Challenges of crowdfunding as a financial instrument to fill the equity gap in the early-stage phase of a startup venture
Crowdfunding is increasingly being used to fill the gap created by banks' reluctance to take the risk of lending to small businesses — especially since the 2008 global financial crisis. Technology, and the internet in particular, allows entrepreneurs and project founders to reach potential funders worldwide. This type of financing is gaining popularity due to the simplicity of the procedures, compared to traditional fundraising methods.
Despite the substantial benefits and potentials of crowdfunding, the information asymmetry is also significant; little information is available about the projects. Potential investors are exposed to a high level of default risk due to the information asymmetry. This situation may exist if entrepreneurs (fund seekers) intentionally withhold certain information to protect their own interests. The combination of insufficient analysis and limited information disclosure can result in adverse effects on wealth for crowdfunding investors.
This panel will provide thematic discussions about crowdfunding's attributes and practices. They will focus on how crowdfunding differs from other entrepreneurial financing alternatives and the threats and opportunities that are associated with it. It is hoped the discussions will provide insights for potential entrepreneurs looking for funding and for potential investors looking for an alternative investment choice. The discussions may also yield useful input for platform operators who want to contribute to the success of this innovative financing tool.
Innovative techniques to maximise startup potential: Building a disruptive entrepreneur-friendly community through multi-stakeholder engagement
Building and supporting a successful innovation and startup community requires the participation of stakeholders involved in various entities (business incubators, science and technology parks, angel networks, startup associations, universities, technology transfer offices, VCs, private equity funds, angel investors, family offices and corporate ventures). Multiple stakeholders can take on a pivotal role of innovation leader and champion to connect startups, scaleups, SMEs, governments, industries, and other knowledge-based institutions. The aim: to grow promising businesses.
This panel will discuss how innovative policies can be developed and what the role of public–private partnerships might be in this process. The discussants will put forth a concrete approach to changing the mindset of individuals who are in decision-making positions, both in public and private institutions. Any policy that supports entrepreneurs and SMEs directly—or that supports the supporters of entrepreneurs and SMEs—is useful, including converting public money to smart money by involving more angel investors and corporate ventures. A critical game-changer question will be addressed: How can we create an entrepreneurial ecosystem where all stakeholders come together around the same table to create more liquidity, ease access to finance and accelerate early exits?
Preparing an equity story for your startup venture: How to convert your jury member into an investor
The equity story is really the foundation of any successful fundraising. The equity story creates a vision of the organization that also serves as a compelling rationale for investors to be interested in putting money into the startup venture. Angel investors will rely on the story to determine the marketability of the company and, most importantly, the company valuation. Angel investors will want to make sure that the business model and its future prospects ‘hang together’ with market growth and the company’s ability to monetize its customer base.
It turns out that the fundamentals of the equity story play a primary role in whether an investor decides to invest.
This panel will spotlight the effects of the equity story on the decision-making of angel investors, with a particular focus on the early post-investment phase.
What is the best finance for startups and scaleups?
The demand for capital to fund the growth of their business is an essential consideration for all entrepreneurs who want to avoid ending up as ‘lifestyle entrepreneurs’. There are numerous funding options for ambitious entrepreneurs, ranging from debt to equity and new funding types such as Initial Coin Offerings (ICOs). Many entrepreneurs struggle to fully understand their funding options and the ramifications of taking on external finance; most will fail to raise external capital even if they are deserving of it, owing to factors both beyond and within their control.
The role of angel investors in entrepreneurial venture financing is increasing every day. Angel investors provide new ventures with much more than financial resources. By assuming different value-added roles, they also contribute considerable non-financial value to their investee companies during the post-investment phase. They act entrepreneurially through their hands-on involvement, but they often have their own distinct entrepreneurial experience.
This panel aims to answer the questions entrepreneurs ask about funding, including about the fundraising lifecycle from startup to scaleup to exit. The discussants will highlight the pros and cons of different types of venture funding so as to help entrepreneurs understand how to win at fundraising and to help investors understand the entrepreneurial mindset so that they can engage successfully with each other.
Attitudes to entrepreneurial investment: Finding an investment that works for both investor and entrepreneur
Entrepreneurs may want funding, but do they deserve it? At the end of the day, that will be up to the investors who back them—or not. This panel will help angel investors understand what it takes to make a successful investment in a deserving entrepreneurial business. And by deserving, we mean one that has the potential to deliver an exceptional return to the investor that is commensurate with the risk they are taking with their capital.
From identifying an investable opportunity (that is, what to look for in the team, the business and the financials) to the finer details of what sources of information an angel investor can expect, the discussion will be useful for both entrepreneurs and investors in understanding what it takes to set up a successful deal.
Increasing the role of qualified mentors to boost the startup culture and early-stage equity markets
Common wisdom has it that behind every great leader is a suite of great mentors and advisors. Steve Jobs had Ed Woolard and John Sculley, Bill Gates considers Warren Buffet a mentor, and Bob Iger credits his former boss Tom Murphy not only with his success at Walt Disney, but also for having inspired the mentorship program Iger introduced that pairs top Disney executives with leading tech start-up CEOs.
While most entrepreneurs don’t have world-famous executives mentoring them, the importance of such interactions is obvious. According to an analysis conducted by Endeavor, companies whose founders have been mentored by a top-performing entrepreneur are three times more likely to go on to become top performers themselves.
However, connecting with mentors is important for everyday entrepreneurs as well. Research tells us that
These statistics highlight a need in the entrepreneurial community to find and connect with qualified mentors who can deliver solid advice to help a business over those shaky first years.
This panel aims to clarify the increasing role of qualified mentors to boost the startup culture and early-stage equity markets in local economies.
By working together across borders, with a common vision, and with these smart dynamics in mind, we are well placed to bring about positive change in the global economy
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