the purpose of acquiring new knowledge concerning the creation of new or improved materials, products, devices, processes or services.

New definition of Supporting R&D activities

This imposes a dominant purpose test whereby supporting activities whose dominant purpose is to support the Core R&D will be eligible, while activities undertaken for production purposes OR future commercial benefit will be excluded. The R&D Tax Credit is not intended to cross-subsidise commercial activities so the dominant purpose test is designed to reduce claims for expenditures that do not impose an additional cost on the company arising from R&D activities.

Intending claimants need to rigorously assess themselves against a new range of eligibility criteria and internal capabilities. These include their entity structure, ownership and grouped turnover; the division of their R&D activities between the newly defined Core and Supporting activities;  the application of the new dominant purpose test;  their ability to meet the new record keeping obligations and track labour and material expenses as they go, and their individual tax status. Those who can create a system that meets the new benchmark will be given the option of claiming their Tax Credits quarterly from January 2014. Companies who wish to maximise their return and ensure their compliance will adopt more reliable management processes than they have under the R&D Tax Concession, and forward looking claimants, will be setting themselves up to track as they go so they can claim early and reap the rewards.

Turnover $5-20mil

The biggest winners from the new R&D Tax Credit are R&D intensive companies with grouped turnover between $5 – 20m who are in tax loss.  For the past ten years they have been unable to claim the R&D Tax Offset and receive the 37.5% rebate because their turnover has been over $5m. Faced with the option of receiving the 7.5% Tax Concession and adding to their tax losses, most have declined to claim. Now under the new R&D Tax Credit they will receive a 45% refundable tax credit net of any other tax liabilities delivered in cash, creating new sources of cash-flow for R&D rather than marginal increases in tax loss.

For further information on how you can help maximise the return and minimise the fuss contact the NSW Innovation Advisory Service.

Research indicates that most new ideas in business come from three sources:

• the staff
• company networks and
• customers.

Think about your company’s situation.  Do ideas get lost ideas in day-to-day operations?  Does your company have a formal customer feedback process?  Do staff ideas get lost in emails and staff meetings?

As well, management often do not know how to assess which ideas they should implement.

You need a System

To cost-effectively assess and commercialise ideas within your workplace you first require a system to capture those ideas.

You need to assess the ideas as to whether they are:

• incremental (refer back to line management),
• strategic (consider licensing out or in-house development) or
• game-changing (spin-off).

Setting up an In-House Innovation Process

An in-house innovation process needs to be simple and easy to manage and incorporate these elements:

• Determine the rules/strategic objective of an innovation program
• Invite ideas (promote throughout the business networks and staff)
• Collect ideas (simple one-page submission)
• Assessment  (1-10 using key company indicators)
• Execute:

1. Pilot  (small amount of resources and team to develop)                    2. Venture (commit more resources and staff)

People Strategy

An innovation program is best for businesses that want to grow within a market.  It is in effect, a people strategy.

So what makes staff want to participate?  It might be time to work on the idea (Google does this), or an award-system( trophy – Atlassian has this), or a monetary incentive.  One company offered any team that created an idea into a business would attract 25% of net profits of the new idea income for 2 years.

A company must protect itself however with a simple agreement that outlines rights –that states the business owns all the intellectual property created.

Fed Ex Days

One award-winning company in Australia, Atlassian has an excellent model called ‘Fed Ex’ days.  Quarterly, staff get 24 hours to produce a one-page outline of their idea.  At 3pm the next day they pitch their idea to senior management and staff.  Their ideas are voted on.  One or two ideas get the green light for piloting.

These days innovation is not a luxury. It is about continuous improvement and keeping your company relevant. It is also about retaining staff and creating a dynamic workplace.

Dan Liszka is the CEO of Alchemy Equities, a business innovation consultancy firm which specialises in delivering in-house innovation programs to small and medium enterprises, as well as equity capital raising.  Alchemy is contracted by the state government to deliver the NSW Innovation Advisory Service and has recently conducted workshops nationally titled Capturing Innovation in the Workplace funded by the federal government’s Enterprise Connect program.

Choose the best path to market.

