Janina Benz

Crowdfunding goes green – Econeers supports an energy transition from the grassroots

Michael Brey - Corporate Communications at Econeers

Michael Brey – Corporate Communications at Econeers

The story behind Econeers
We have started Econeers in October 2013 as sister-platform of Seedmatch, the German market leader in crowdfunding for startups and partner of CODE_n. So we have transferred our experience as well as  the proved concept of crowdfunding to the prospering field of renewable energies and sustainability. That was because we discovered large similarities between both concepts: The energy transition in Germany has been basically driven by civil investors right from the start. Almost 50 percent of the renewable energy facilities are paid with private money. Since 2001 over 880 energy cooperatives have been founded by citizens intending to strengthen their independence from large energy groups. So starting a new crowdfunding platform with a focus on clean energy projects in order to create an easier and more efficient way of civil participation was just a logical consequence for us. More…

Jens Schleuniger

VC, Accelerators or Crowdinvesting – Which financing option is the “right” one?

Jens Schleuniger - Managing Director of für-gründer.de (German network for founders)

Jens Schleuniger – Managing Director of für-gründer.de (German network for founders)

Venture capital companies, business angels, accelerators, company builders, incubators, crowdfunding, crowdinvesting, family and friends, personal savings – these days, startups are presented with a broad range of sources for financing their business ideas.

But which option is the best or the right one when it comes to starting out? Finding a clear answer to this fundamental question seems nearly impossible in light of the ever-growing alternatives on offer. The following key points could prove useful in navigating the jungle of options available, and they could ultimately help you when making crucial financing decisions or developing a financial strategy for your business.

1. Your own SWOT analysis as a basis

As with all problem solving measures, getting a good idea of your starting point – that is, analyzing the initial situation – is the best way to approach the issue of financing your business plans. Ask yourself critically and objectively: What are my strengths? What are my weaknesses? What is my operational capacity? How strong and extensive is my personal network? To what extent can I finance my startup myself? Answering these types of questions is the first step on the road to discovering which financing strategy is best for you. The analysis of your strengths and weaknesses is then supplemented by an in-depth look at the opportunities and threats your business could face under the current circumstances.

More…

Jens Schleuniger

VC, Accelerators or Crowdinvesting – Which financing option is the “right” one?

Jens Schleuniger - Managing Director of für-gründer.de (German network for founders)

Jens Schleuniger – Managing Director of für-gründer.de (German network for founders)

Venture capital companies, business angels, accelerators, company builders, incubators, crowdfunding, crowdinvesting, family and friends, personal savings – these days, startups are presented with a broad range of sources for financing their business ideas.

But which option is the best or the right one when it comes to starting out? Finding a clear answer to this fundamental question seems nearly impossible in light of the ever-growing alternatives on offer. The following key points could prove useful in navigating the jungle of options available, and they could ultimately help you when making crucial financing decisions or developing a financial strategy for your business.

1. Your own SWOT analysis as a basis

As with all problem solving measures, getting a good idea of your starting point – that is, analyzing the initial situation – is the best way to approach the issue of financing your business plans. Ask yourself critically and objectively: What are my strengths? What are my weaknesses? What is my operational capacity? How strong and extensive is my personal network? To what extent can I finance my startup myself? Answering these types of questions is the first step on the road to discovering which financing strategy is best for you. The analysis of your strengths and weaknesses is then supplemented by an in-depth look at the opportunities and threats your business could face under the current circumstances.

More…

Janina Benz

Crowdfunding is sexy

Crowdfunding is having a profound effect on the startup fundraising landscape by bypassing the entire traditional financial system and sourcing funding directly from potential customers and partners.

Kickstarter facilitaed funding for more than 54,000 projects

Kickstarter facilitaed funding for more than 54,000 projects

Since Kickstarter launched in 2009, 5.5 million people have pledged $941 million to fund 54,000 projects. Kickstarter UK launched in mid-2012 and appears poised to have a similar impact on this side of the Atlantic, facilitating funding for 1,558 projects to the tune of just over $35M through more than 300,000 people (40% from the UK, 26% from the US, 21% from other EU countries, and 13% from the rest of the world) in its first full year of operation. More…

Janina Benz

Homee launched crowdfunding campaign on Indiegogo

Only two months ago Homee was invited to join Continental at the IAA. Now Homee is back with big news! We proudly announce that Homee launched a crowdfunding campaign on Indiegogo. The aim is ambitious, they need to receive 100,000 € by the crowd within 42 days. In our last post we discussed the different funding options and that crowdfunding is getting more and more popular for startups and we keep our fingers crossed.

How does Homee work?

Homee is a cool gadget and a life-style product which is also a smart home solution of high quality. Control and connect all your favorite devices with Homee. You can combine different products from different manufacturers and even different standards; and bring them all together in the easiest way possible!

Homee: your home remote from Codeatelier on Vimeo. More…

Janina Benz

Raising Startup Funds – A Merging of the Minds?

After coming up with the concept of the “next big thing”, funding is the first big challenge facing every technology startup. There are living expenses. There may be legal and administrative expenses in incorporating or registering a business. And, assuming the initial development work is successful, entrepreneurs will need an office and employees. But where do you start?

Different Funding mentality in Europe and US

Different Funding mentality in Europe and US

Historically, we’ve seen different approaches in Europe and the US in the funding of startup ventures, with the US focusing more heavily on private equity and risk-based investment and Europe tending to place a greater emphasis on loans and governmental or institutional involvement.

