2014-09-04 11:40:19 Crowdfunding English Small businesses seeking early seed startup capital have a crowdfunding source in Fundable and a pre-launch platform in LaunchRock.com. https://d2yxjugd6jl4bj.cloudfront.net/wp-content/uploads/2014/08/08232603/iStock_000015742815Small.jpg A Two-Step Crowdfunding Plan for Tech Startups | QuickBooks

A Two-Step Crowdfunding Plan for Product and Tech Startups

2 min read

If you’re looking to launch a consumer product or technology startup and have not yet started looking for seed capital, there may be an easier way to get your company off the ground, thanks to two sites headed up by veteran entrepreneur Wil Schroter.

“I’ve started eight companies,” Schroter says. “Three of them have been venture-backed, and I’ve found the funding process to be really frustrating. It was a difficult process and I wanted it to be easier.”

So he started Fundable, a crowdfunding website that specializes in helping companies raise seed capital. The difference between Fundable and other crowdfunding sites like Kickstarter and Indiegogo is that the latter tend to be project-based and the contributions from funders tend to be smaller. Fundable is designed to get a new company off the ground.

“The average amount of money raised on Kickstarter is $15,000,” Schroter says. “At Fundable, it’s $175,000.” What’s more, Fundable is strictly focused on raising money for business startups using an equity model. In other words, early startup funders can earn a return on their investments, whereas on most crowdfunding platforms they do not.

The Launch Platform to Use Before You Ask for Money

Earlier this year, Fundable purchased LaunchRock. Entrepreneurs can use LaunchRock as a prelaunch platform to introduce people to their ideas, seek feedback, and gather interest before asking for money. After they have a sizable list of interested parties and have tweaked their idea based on feedback from their list, they can then move their idea into the crowdfunding stage and start seeking capital.

A key advantage, Schroter says, is that entrepreneurs do not have to rely on their private network of investors to raise startup funds. The JOBS Act of 2012 allows companies needing startup funds to make their financial needs public. That has changed the funding game across the board.

“That’s how it works for most companies,” he says. “They build an audience and then ask for money.”

Fundable seems to attract a lot of technology and consumer product companies, but those aren’t the only types of businesses that can benefit from the website. In fact, food and restaurant companies, fitness companies, and web-based retailers have used the site to secure early seed capital. In just two years, Fundable has raised $140 million for startups in several business sectors. However, Schroter notes, it is more difficult for service companies to attract that kind of capital due to the nature of their businesses.

The Two-Step Process For Securing Your Seed Capital

If you need  to attract early startup seed capital for your company, you can  use this two-step process:

  1. Launch your idea at Launchrock.com and get feedback from interested parties.
  2. Migrate your idea to Fundable.com and start asking for money.

There’s never a guarantee of success, of course, but companies that are successful in attracting the seed money they need to get take off are more likely to stick around for the long haul — and Fundable could be the current that powers their lift.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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