Many companies we see at the NSW Innovation Advisory Service are uncertain about which route to market is best for their product or service.  Much time and money is wasted pursing the wrong strategy.

A simple way to consider the best route to market is to ask the question:

Is it a sustaining technology or a game changer?

If sustaining (incremental improvement, better design, improved service function), that is a sustaining improvement – we suggest to our clients to resist going head-to-head with the incumbent competition, but rather to pursue a licensing strategy.  This is where as the owner of the intellectual property (patent, brand, design, trademark), you license the technology to another company to manufacture, market and distribute.

If it is a game-changing opportunity(as VOIP was to telephony)– then we suggest the company pursue a spinoff or startup strategy – which generally means capital raising.

We have clients that have come to us after spending three years pursuing a licensing strategy, unsuccessfully for a game-changing technology.  The product they were endeavoring to license – would have resulted in reduced sales to the target company’s existing product line.  If a product being pitched for licensing, makes an existing product line redundant – a company is unlikely to license in the new technology.

Three years on, management should have asked that simple question – is the innovation an incremental improvement or a game-changer?

So what are the skills required to bring new products and services to market?

This is a major area our innovation consultants discuss with clients. We regularly have the technology specialist seeking advice on commercialisation of the product they have designed.

At the NSW Innovation Advisory Service, our first response is – who is your team to deliver this product to market?  Successful commercialisation is about team.   We suggest to technical types – that they team up (and share the equity) with an entrepreneur who understands how to bring something to market and sell.  Days, weeks, years are lost with the wrong people attempting to bring products to market.

It is a major reason for the weakness in Australia’s track record in achieving successful commercialisation.  We are great inventors – but not great innovators – that is, when you commercialise that invention.

Technical-types spend many hours getting their product 100% perfect.  It’s in their DNA to do so.  Budgets get overrun and timelines extended as a result.  But when teamed up with an entrepreneur, who’s DNA is to get the deals and secure the cash-flow – a product is delivered to the market can be 75% ready.  By setting to market early and remaining flexible, the team can incorporate customer and distributor feedback to fine-tune the product and can start generating the sales to keep the show on the road.

Understanding the market can save time

At the NSW Innovation Advisory Service, an innovation consultancy service, we often see teams who have assumed they know their market and have not assessed if the market warrants the investment in time and money.  Wrongly pitched product launches can easily be the result.   We site an example of a kitchen manufacturing company which was about to launch a website for purchasing kitchen components.  A short focus group test market session indicated they needed to tweak their campaign and introduce a “touch and feel” element – women would not buy the kitchens without feeling/seeing the surfaces. They adjusted their service accordingly and went on to a successful launch.

Had they not undertaken that focus group session they would have launched and spent years reshaping their product offerings.

The focus group was cost effective and saved considerable time.

Successful commercialisation doesn’t have to be about trial and error. There are proven, cost-effective ways to bring products and services to market without wasted effort and heartache.

Start with assessing the opportunity correctly, build a team around the opportunity and understand the marketplace.  Seek out advice from those that have trodden the path before.

*****************************

Kate Ingham is the Senior Client Manager with Alchemy Equities, a Sydney-based business innovation consultancy firm which assists companies commercialise technologies and services.  Alchemy Equities is contracted by the NSW state government to deliver the NSW Innovation Advisory Service.

What is a micro business?

A micro business is classified as one that operates with four people or less.  Micro business is one of the fastest growing sectors in the NSW economy, making up 88% of the State’s small businesses.  (Source: ABS Cat No. 8165.0, Counts of Australian Businesses, Jun 2003 to Jun 2007).

Micro businesses may operate as a single operator or multiple employee business from either home, mobile, shared offices or commercial premises.

Lifestyle Factors

Operating a business from home has become increasingly common because of the digital revolution, outsourcing, the trend to self-employment and the growth of service industries.

This accelerated emergence of micro business operating in recent years can also be linked to better technology and trends toward more flexible lifestyles. Apart from the economic value this growth entails, local communities also gain with social and environmental benefits of those working from home.

Developing Your Products

Many micro-businesses are developing unique products and business services to bring to the market.  They are also developing unique brands and trademarks.