In the US, entrepreneurs begin by maxing out their credit cards. Then they’ll do the rounds of angel investors to fund the business through proof of concept to first customer acquisition. Once the proposition is market-proven, they’ll hit the venture capital trail. This has been the typical route to market for America’s best-known technology success stories – Facebook, Twitter, Google, and the like. This approach has significant upsides for investors if the business succeeds, but if the business does fails, those businesses, and their investors, lose everything. It’s a high stakes game that ebbs and flows with the market.

In Europe, seed money has traditionally come from family members, followed by bank loans and grants from public bodies – a theoretically safer approach, but also one that offers a different kind of incentive to investors, one that is decidedly not “get-rich-quick”. Talentsoft, a French cloud-based talent management solutions company, has blended US and European approaches with investments coming from the European arm of a US venture capital firm and from a French government institution.

While this public-supported approach is available in the US through organizations such as the small Business Administration, they tend to be more popular with conventional businesses looking to fund expansion than with technology entrepreneurs looking to fund innovation. US entrepreneurial risk sits firmly in the private sector, whereas Europe expects public institutions to partner in innovation.

Crowdfunding becomes important in the funding procedure

Crowdfunding becomes important in the funding procedure

But all this is changing with the advent of crowdfunding, led by Kickstarter and Indiegogo. The current crowdfunding record is held by smartwatch innovator Pebble, which raised $10,266,845 from individual donors who asked for nothing more from the company than a free watch – a far cry from the significant equity expected from a typical VC investment. But this approach has its downside for entrepreneurs, however, in that if the stated fundraising goal is not met, the entrepreneur gets nothing. Ubuntu Edge found this out the hard way when they used crowdfunding in their quest to raise $32 million to develop a Linux-based smartphone; they hit a wall at $12.8 million, and that was the end of that.

The latest twist to crowdfunding, epitomized by RocketHub, exchanges the Kickstarter reward system for true equity. This, however, brings the additional complication of having to comply with investment regulations in any country in which the entrepreneurs and their investors have a presence; the jury is still out on how palatable the additional regulatory oversight will be to both parties.

It’s clearly a crowded marketplace for any entrepreneur seeking to take their business to the next level. In future posts, we’ll take a closer look at individual paths to successful exits by both European and US startups.

Janina Benz

WADI – Crowdfunding for clear water

End of August our CODE_n13 finalist Helioz launched a crowdfunding project. Their innovative product WADI will help to improve lives of people in developing countries. The Austrian social enterprise raises the necessary funds to prove that millions of people around the world can be granted access to safe drinking water using only the power of the sun and a small device.

WADI

In India, 400,000 children under the age of 5 die as a result of waterborne diseases each year. Helioz wants to support an unprecedented scientific health impact study in India. The study aims at proving WADI’s effectiveness by verifying at least a 50% reduction of waterborne diseases by use of WADI. More…

René Klein

Crowdfunding – Raising the Bar for Business Angels and Venture Capitalists

Following the Fall 2011 launch of crowdfunding on the Seedmatch and Innovestment platforms, this new-fangled financing instrument also took to the stage at the CeBIT trade show this year. Topping the bill at the event were two business startups, Changers.com and carzapp, the two recipients of coveted crowdfunding services from Seedmatch at the CODE_n contest. Both young companies have already reaped the rewards of crowdfunding: carzapp successfully revved up 363 investors with its concept and attracted capital worth €250,000. As Changers.com prepared to lower the curtain on its funding drive on May 2, 2013, it had 151 small investors offering a total of €80,750. In both cases, investors within the “crowd” participate via an equity-like shareholding loan (a German “partiarisches Darlehen”). Accordingly, every investor is entitled to a share of the startup’s commercial success.

René Klein - CEO of www.fuer-gruender.de

René Klein – CEO of www.fuer-gruender.de

The usual approach taken on other platforms is based on classic “dormant equity” holdings. The German Efi think-tank (the Expert Commission on Research and Innovation) looked closely at this area for its 2013 annual expert report, concluding that, “In the opinion of the expert commission, equity-based crowdfunding could play an increasingly important role [in the future], especially during the early-stage financing of startups.”

This is also underscored by recent data from our crowdfunding monitor issued on March 31, 2013. In the first quarter of 2013, seventeen startups attracted no less than €1.8 million via crowdfunding platforms. The total value of all 67 funding rounds conducted to date in Germany is thus more than €6.5 million. There are a whole host of platforms for startups to choose from, with Seedmatch, Innovestment and Companisto topping the list of larger platforms.

This whole industry is now coming of age, and we currently expect funding to total €13 -15 million in 2013, having already hit €4.3 million in 2012. This is particularly interesting given that at €31 million, funding through classic investors was declining rapidly in 2012, just as new sources of funding began sprouting shoots. According to figures issued by the German Private Equity and Venture Capital Association (BVK), in 2011 such investments still stood at €42 million. The gaps in Germany are perhaps being plugged by crowdfunding. And now startups no longer have to turn to traditional business angels since there are many smaller flocks of business angels to win over. Another trend is also emerging, which may turn heads with classic VC companies. More and more startups are returning to crowdfunding even during the second round of financing – and they’re attracting bigger sums of money. One company currently touting for funds is AoTerra, the first company to break the €500,000 barrier. It is currently setting its sights on up to €750,000 in a separate round of financing on Seedmatch. Slowly but surely, these are sums likely to pique the interest of venture capitalist companies.

To find out more, go to Für-Gründer.de and Crowd investing in Deutschland.