Crowdfunding expert Kendall Almerico, the CEO of ClickStartMe.com, has released his five tips to entrepreneurs who want to sell equity in their startup business through crowdfunding once the SEC releases their JOBS Act regulations. As Almerico points out, when the SEC finally releases their rules as required by the JOBS Act, there is going to be an explosion in crowdfunding startup businesses on the internet, and entrepreneurs need to be ready by preparing now.
“That loud noise you hear coming our way is the sound of billions of dollars pouring into new businesses through crowdfunding as soon as the SEC releases the JOBS Act rules,” Almerico says. “Entrepreneurs need to be ready now, so they will not be trying to play catch up when the rules are released.”
Since the Jumpstart Our Business Startups Act (the JOBS Act) was signed into law in April 2012, entrepreneurs and investors alike have been anxiously waiting for the SEC to announce rules to allow online equity crowdfunding of business startups. Equity crowdfunding, Almerico explains, is the process of raising startup capital by selling small amounts of stock online to a large number of people. At present, equity crowdfunding online is illegal, even though rewards-based crowdfunding on sites like ClickStartMe.com allow people to raise money to start a business as long as they do not sell stock or ownership.
When the SEC rules go into effect some time in late 2013 or early 2014, entrepreneurs need to be ready to jump on the equity crowdfunding bandwagon to fund their new business. For entrepreneurs who want to take advantage of equity crowdfunding then, Almerico’s advice is to do certain things now.
“With the emphasis on ‘now’ for a reason,” Almerico says. “If you wait for the SEC rules to come out to start these preparations, you will miss the first huge wave of money flowing into new startups.”
1. Build social media networks – now. Crowdfunding relies on getting the word out to potential investors, and there is no better way to virally spread the word than through social media. “Everyone involved in your business startup needs to personally be active on Facebook, Twitter and LinkedIn at a very minimum,” Almerico says. “Start building more friends and followers to your personal social media pages now. It is too late once you launch your business social media pages.”
2. Interact with your social media friends and followers – now. Just going out and adding hundreds of friends and followers to social media is not enough. You need to engage them, so your posts and Tweets are on their radar when the time comes to launch your crowdfunding project. “If you just add friends to Facebook but don’t ‘Like’ their posts or comment on them, they will not see your status updates and you will not appear on their timeline,” Almerico warns. “You have to start interacting with as many people as you can now, so when it matters, they actually see your posts.”
3. Interact With Writers and Bloggers – now. No matter what your new business is going to be, there are already people writing and blogging about it. Find those writers and bloggers and friend request them on Facebook, connect with them on LinkedIn and follow them on Twitter. “Getting a writer or blogger to eventually publish something about your crowdfunding project could make or break you,“ Almerico notes. “Start to establish those relationships now, and make sure you add a @blogger or @writer when you tweet to give them a shout-out.”
4. Write a great business plan – now. Unlike rewards-based crowdfunding where people often donate based upon pure emotion or a great video, equity crowdfunding is an actual investment into owning a business. “If you think investors are going to buy into your startup company just because you have a cool video, think again,” Almerico says. “A proper business plan is a necessity to give your crowdfunding project the best chance of funding success.”
5. Get an accountant involved – now. Almerico notes that, in all likelihood, the final JOBS Act rules are going to require a level of professional financial review and before you are allowed to use equity crowdfunding to start your business. Even if you are starting a business from scratch, you will need preliminary financial statements of everything you have done to start the business. “These financial statements can take time to complete,” Almerico notes. “So get in touch with an accountant who understands the JOBS Act, and can help you now.”
Crowdfunding expert Kendall Almerico is the CEO of ClickStartMe.com, the upstart crowdfunding site that “puts the fun in crowdfunding” and is a JOBS Act expert. For more information or to schedule an interview with Kendall Almerico, e-mail or call 813.410.4658.
MEDIA CONTACT
Tess Hottenroth
[email protected]
(813) 410-4658
SOURCE: ClickStartMe.com
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Good points! Beyond the accountant the business plan needs a complete back office plan. This should include the appointment of a Transfer Agent to manage the tracking of the investor’s stake. If you think that you’ll manage hundreds, possibly thousands of investors who eventually hope for a return using an Excel spreadsheet then you’ll have some non-mission critical back office concerns to contend with down the road.