Know All the Investor Types

Know All the Investor Types

I recently got the inspiration to do a 6-session book study program in which we go through one of the key chapters of my book, Raise Capital on Your Own Terms, in each session. I was thrilled when almost 90 people decided to join us!

We’ve had two calls so far, and participants have been incredibly engaged, not only asking great questions, but also sharing resources with each other and creating interest groups where they are taking conversations further.

One of the hot topics we’ve been discussing is “who are investors and how do you find the right ones?” I gave a presentation about the following distinctions that you should be aware of when raising money:

  1. Professional investors versus non-professional investors—Professional investors are people who invest in small businesses on a regular basis. Conservatively, they account for only 0.3% of all investors in our country. Everyone else is a non-professional investor—people who go about their lives without thinking much about investing.
  2. Outside-the-box investors versus conventional investors—Outside-the-box investors are those who have an open mind about what makes a good investment while conventional investors are those who have pre-conceived, rigid ideas about investing. Most professional investors are conventional and most non-professional investors are outside-the-box.
  3. Accredited versus unaccredited investors—Accredited investors are defined under federal law, generally, as those who have at least $1 million in net worth or $200,000 in annual income. They make up approximately 10% of the population; 8% of accredited investors are “active,” meaning that they actively invest in small business, usually by joining an angel group. Depending on your legal compliance strategy, you may be limited to only raising money from accredited investors, but there are options that make it possible to raise money from both accredited and unaccredited investors—what I like to call “the 100%.”
  4. Angel investors versus OPM investors—Angels are those who actively invest their own money in small business. OPM investors invest other people’s money (OPM) and therefore are much more constrained than angels due to their obligations to their investors.

Capital on Your Terms Community

Because the book study has been such a success, we are planning to launch a pilot monthly membership program for those who want to learn more about raising capital on your own terms. Topics will include:

  1. Getting clear on your goals and valueshow much capital to raise, when and how often to raise, long-term plans for your business including exit strategy, understanding what you can offer investors, etc.
  2. Your ideal investors—who they are, where to find them, and designing the ideal relationship with them.
  3. What to offer investorsdifferent business structures and how they affect your relationship with investors, what to put in the term sheet, how to describe the offering, how to get literate on various aspects of investments, etc.
  4. Legal compliance strategy—what are the options and how do you stay compliant.
  5. Investor enrollment strategy—what to show potential investors, how to get meetings, what to say in the meeting, how to follow up and close the deal.
  6. Prepare to address mindset obstacles—know what obstacles may arise along the way and prepare to address them, so they don’t stop you on your fundraising journey.

The membership program will include live monthly office hours and an online platform where you can get your questions answered, get feedback, and share resources.

If you’re interested in learning more about this new offering, please click here to sign up for our waiting list, and we will email you with the details.

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Fundraising Tips from Dan Fireside, Capital Coordinator at Equal Exchange

Fundraising Tips from Dan Fireside, Capital Coordinator at Equal Exchange

Equal Exchange is a worker-cooperative that sells Fair Trade coffee, chocolate, and other staples.  They created a revolutionary way of raising money from investors.  Investors receive non-voting preferred stock, and if the co-op is ever sold, any excess revenues would go to another Fair Trade organization.  Investors make money via annual dividends, and Equal Exchange actually has to turn investors away.  They currently have about 550 investors and have sold over $17M in preferred stock.  

Dan’s job is to raise capital and manage investor relations.  Dan says that now is a great time to raise capital because, based on his experience, when Wall Street crashes, investors become more aware of the importance of investing in alignment with their values.

Dan has learned from experience that the most important way to cultivate investment is by building relationships with values-aligned people.  When talking to potential investors, remind them that all investment is risky, but at the end of the day, whether you make money on your investment or lose it all, it’s nice to feel good about what your money is doing in the world.  

When Wall Street crashes, investors become more aware of the importance of investing in alignment with their values.

Once you have investors, you have to communicate with them and not just send them a check each year.  Help them see why they should be excited about their investment.  Tell stories about your impact—be as specific as possible.  Click here for an example of what Equal Exchange sends to their investors.

Keep building relationships with your investors.  If you’re ever in trouble, they will be the first ones to support you.

If you’d like to learn more about raising capital using the same principles as Equal Exchange, click here for information on our upcoming online book study of Raise Capital on Your Own Terms: How to Fund Your Business without Selling Your Soul.

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Fundraising in Uncertain Times

Fundraising in Uncertain Times

The stock market volatility index reached an all time high on Monday, March 16. The index has increased 500% this year. According to CNN, market activity is being driven by “extreme fear.”

After ten years of a rising market, this feels like a whole new world. Many investors became overconfident in the reliability of steady growth in their mutual funds. When my clients (small private companies) sought investment, they were competing with this seemingly predictable source of 8% plus returns.

The perception that an investment in a small, private business is riskier than a stock market investment is being challenged for the first time in many years.

Now we are being reminded that what the markets give, they can quickly take away. My mantra has always been that all investments are risky—there is no sure thing. The perception that an investment in a small, private business is riskier than a stock market investment is being challenged for the first time in many years.

Many investors may now be looking for an alternative and a way to diversify. There will likely be a growing demand for direct investments in businesses we understand and trust.

