1. Standing Out In a Crowd: Early Stage Financing Presented by: Anamarie Jezo & James Leonard The University of Wisconsin Law & Entrepreneurship Clinic

2. A Case Study

3. Homer’s Options Personal Savings and Lines of Credit Family and Friends Angel Investors Venture Capitalists Equity in his Company BUT…

4. Early Stage Financing Crowdfunding Micro-financing

5. What’s on the Agenda Crowdfunding Background Panelist: Alisa Toninato Micro-financing Background Panelists: Andrew Tapper and Tony Rudeen

6. Promote Your Project Tell contributors: Who you are What your project is What the project’s goal/purpose is How their $ contribution will help What they’ll receive for helping you

7. What is Crowdfunding? Get and Give: Entrepreneurs receive funding from individuals and provide non-cash and non-equity rewards for that funding Commonly Used For: Starting up a company Creative projects (music, film, blogging, artwork, journalism, free software) Disaster relief Political campaigns Common Contributor Relationships: Donations Memberships Pre-orders of products

8. Popular Crowdfunding Websites Kickstarter www.kickstarter.com Ulule www.ulule.com IndieGoGo www.indiegogo.com Rocket Hub www.rockethub.com Quirky www.quirky.com

9. BE AWARE OF EACH SITE’S POLICIES!!! Funding targets and deadlines Escrow accounts and $ disbursement What happens to the $ if the project fails

10. Reward System DO DON’T Give contributors monetary rewards Give contributors equity or an ownership interest Set up 4 donation ranges  S, M, L, & XL Offer a different reward for each range Let contributors know how many of each reward is available Allow bigger contributors to pick their reward Reward examples: Free mp3 download Ability to listen to the album before it's released to the public Recognition as a sponsor on company promotional materials Small reprint of artwork Complimentary service Invite to open house/dinner/launch party

11. Get the Most Out of All Your Hard Work! Homer is doing 2 things at once: 1.Raising capital 2.Marketing his product or service If done effectively, he’ll: 1.Get the $ his project needs 2.Create a potential customer base Take Advantage of Email & Social Media to Promote Your Project!!!

12. Protect Your Project Risky Business: Potential for others to steal your idea, develop it, market it, and fund it faster than you Most sites have policies which state that they are NOT liable should someone steal your idea from their site Mitigate the Risk by: Consulting a lawyer Filing early patent, copyright, and trademark applications

13. Securities Regulation Pitfalls Howey Test  A transaction is a security if there’s: 1.An exchange of money 2.With an expectation of profits 3.Arising from a common enterprise 4.Which depends solely on the efforts of a promoter or 3rd party Meeting ALL 4 parts of this test will likely lead to: Being required to register with the Securities Exchange Commission (SEC) Facing penalties for failing to do so Having to give the money back to investors (rescission) This is why you should NOT offer $ or equity as a reward to contributors!!!

14. What’s on the Agenda Crowdfunding Background Panelist: Alisa Toninato Micro-financing Background Panelists: Andrew Tapper and Tony Rudeen

15. http://felionstudios.com

16. What’s on the Agenda Crowdfunding Background Panelist: Alisa Toninato Micro-financing Background Panelists: Andrew Tapper and Tony Rudeen

17. What is Micro-financing? What: a.k.a. Micro-credit loans Small dollar loans Usually in the range of $500-$5,000 Who: Low-income entrepreneurs and business owners Why: Do not meet the criteria for traditional bank and investor lending

18. What is Micro-financing? Where: The Madison Fund www.madisonfund.orgwww.madisonfund.org The Capital Good Fund www.capitalgoodfund.orgwww.capitalgoodfund.org Accion Texas Inc. www.acciontexas.orgwww.acciontexas.org The Grameen Bank www.grameen-info.orgwww.grameen-info.org

19. Trends of Micro-financing In the US, this is a relatively new concept but is catching on quickly. Growing rapidly in recent decades. By enabling small businesses the opportunity to succeed, the overall impact on the local and national economies is substantial.

20. Have a sense for enterprise and business Demonstrate the entrepreneurial spirit Lack access to credit or money Lack of fundamental financial knowledge Typical Characteristics of Applicants

21. Purchasing new materials Increasing employment Upgrading Equipment Developing goods or services Working capital Organizing business and books Micro-financing Enables

22. Advantages of Micro-financing Lenders are often local Traditional red flags will not hurt application as much Positive impact on community is viewed favorably Obtain financial literacy and build credit No need for collateral to obtain loans

23. Disadvantages of Micro-financing Defaulting on loan will be reported to credit agencies The interest rate is high Usually an inflexible cap to the amount of money that can be borrowed Financing is only offered as a loan

24. Borrower gains financial independence Improves managerial skill set Develops credit The business grows Sustains employment Contributes to a richer, dynamic community A Successful Story

25. What’s on the Agenda Crowdfunding Background Panelist: Alisa Toninato Micro-financing Background Panelists: Andrew Tapper and Tony Rudeen

26. http://www.madisonfund.org

27. Homer is on his way!

28. Acknowledgements Alisa Toninato of FeLion Studios Andrew Tapper and Tony Rudeen of The Madison Fund In honor of the late Warren Gilson All of you for your attention and questions!

29. Visit us online (www.uwle.org) or in person at the Entrepreneurs’ Resource Center to setup a business consultationwww.uwle.org