To check on the commercial viability of your product we suggest you seek an innovation consultant which specialises in commercialising products or services. The first port of call can be the NSW Innovation Advisory Service, which provides an initial free consultation to assist you get on the right path. They are specialists in product commercialisation and will assist with streamlining your product development process and refer you to the appropriate expertise for each step of the way.

Also, consider securing your trademarks, patents and copyright for manuals and written material. The Innovation Advisor will again assist with this process. They are also business strategy consultants and will discuss the best business model for bringing the innovation to market via licensing or capital raising.

Product development is not for the faint hearted, but can be enormously rewarding.  Seeking advice at the correct stages can save much time, heart-ache and money.

You may wish to check out the viability of your product before meeting an innovation advisor. The NSW state government has developed a resource, called Ideas Online, where you can self-assess the idea, its protection, the business case and options for reaching the market place.  You will be asked over 40 questions and it is valuable to be brutally honest when answering those questions. Enter Ideas Online.

The NSW Innovation Advisory Service is funded by the NSW state government to support innovators and small business commercialize their ideas, products and services.  Services include preliminary patent search, technical assessment and market reviews through to licensing and capital raising. See www.ausinvent.com for more information.

Dan Liszka is the Managing Director of Alchemy Equities, the firm which is contracted by the state government to deliver the NSW Innovation Advisory Service.

In his article – ‘The Top 10 Angel Investor Groups’ Jason Fell looks at the largest groups that fund startups, ranked by number of investors.

In the United States, the Angel Capital Association is the “trade association” of investment groups.  Angel investing in Australia are represented through the Australasian Angel Investors Association.

It is useful as an Australian startup, to assess if there is value in establishing early, a US presence for your company and attracting Angel support there. Some Angel groups syndicate support across 2 or 3 groups, capitalizing on the other group’s research and due diligence processes.  Jason Fell lists the following groups as the largest in the US to support startups:

Ohio TechAngel Funds, Columbus, Ohio
Number of angels: 282
Who it helps: Supports early-stage Ohio-based information technology, advanced materials, and medical technology companies.

Tech Coast Angels, Los Angeles
Number of angels: 263
Who it helps: Provides connections, knowledge, mentoring and operational assistance to early-stage entrepreneurs in the tech, biotech, consumer products, Internet, information technology, life sciences, media, software and environmental markets.

Investors’ Circle, San Francisco
Number of angels: 225
Who it helps: Uses private capital to promote businesses that address social and environmental issues. The group has invested almost $150 million in 225 companies, it says.

Golden Seeds LLC, New York City
Number of angels: 190
Who it helps: Members invest directly, or through a managed fund, in companies that are founded by or led by women. Sectors include consumer products, technology, software and life sciences.

North Coast Angel Fund, Cleveland, Ohio
Number of angels: 180
Who it helps: Invests in Ohio-based technology startups.

Band of Angels, Menlo Park, Calif.
Number of angels: 136
Who it helps: Group of former and current high-tech executives that has invested almost $200 million in early-stage technology companies.

Hyde Park Angel Network, Chicago
Number of angels: 133
Who it helps: Members invest in seed and early stage businesses, primarily located in the Midwest. Industries include: information technology, business services, industrial technology, financial services, consumer or industrial products and healthcare services.

Alliance of Angels, Seattle
Number of angels: 100
Who it helps: Early-stage investors in startups based in the Northwest region of the country.

Pasadena Angels, Altadena, Calif.
Number of angels: 100
Who it helps: Provides up to $750,000 in early-stage and seed financing to startups in southern California.

New York Angels Inc, New York City
Number of angels: 99
Who it helps: Made up of entrepreneurs, CEOs, venture capitalists and other business leaders, the group invests between $250,000 and $750,000 in early-stage technology companies generally located in the Northeast.

+++++++

Kate Ingham is a partner at Alchemy Equities, a boutique corporate advisory firm that specializes in private equity capital raising for growth companies in Australia. See www.alchemyequities.com.au

While in many respects, producing a prototype isn’t compulsory, it’s generally regarded as a key part of the commercialisation process. One significant advantage of a prototype is that it helps you demonstrate that your idea can really work.