If you’re raising money for your business, your biggest competitor (i.e. Wall Street) is not looking very good right now. Take the opportunity to remind your potential investors that this is a great time to move investment dollars out of the volatile public markets and into a business that is values-aligned and run by someone they know and trust.

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Leap Before You Feel Ready

Leap Before You Feel Ready

Last month, the third annual Conscious Company World-Changing Women’s Summit was held in Sonoma, CA. As Crowdfund Mainstreet co-founders, both Jenny Kassan and I were honored to each be named to the list of 43 World-Changing Women in Conscious Business for 2020.

The summit was attended by 250 female/women-identifying founders, CEOs, executives, and entrepreneurs involved with conscious businesses. The event focused on authentic conversations around two prominent themes: 1) listening to and trusting your instinctual wisdom as a woman and business leader, and 2) understanding, challenging, and overcoming the complexities of racism in business and beyond—both issues that are increasingly important as we challenge the status quo and take the concept of conscious business and conscious leadership to new heights. 

Confidence is an outcome of taking action, not a prerequisite for it.

The need for more women in business leadership is undeniable. Research and logic have long confirmed the fact that women have much to contribute to our companies and communities, but it can be daunting to fight the stereotypes and the patriarchy along the way to becoming the change we want to see in the world. Storied women leaders such as Missy Park of Title Nine, Tami Simon of Sound True, Cheryl Contee of Do Big Things, and Jane Wurwand of Dermalogica were in attendance and shared their experiences on finding their leadership styles and successfully growing their companies.  

Each of these women came to leadership in their own way, but all learned to listen to and trust their unique voices. All seemed to have an early grasp of the fact that confidence is an outcome of taking action, not a prerequisite for it. The message was clear—if you wait around until you have the confidence to make the changes that need to be made, you will surely perish in inertia. We cannot afford the loss of so many voices. A better way, as Jane Wurwand of Demalogia says, is to accept the fact that “You don’t know how to do something until the first time you do it. You didn’t come out as a baby knowing how to make a casserole—but you figured it out!” There is a freedom to fail forward and innovate when you adopt a beginner’s mindset. We will get to equality and inclusivity a lot faster if we learn to consistently leap before we feel truly ready.

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Angels of Main Street is one year old and growing fast!

Angels of Main Street is one year old and growing fast!

A little over a year ago, Crowdfund Mainstreet CEO Michelle Thimesch and I had a crazy idea—create an angel group for EVERYBODY!

The traditional definition of an angel investor is a wealthy person who invests their own money in startups. There are groups all over the country where angels gather to support each other with finding and making investments. To join these groups a person must meet the definition under federal law of an accredited investor (minimum of $200,000 in annual income or $1 million in net worth, excluding their primary residence).

Angels of Main Street was formed so that EVERYONE could be part of an angel group—there is no minimum wealth or income requirement. AMS currently has almost 70 members who collectively invested over $500,000 in small businesses in 2019. Investment amounts ranged from $500 to $25,000.

It’s easy to join Angels of Main Street. Just pay the one-time membership fee, commit to investing at least $500 per year in businesses you care about, and join us for our calls, events, and learning opportunities.

For details, visit https://www.angelsofmainstreet.com, or feel free to email info@jennykassan.com if you have any questions.

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Major changes for maximum impact

Major changes for maximum impact

Dear Community,

This is my last blog post for 2019, and I want to thank you for all your support this year. As we work to change the face of investment in our country, your outpouring of love for our amazing entrepreneur clients, and of course your investments in them, mean everything to us!

2019 was a year of major change for Jenny Kassan Consulting. For the first time we didn’t do our signature training event, Fund and Fuel Your Dreams, because it felt like we were being called to serve in a different way.

It was time to acknowledge that raising significant investment dollars, for many entrepreneurs, is an undertaking that requires an extremely high level of support—coaching, legal services, support with communications, and help with connecting to the right investors. While a three-day training is a great start, it barely scratches the surface of what is needed to meaningfully support an entrepreneur with fundraising. Plus, now that my book is published, everything we taught at the event is easily accessible without the need to attend a three-day live event.

So, in 2019 we focused our efforts on one-on-one client services, allowing us to address each individual client’s unique goals and challenges and to bring the right resources to the table.

We also put more energy than ever into cultivating the investor side of the equation. With such amazing entrepreneur clients, the obvious next step was to leverage the relationships we already have with “outside-the-box” investors and to encourage connections between investors and our clients. We do this through our WeCapital Community—where we connect our current and former female clients with investors—and also through Angels of Main Street—a community of angel investors that is open to people anywhere in the US regardless of wealth or income.

In its first year, the Angels of Main Street have already moved several hundred thousand dollars into direct investments in mission-driven companies.

In 2020, we will continue 1) to focus on providing highly customized services for entrepreneurs who want to raise investment capital on their own terms and 2) to grow the movement of investors wanting to learn how to move their money into ventures they love.

We hope you’ll stay involved—here’s what you can do:

· Follow us on social media

· Join Angels of Main Street

· Invest on Crowdfund Mainstreet

· Buy and gift my book here

· Refer entrepreneurs to us here

· Continue to read our newsletter and encourage friends to join our mailing list by going to our website

Thank you again for your support and encouragement!

~ Jenny

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