Average Joe Investments
In the past only venture capital firms and accredited investors benefit from the early-stage financing for exciting new start-ups and even though today anyone can take advantage to the political changes that allows an average Joe to invest in early stage startups there isn’t a place that simplifies the investment process and makes it very straight forward for those who don’t have a business or finance background.
The existing platform out there that implements equity crowdfunding provides valuable information about the startups like a business plan, financial projection and a short video overview but lets face it, startups are too risky to rely only in documents and a short video, in fact seed investors are looking for more traction and what used to be considered seed funds in 2006 today is more likely a pre-seed which is not considered to be a first round and for startups to qualify for seed funds they might have to raise some capital from friends and family, gain users, raise some more from angel investors, enter an accelerator program to finally raise some seed funds and all this is to reduce the risks when investing in startups.
But despite the risks, startups are here to stay. A new app or technology is born everyday with the dream of becoming an overnight success. Imagine you would’ve invested $100 to $2,000 dollars in Facebook, Amazon or YouTube when the founders started working on the idea?
If you had invested just $100 in Amazon’s IPO, you would have received 5 shares. What is beyond impressive is that investment would have been worth nearly $120,762 at the August 31, 2018 close price of $2012.71/sh. That would yield an increase of more than 120,000% on the initial $100 investment. Read More
My approach to this problem involves unscripted television in a docuseries format (Documentary Series) where an average Joe can watch a series of episodes on a startup project to know more about the founders, the team and the stages they complete. More over, the founder and the team will prove the concept and share their struggles as they build their startup and viewers will be able to identify leadership, hard effort, team work to name a few qualities that can help or break the team and also understand more in detail the technology and see how early users like or dislike the project as the story unfolds. By the end of the season the viewer will be able to make a better decision before investing in the project but most importantly they won’t be investing in ideas but people.
“We should invest in people not ideas. A good idea is often destroyed by bad people and good people can always make a bad idea better.”
— Simon Sinek
Startups will have to apply and be selected for production to ensure that the projects in the platform are legit and protect both parties. I also believe any startup can apply but initially I would focus on early stage startups and I would reach out to college and university students looking for the common factor between some of the unicorns startups.
What Facebook, Microsoft, Snapchat, Yahoo and Google have in common? They all started in a dorm room.
Join the new generation of student founders as they go from the idea to launch and be one of the first to invest in emerging tech when it’s affordable.
DormStartups.tv is a subscription video on demand (SVOD) platform that showcases the stories of tech students working on their projects and emerging technologies. Users can find a co-founder with technical skills or pre-seed capital following two unique investment formats we like to call:
A) Base Income Salary Agreement
B) Pre Initial Public Offering (Equity Crowdfunding) Read More
But why now? I want to dive deeper in the changes that makes the perfect timing, sharing a PEST analysis to have a better understanding.
Political changes:
May 16, 2016 the Securities and Exchange Commission began implementing equity crowdfunding nationwide for the average investor. This allows small companies to directly raise debt or equity capital from friends, family, and interested investors. It’s the final piece of landmark legislation called the Jumpstart Our Business Startups Act, popularly known as the JOBS Act, that was passed in 2012.
- Jobs Act 2012
- Creation of legal documents to manage investments in a way anyone can afford to invest in new tech and protect them from malicious people
- Equity and portfolio legal documentations that align with the Jobs Act rules and regulation
Economic:
One of Jumpstart Our Business Startups Act provisions allows new businesses to raise capital directly from private investors. Initially, only accredited investors — those with $1 million in net worth or who earn at least $200,000 per year — were allowed to invest in start-ups.
- You needed to be an accredited investor to be able to invest
- In the past only accredited investors had access to new emerging technology
Now anyone can invest in a really early stage startups.
Social:
There’s a limit on the amount of money that can be raised: a maximum of $1 million over a 12-month period. Great for small businesses and students working on theirs startups.
This key point represents different social groups in today’s society and some of the action taken by each one.
- A lot of people learning how to code to build their app idea
- A lot of startups getting rejected by accelerators and incubators
- Average Joe hoping they were able to invest in companies like Yahoo, Facebook, Microsoft, YouTube etc… before IPO
- Media referring to overnight startups when the founder has been working on the project for over 10 years.
- Average Joe doesn’t know much about businesses, startups or financials.
Technological:
By combining the convenience of video on demand to watch startups series anytime and the power of equity crowdfunding to invest at an early stage, the platform would be a better solution for anyone looking to invest in startups and learn more about the team and founders but also a better solution for startups looking to raise pre-seed capital.
- Making new emerging technology available to an Average Joe
- Show in a Reality TV format and the stages Startups go through in the process to grow their ideas.
- The equity crowdfunding opportunity for people that love the idea and identify with the project, the founders and the team.