There are a number of different levels of prototypes ranging from virtual prototyping comprising animated 3D CAD drawings, right through to production stage products. A well produced prototype will allow you to:

• Conduct any necessary testing to ensure the product will work as claimed.
• Identify and protect any subsequent improvements prior to patenting.
• Estimate the cost to manufacture
• Provide a visual representation of your idea when you’re giving presentations to potential investors, licensees etc.
• Research potential customers prior to entering the market.

Whether or not you choose to produce a prototype, may vary depending on the type of invention, available resources and your commercialisation strategy.

There are a number of services that can assist you in this area such as industrial designers, which you can find in the Yellow Pages. Additionally, many innovation centres and innovation consultants also provide government subsidised technical assessments that provide a written report on your current designs and drawings.

In terms of patenting your idea, again you don’t necessarily require a prototype, but you will need to convince the patent examiner that the device works as outlined and is useful. You could achieve this with comprehensive drawings and descriptions.

Contact the NSW Innovation Advisory Service to arrange a Preliminary Patent Search to ensure your idea has not already been patented.

The NSW Innovation Advisory Service provides an innovation consultancy which is subsidised by the NSW state government. Alchemy Equities is an innovation consultancy and is contracted by the state government to deliver the NSW IAS. See www.ausinvent.com

The game of cricket has changed forever as ipowow uses its mobile web platform to allow broadcasters to interact instantly with their viewers via smartphone technology.

Via iPowow technology, broadcasters can ask an audience a question and they can use their 3G mobile phones or laptops to respond instantly.

iPowow’s global, cloud-hosted platform collects and combines the audiences responses and then delivers the digital results directly, second by second, which is displayed onscreen, in real-time, as a moving graphic –  similar to ‘the worm’ used in political campaigns.

iPowow will debut for the first time on Australian television this Sunday the 25th of September at 10AM on Channel Nine’s Wide World of Sports.

iPowow products are Twitter and Facebook connected, engaging millions of viewers outside of a TV show’s normal audience. The iPowow scoring screens also gives viewers the ability to send Tweets and Facebook posts during the event, showing scores and the current leader board places.

The patented technology that sits at the heart of iPowow, is on the leading edge of a global shift towards participation television and second-screen content. iPowow gives broadcasters, television producers and advertisers the power to create a new breed of participation television.

iPowow Social also brings real-time audience feedback to social networking. The company has recently launched a campaign for basketball legend, Shaquille O’Neal.

“The product gives sports stars and celebrities the power to ask all of their Twitter followers and Facebook friends a question and receive the answer, instantly,” says iPowow CEO, Ettienne Fourie.

iPowow has signed UFC, Cirque Du Soleil, The American Music Awards, ABC Australia, Top Rank, and ‘The 2011 MISS USA® Pageant’.

To date the company has raised $3.5mil in private equity funds and are located in the USA and Australia.

iPowow is a client of boutique private equity firm Alchemy Equities which raises capital for high growth early stage businesses and is located in Sydney Australia www.alchemyequities.com.au and www.assob.com.au/wow

How do you build credibility around your business?

At some point your business will need resources to reach a next level. Alchemy Equities is about helping businesses get access to funding and support to make that happen.

A key element of getting access to resources is building credibility around your business.

Kate shared a number of strategies to build credibility in our interview:

• Work hard.
• Balance your entrepreneurial enthusiasm with experience: Build a team with that includes people with significant experience.
• Exposure and network. Make sure who ever is on your team also has exposure and a network that helps build the business
• Create solid communication around building the credibility of the team: investors want to see a team of people who complement each other, not an individual.

So how do you create that kind of communication?

When you work on building credibility, look at how your collateral is communicated;

• Show attention to detail. If you sweat the small stuff  your clients and investors will question your capability to execute what you promise.
• Consistency. Be clear and a 100% consistent about what you want to communicate.
• Don’t bluff it. Be honest and authentic about what your doing, including what you’re not getting right. Communicate to your audience how you’re dealing with  issues; that’s what ultimately builds trust.
• Adjust you communication to your target audience. The people you’re communicating to are savvy. Choose language that’s appropriate.

See interview: http://www.huntingwithpixels.com.au/blog/video-interview-with-alchemys-kate-ingham-how-do-you-build-credibility-around-your-business