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Posts Tagged ‘Raising Capital’

Web.com Small Business Tip of the Day: Banks Optimistic About Small Businesses

April 26th, 2013 ::

If you’ve been holding off on applying for a small business loan, now might be the time to make your move. A recent survey conducted for FICO, an analytics software company, revealed 62 percent of U.S. banks are optimistic that the demands for small business loans would be met in the next six months. In addition, 89 percent of banks surveyed said the approval rate for small business loans would hold steady or increase, and 79 percent of respondents believe the delinquency rate on small business loans would remain flat or decrease in the same time period. The survey results could mean small businesses would have more capital to begin investing and hiring again.

U.S. Crowdfunding More Than Doubled Last Year

April 23rd, 2013 ::

By Maria Valdez Haubrich

Crowdfunding—a method of soliciting small donations of money from large groups of people online—is growing exponentially, according to new data from research firm massolution. According to the company’s annual 2013CF – Crowdfunding Industry Report of more than 308 crowdfunding platforms (CFPs), CFPs worldwide raised $2.7 billion in 2012–an 81 percent increase compared to 2011.

CFPs successfully financed more than 1 million crowdfunding campaigns, with 95 percent of these taking place in North America and Europe.  In North America alone, crowdfunding volume more than doubled, growing by 105 percent to hit $1.6 billion. This year, massolution expects worldwide crowdfunding volume to top $5 billion, largely thanks to new laws in the U.S. that will enable crowdfunding to expand beyond simply seeking donations or rewards-based contributions, and actually seek equity investments.

The current report focused on lending-based, donation-based and reward-based crowdfunding. However, thanks to the Jumpstart Our Business Startups (JOBS) Act signed into law last April, which will allow non-accredited investors to make investments in companies in return for equity, equity-based crowdfunding is expected to grow substantially in 2013 and beyond.

The SEC still needs to revise several key sections of the act before equity-based crowdfunding can take place in the U.S. While the SEC has failed to meet deadlines for doing so, the regulations are expected to be set by the end of the year.

What types of campaigns are most likely to get funded via crowdfunding? Massolution identified the five most popular types of crowdfunding campaigns and found social causes still lead the pack; nearly 30 percent of all crowdfunding activity involves social issues.

However, business and entrepreneurship campaigns are moving up in the ranks, with 16.9 percent of crowdfunding activity last year coming from this category. In fact, massolution reports that last year’s growth in lending volumes was primarily due to crowdfunded microloans and community-driven loans to small and midsized businesses.

Films and performing arts accounted for 11.9 percent of all crowdfunding activity in 2012, and music and recording arts accounted for 7.5 percent. The emerging category last year was energy and environment, which accounted for 5.9 percent of crowdfunding activity.

A few interesting trends massolution points out that could have implications for small businesses:

  • Crowdfunding is no longer just for small companies seeking to fund individual projects, but is poised to become a means by which big corporations and even institutions could raise funds. This could mean even greater competition in the crowdfunding space, making it harder for small companies to stand out.
  • At the same time, new platforms are likely to emerge dedicated to smaller companies and even specific industries, which could make it easier to find financing within these platforms.
  • In fact, there’s even opportunity for entrepreneurs to start their own crowdfunding platforms to target underserved niches.

Image by Flickr user James Cridland (Creative Commons)

Web.com Small Business Tip of the Day: Crowdfunding Fees

April 22nd, 2013 ::

If you’re considering using a crowdfunding website to finance a product launch, you’re not alone. Global crowdfunding grew 81 percent to $2.7 billion last year and successfully funded more than 1 million campaigns. But did you know you most likely have to pay fees to participate? Depending on how much money you need to raise, crowdfunding may or may not be a viable option for you once you consider how much the crowdfunding website charges in fees. Kickstarter, one of the most popular crowdfunding sites, charges a 5 percent fee for every successful project. Some sites charge even more for projects that don’t meet fundraising goals, so check the fine print before you sign up.