If we look at a competitive landscape DormStartups.tv offers a deeper access to emerging tech and the story behind the startup giving anyone the opportunity to invest in an early stage.
Investor TV Shows like Shark Tank might give some access to startups and during the founders pitch viewers can have a glance of the founders personality and skills. Also if the founders land a deal with the sharks, on the new season viewers can see an overview of the progress. However, only the sharks can invest and in some cases if the sharks pass on the opportunity, accredited investors that watch the show, reach out to the founders and it is common that founders get better deals after not landing a deal with the sharks.
Moving on to accelerator programs and incubators like YCombinator, 500 Startups and TechStarts to name a few, startups that get selected can move fast on the funding rounds and with their mentorship and network these programs provide, the risk to fail are reduced to the minimum. However, these programs only invite accredited investors and venture capitals to their demo night and an Average Joe will have to wait until the startup goes public to buy shares.
Investor TV Shows and accelerator programs takes us back to the first problem of being available only for venture capitals and accredited investors.
The last existing technology available today is the crowdfunding platform like Kickstarter that is not equity base and a lot of founders have benefit from. Backers only become early adopters and supporters but there is no return on investment as the project grows.
Microventures and Seedinvest are equity base and Indiegogo is now implementing both crowdfunding and equity crowdfunding giving anyone the opportunity to invest but despite the effort this platform does to provide documentation, videos and prototypes at the end the second problem remains. Not everyone has a business or finance background to understand all the documentation and users can’t really tell much about the founders and the team’s personality. What about execution or how can we know they can build what they’re showing in paper cause I can draw a rocket ship and calculate a trajectory but NASA and Tesla can build it. We should invest in people…
Execution plays an important roll to succeed and that's why running interviews with potential users and reaching out to industry leaders that can become partners or mentors, is so important. Someone I would love to interview is Frida Kapor from Kapor Capital and my question to her would be:
- Would you be willing to split into 15 chunks of $15,000 the initial investment you usually do in one startup? The purpose is to give startups in an early stage, access to a small capital to work and focus in their project in exchange of a SAFE (Simple Agreement for Future Equity).
But before I do reach out to Frida Kapor I am putting together a Pilot episode that I produced before making my decision to move from the Dominican Republic to Silicon Valley to become a Software Engineer and my transition leaving everything behind to build my idea. This episode will be available soon to everyone but in the mean time I want to share why having a Pilot is so important especially when we are talking on building a video on demand.
This photo is a prior conversation with a VC:
Also, John (My roommate) and I decided to go to a local Starbucks and interview random people about startups, investments and platforms they use to watch their favorite show and videos. We also asked their opinion on DormStartup.tv concept. Here is the result.
Moreover in execution on October 26–29 I will be pitching the concept in the Hollywood Pitch Festival and I will also share the experience later on.
You see my point, there is a lot going on when building a startup. It is not only coding in the dorms or garage. One day you are in the streets talking to strangers, the next day you are having dinner with an industry leader or disguised as a delivery guy to see if the front desk security from WeWork lets you in to finally talk to a Venture Capital near by that hasn’t replied your emails, that didn’t workout though. But imagine for a minute you can follow up with all the strategies that founders come up with in order to be successful. Let me walk you through a user journey for DormStartups.tv…
Laura wants to make investments for the future and take advantage of equity crowdfunding. But she doesn’t know anything about investments or how to evaluate a company base on a business plan, investor deck, financial projection or other business documentation. She found DormStartups.tv and started watching Docuseries to learn more about the stories of new startups, the founders, the team, the struggles and the stages completed. She likes how the team and the founder work so hard to accomplish their goals, she had a detail understanding of the vision of the company and she identifies with the social impact the startup has.
Laura is now ready to join the startup by making an initial investment in an early stage when it’s more affordable and the opportunity of a big return on investment is high.
This video shows a quick overview of the platform.
And lastly these images are some examples of what the equity crowdfunding feature will look like after the viewers are ready to invest:
The project page will show a list of projects viewers can discover and see the episode or read more about the project.
The product page will have detailed information about the campaign, backers, funding goals, current fundings and description of the project.
On the left side the product page will show the investment option available for the viewer.
Also the equity will be detailed on the left as well depending what investment option the viewer chooses.
Viewers will be able to invest using Credit Cards, PayPal or Bank Transfer.
Startups will have total control of their project and their campaign. However, the Docuseries on the project will be produced by DormStartups.tv to protect both parties and quality purposes.
Also startups will have access to the viewers that invest in their project.
If you would like to know more about this project or would like to be part of this project reach out to me because I am considering to start an equity crowdfunding for this project and one day tell the story on how everything started and the group of early investors that believed in this concept investing in me.