Ann Hazel talks crowdfunding and building a business
It’s what I did and there are very sensible reasons to look carefully at what type of crowdfunding you do. The sector has a scary side.
First it’s time consuming, second it’s not an easy ticket, third it's risky, fouth its very hard work. You have to be ready to go into a new phase of your life, build up your profile, your contacts, get everyone on side and launch a campaign, its up to you to make it successful as it is the business you will be running post the campaign. This is why I went The ESE route. First they only cater to HNW investors and I was used to dealing with this extraordinary breed in my day-to-day business, as they were my clients. There were many more reasons and too many to cover here, the point being it gets individual to you at a certain point in the thinking.
I think crowdfunding is great and like everything I do I did a lot of research, why I agreed to write the first voice/ column here at Research Crowdfunding, I believe we will never stop researching it.
This market came about fast, also, it will and has changed fast and it will continue to do that.
If it doesn’t implode first!
I don't want to be the ice bucket challenge for crowdfunding but it is getting very large indeed, 580 campaigns an hour, globally, it’s a lot. Ok, most of these are personal, "help me with my vet bills"
And so can't be considered in this column for 'business based crowdfunding' but I started this first column with the sub title 'hybrid crowdfunding'
So I should answer it and include as many aspects of that market that make sense.
The market is moving fast, (yes I said that already) yet its important to note, markets that do that, always create different versions, lots of competition emerges in an attempt to find the winning formula, that is normal, 100's and 100's of crowdfunding sites have popped up, all manoeuvring for the same space.
So back to basics, why did it emerge, before we think about the hybrids and the differentials?
It emerged out of need, and demonstrates a big shift if we stand in the future 5 or 10 years and look back on now, the death of the institution? No, not that far but the forming of the stone that will sit at its grave head at some point. If we have a mechanism to trade direct, the internet, if we have a desire to help other people with vet bills or grow a business to sell to Facebook for billions, and ideas as well as the people to build those ideas then what do we need the institution for again? ohhh yeah, 'we don't"
So yes it has this potential and in my opinion will reach that place but maybe not be this time around, that will depend on some factors. Regulation being one and the quality and the success of the deals being number two. GFB we get a glut of failures and investor confidence is damaged, this will damage crowdfunding, then it will depend how deep that issue goes to the extent it will tip crowdfunding in one direction or another. Lets not go there now.
The hybrid example I am going to plug is a bit unfair to plug here in this blog because it looks contrived but I totally buy into this thinking; Companies need a place between crowdfunding and an exit or a ‘stock exchange listing’ this just makes sense, The European Stock Exchange sponsors this Research and therefore this site and in turn me, so I caveat these comments with the fact that we/I are labelled bias by definition, having said that it is alone in the marketplace, a market place full of versions of the exact same thing. ESE is a bridge between crowdfunding and regulated stock exchange. A place to act like a public company before becoming a public company. I was given some stats in that sector which I checked myself on www.passfail.com.
Out of 11,000 companies listed on OTC BB or Pink Sheets exchange over 2200 of them are trading at less than a penny and over 1000 of those are trading at zero.
That is fundamental to everything I said here. Why?
These companies failed, the exchanges they are listed on failed them, it cost them a lot of money to get there and so what can we learn? Early stage companies have no place listing on a 'big boy' exchange. Maybe or definitely? You make your mind up; it’s stacked in favour of a fair comment to me.
Building an exchange therefore that allows crowdfunding but with sophisticated investors only, so they can offer more than just money, a place where you can learn what it takes to be public, a place where you can get access to seated members and large private equity funds, then you can build a business, in a safe place, collaborate and eventually exit. Win win, so here is the advert www.europeanstockexchange.com
Ensuring the success of my business, my column here and my true feeling and why I took this role in the first place. I want to shout it from the rooftops, maybe I will.
Follow Ann on Twitter @annglobalhazel