Sites like Kickstarter and Indiegogo have long allowed individuals to support start-ups in exchange for pre-buying a ticket or early prototype of a product, but not for equity. Accredited investors—with a net worth of over $1 million or who earn over $200,000 a year—have their own platforms and can invest in companies through sites like AngelList.
However, new rules enacted last May allow average people to invest in start-ups through crowdfunding sites that reward investors with equity. The rules usher in a new era of crowdfunding that is accessible to individuals of all economic backgrounds.
As part of the federal JOBS Act,Title III rules allow everyday investors the opportunity to share in the returns of the “next big idea.” This week, (Monday, July 18) for example, a new equity crowdfunding site, Republic, launched with a curated set of projects and companies that include women-founded startups such as Farm from a Box and minority-owned companies like Youngry.
A high-stakes competition is underway between traditional financial services institutions and disruptive FinTech startups.
The Economist reports that more than $25 billion has been invested in financial technology — FinTech — in the last five years, with 4,000 firms challenging banks in just about every product line. As financial services comprise about $1.2 trillion of U.S. GDP, increased levels of investment are likely.
Big banks have the advantage in this fight — at the moment. These institutions have well-earned reputations for safety and security. They benefit from strong, multi-generational customer relationships, have considerable brand equity, and offer myriad financial products and services.
Except well-funded, agile FinTech startups including SoFi, Billguard, Square, Wealthfront, Venmo and Neighborly are innovating and nibbling away at banks’ market share. They’re doing this by offering custom solutions for everything from student-loan refinancing and payment processing to lending and facilitating neighborhood investment.
In today’s fast-changing world, new product teams are constantly pushed to do more faster. They need to run fast to keep up with rapidly changing market conditions. Oftentimes it means making decisions about what to invest in with very little information. How can teams validate hypotheses without over-investing on speculative engineering projects, and potentially losing time and money building the wrong thing?
It turns out that there is another way. In both B2B and B2C scenarios, you can often get a very good read on the interest and even purchase intent from potential economic buyers by running a series of landing page tests.
What is a landing page test?
A landing page test is a form of Minimum Viable Product (MVP) test, in which one uses a landing page as a way of gauging some aspect of customer interest and/or purchase intent.
While you can gather a tremendous amount of insight by running detailed, open-ended interviews with potential customers, at the end of the day you are still limited by what the customer thinks they will do, instead of what they will actually do. Purchase intent is frequently inflated when you test your product idea with people face to face, because they are often loath to hurt your feelings by telling you the truth. It’s emotionally much easier to just say “yes, this is very interesting!” or “Sure! I will certainly buy it!” rather than “you are talking to the wrong person – I have no interest whatsoever.”
When you think of Michelin, you probably think of tires. In particular, the tires you’re about to replace on your car. The 126-year-old French company evokes images of reliable, durable rubber tires for all kinds of vehicles. “Pushing the envelope” or “cutting-edge innovation” probably aren’t the first phrases that come to mind. Yet pushing the envelope is precisely what the company’s Michelin Incubators is designed to help a corporate entrepreneur, or intrapreneur, do.
Led by SVP and Director Ralph Dimenna, Global Incubators was created to accelerate innovation outside Michelin’s core rubber tire business. The program works like a startup incubator, but it recruits teams from within Michelin. Corporate entrepreneurs pitch their ideas to executives to win a round of funding. Once they close on the funding, they put together a team and form a startup that works on the idea full time. The team tests its hypotheses in the market until they either find the product/market fit or pivot to something else.
Britain is well known as the site of the world’s first Industrial Revolution, but until recently London – home of the scientific and financial revolutions that preceded industrialization – was rarely considered an entrepreneurial hotspot since then.
London seemed simply not to have captured the kind of world-class, innovation-driven entrepreneurship that has propelled Silicon Valley and Kendall Square to international acclaim.
Seeking to play my role in helping London recapture some of its entrepreneurial tradition, I took up a post in Fall 2012 as a Visiting Scholar at MIT Sloan on behalf of the British Government. For the previous five years, I had been Britain’s Consul General to New England focused on transatlantic business development and had moved the Consulate into One Broadway (aka E70) to deepen the links with MIT, Kendall Square and the high-tech sectors.