Web.com Small Business Toolkit: CrowdIt (Crowdfunding Site)

April 17th, 2013 ::


Although it’s not “officially” launching until June 4, 2013, CrowdIt is creating buzz for its crowdfunding projects by previewing early submission through its new “carousel.” In addition, projects submitted by June 1, 2013 are eligible to win $10,000 from CrowdIt based on which project reaches the highest amount of funding by August 18, 2013. CrowdIt acts as a virtual incubator and is taking a new approach to crowdfunding by including peer-review feedback, mentoring and business networking as part of its offering. Flexible funding options mean you can request full or partial funding based upon the unique needs of your crowdfunding campaign.

Web.com Small Business Toolkit: Good Clean Fund (Crowdfunding Tool)

April 10th, 2013 ::

Good Clean Fund

Looking for an alternative crowdfunding source? Check out Good Clean Fund which promises more features and functionality (like a drag and drop editor) than Kickstarter—and it’s free. Good Clean Fund requires you to use PayPal or Stripe (to collect your money) and then you can begin to build your campaign. Enter in the basic details, connect with your Facebook and/or Twitter account, and you’re pretty much done. To make your crowdfunding campaign more enticing for investors, add videos, images and comments and more. You can easily play with the design of your crowdfunding page and update it during your campaign—you’re in charge.

Web.com Small Business Toolkit: Eileen Fisher Business Grant Program (Grants for Women Entrepreneurs)

April 1st, 2013 ::

Eileen Fisher Business Grant Program

Designer Eileen Fisher started her business with just $350 in her savings account. Now she wants to help other women by inviting women-owned businesses to apply for her ninth annual Business Grant Program for Women Entrepreneurs. The program celebrates top women founders of innovative companies that foster environmental and economic health in their communities. Up to five grants of $12,500 each will be awarded to prospective applicants. Recipients will also attend a two-day conference in New York City, meeting with past beneficiaries and Eileen Fisher teams, in early 2014. Only for-profit businesses or for-profit/nonprofit hybrids (social enterprises) will be considered for this grant. The deadline is May 31, 2013.

Web.com Small Business Toolkit: ProHatch (Crowdfunding)

March 14th, 2013 ::


Interested in crowdfunding to raise capital for your business? Start by educating yourself on this source of startup capital by signing up with ProHatch’s Online Crowdfunding Incubator Program for Small Businesses. The Online Crowdfunding Incubator provides free information and consultation on how to effectively prepare your business to successfully and quickly raise capital through crowdfunding–via social media and other online tools. “Coffee & The Crowd” is an online webinar training program series that gives participants an opportunity to enjoy a free cup of Starbucks coffee, compliments of ProHatch, while being educated on the latest information about crowdfunding and business preparation by both ProHatch and industry experts. Register now; participation takes place this week.

Web.com Small Business Toolkit: Build Your Business Plan (Business Plan Tool)

January 9th, 2013 ::

SBA’s Build Your Business Plan

If you never got around to writing that business plan, the Small Business Administration now has a tool to make the process a lot easier. Your business plan should outline the route a company intends to take for the next three to five years and includes revenue projections, marketing strategies and more. The SBA’s Business Plan Tool provides the business owner with a step-by-step guide to get started. You can save your plan as a PDF and update it at any time. Then take your plan to a free mentor at one of the SBA’s partners (SCORE or a Small Business Development Center) to get one-on-one advice.


Small Businesses’ Credit Profiles Are Improving. Is Yours?

November 20th, 2012 ::

By Karen Axelton

Ask any small business owner who’s been trying to borrow expansion capital, obtain working capital or simply get a line of credit from a lender, and they’ll tell you it’s become far more difficult since the recession hit. However, a new study by Direct Capital Corporation suggests that the tough times may have actually had a beneficial effect on small business owners in one way: Since the recession hit in 2008 and during the past few years of recovery, small business owners’ average credit profile actually improved in 45 out of 50 U.S. states.

Direct Capital Corporation, a nationwide lender to small businesses, reviewed credit data for over 23,000 small businesses nationwide during the past 12 years. Where do small business owners have the strongest average credit profile? Nebraska topped the list, followed by Alaska, South Dakota, Indiana and Oklahoma.

The states where small businesses’ average credit profiles have declined in the past four years are Washington, DC (which had the lowest average credit profile), followed by Rhode Island, New Mexico, Montana and Texas.

Direct Capital Vice President of Marketing Stephen Lankler says one reason for the surprising change is that business owners have a heightened awareness of how important it is to keep their credit score high. “Business owners today are much more aware of how important it is to maintain a strong credit profile,” he said. “That was not the case five to seven years ago when it was much easier for a business to access credit.”

Lankler says growth in the number of products that give businesses on-demand access to their credit profiles has also contributed to the higher credit scores. “As a result of the financial crisis, major lenders – including banks – have become much more restrictive in extending credit to business owners,” Lankler said. “In response, business owners have become more vigilant in maintaining strong credit profiles and a flood of products have been introduced to help them do so.”

What are some ways you can keep your business’s credit score high?

  • Pay your bills on time and if you cannot, talk to the vendor to work out a payment plan.
  • Monitor your business’s credit report to note any errors and take steps to correct them.
  • Don’t mix personal and business funds. Use business, not personal, accounts for business purchases.
  • Use business credit cards carefully, being sure not to overutilize credit. Ideally, pay off your balance in full each month, but if you can’t, keep your balance under 30 percent of your available credit.
  • Even if you never plan to use it, make sure you keep enough available credit (through business credit cards and other options) to get you through an emergency if need be.

Image by Flickr user ThirdLegReviews (Creative Commons)


Bad News for Small Business: VC Investments Decline

November 15th, 2012 ::

By Maria Valdez Haubrich

Recently, we posted here about the growth in angel capital investments. Now, there’s some not-so-good news for small businesses about venture capital. The most recent MoneyTree survey from PricewaterhouseCoopers and the National Venture Capital Association reports that in the third quarter of 2012, VC investments shrunk both in terms of overall dollars (down by 11 percent from the second quarter of 2012) and in terms of deal volume (down by 5 percent from the second quarter of 2012).

VC dollars and deals also declined year over year. What’s behind the shrinkage? PWC and the NCVA say that venture capitalists are exhibiting extreme caution with the capital they have available. Instead of making new investments, they’re focusing on the companies that are already in their portfolios. Compounding the problem, there are fewer new venture funds, which is cutting into the amount of capital that can be invested.

Of course, the bad news may not affect you if your small business is in an industry that finds it easier than average to attract venture capital. Here’s a closer look:

  • As of Q3 2012, software companies were still the most popular type of VC investment, accounting for $2.1 billion invested in 304 deals. (That’s still a 12 percent drop from Q2 2012, however).
  • Life sciences (which includes biotechnology and medical devices) investing increased in terms of dollars but declined in deal volume compared to Q2 2012.
  • Internet-specific investing (companies whose business model depends on the Internet, regardless of industry) declined by 12 percent in dollars and 8 percent in deal volume compared to Q2 2012.
  • The clean technology sector (alternative energy, pollution and recycling, power supplies and conservation) had a 20 percent decrease in dollars but a 2 percent increase in deal volume.
  • Financial services, healthcare services, business products and services, and retailing businesses saw increasing dollar amounts invested in Q3 compared to Q2.
  • In contrast, companies in the media and entertainment, semiconductors, telecommunications and IT services sectors all saw a decline.
  • Companies in the software, media and entertainment, and IT services industries received the most first-time rounds in Q3 2012.

Your industry isn’t the only thing that matters when you’re looking for VC investments. Where your business is located matters more than you might want to think. Over half (58 percent) of VC funding in Q3 2012 went to businesses in California, Massachusetts and New York.

Image by Flickr user Horia Varlan (Creative Commons)