Lessons from Crowdfunding

Kevin McMahon gave a talk at Santa Clara University last month (Sept 29^th) about starting his non-profit firm Art Heroes (art-heroes.org).  The timing was amazing because just 2 hours earlier, Kevin had successfully finished a crowdfunding campaign.  Art Heroes raised $23,000 on RocketHub and the lessons from his experience were fresh in his mind.  He made some terrific points that I wanted to share here.

Successful crowdfunding depends on the following:

1.       Know your story, tell your story – Run your story by your intended audience before launching your campaign.  It is easy to forget that each industry uses lingo that not everyone knows.  Make sure that your campaign is accessible to everyone. 

2.       Big donors up front – Get commitment from people who believe in you before you launch your campaign.  No one likes to be the first person on the dance floor and this goes for the crowdfunding campaign as well.  Network before you launch.

3.       All hands on deck – Just like starting a company, running a crowdfunding campaign alone is not easy.  Thus, if you can get others to co-sponsor it, you share the responsibility. 

4.       Thoughtful incentives – How many t-shirts can one person use?  Ask your audience about what they would like for rewards in return for their support.  And, no, 100 t-shirts is not a good way to start. 

5.       Social media madness – Use everything, all the time.  Before you launch, learn the basics of every social media platform.  Get on twitter, snapchat, Instagram… be everywhere. 

6.       Sharing is free – Even if your friends can’t support you monetarily, they can sharing your campaign for free.  Your network sharing your campaign with their network grows your audience exponentially. 

http://www.rockethub.com/projects/47080-art-heroes-connecting-creatives-with-causes

Crowdfunding platform list as of Sept 3 2014

Hello readers,

There is a new page on this blogging website that contains a summary of popular crowdfunding platforms.
It is a work in progress and is definitely not perfect, but it does have a lot of data in one spot.
Let me know if you have any information to update the list.

Entrepreneurship at Santa Clara University - really

Yes, you can be entrepreneurial in a large (old) organization.  Santa Clara University (SCU) has developed a Master’s of Science in Entrepreneurship with an emphasis in Global Innovation (MSE-GI).  This isn’t the first time that SCU’s Leavey School of Business has been entrepreneurial.  In 2010, the school launched CAPE, an entrepreneurship education program for non-matriculating students.  The fifth cohort started this summer with 50 participants.  In 2013, the Master’s of Science in Finance and Master’s of Science in Entrepreneurship started.  The MSE-GI is an overhaul of last year’s MSE; however, this time the program is focused in both scope and market.

The MSE-GI program is a 12-month, full-time post baccalaureate degree program for international students in Silicon Valley. The program integrates course work and internships to equip students with business skills and practical experiences necessary for successful careers in a range of organizations from start-ups to established market leaders. International students will be immersed in the business landscape, culture, and network of Silicon Valley and study under prominent Silicon Valley scholars, gain experience with local firms and network with business leaders. Additionally, students will gain the skills and contacts to enable them to lead entrepreneurial projects and intrapreneurial opportunities.

SCU was founded in 1851 in the heart of Silicon Valley. The university now has over 8000 students across undergraduate and graduate degree programs. 

The first cohort will begin in June of 2015. 

You read it here first.

The website will be up in a couple of weeks.     

http://www.scu.edu/business/

Madame Kayoko Hosokawa – entrepreneur

On July 14th I was honored to attend a Salon hosted by the Japan Society of Northern California at the Consul General of Japan’s home in San Francisco.   At the Salon, Madame Kayoko Hosokawa, the former First Lady of Japan, spoke about her latest endeavors in support of musicians with special needs.  The day before, she had introduced the U.S. Japan Friendship Special (Family) Music Concert, which brought together musicians with autism from Japan and the U.S.  At the Salon, Madame Hosokawa passionately described how she was moved to start advocacy for those with disabilities over 30 years ago when she learned about a young woman who was a Special Olympian from Japan.  Since then, she has worked on several projects to promote equality.  Her efforts include co-foundering the Special Olympics of Nippon in 1994 and producing 4 movies about some of the extraordinary accomplishments of those special needs.

Why am I bringing this up on a blog about entrepreneurship?  Good question.  I do this because I would like to highlight Madame Hosokawa’s endeavors as examples of entrepreneurship that don’t fall into what people often define as entrepreneurship.  The Special Olympics of Nippon was not a brand new idea, but it took a lot of work to create this organization.  And what about films?  A film is not a new firm, but could be considered a new venture. 

What do you consider entrepreneurship? 

Types of Chocolate Firms

The first thing that you learn when you start looking into chocolate makers is just how many there are in this $100 Billion market (depending on who you talk to.  CNN reports $110B in 2014, IBIS estimates $120B, Markets and Markets estimate $98.3 B by 2016). I have found over 1000 companies involved in chocolate production by consolidating lists across several sources, and I am sure that there are many that are missing.  These firms are either manufacturers or chocolatiers.  The manufacturing firms are those that take beans from the market and produce chocolate for their own end products or for wholesale.  The chocolatiers use the premade chocolate as a base for their products such as truffles and flavored bars.  The following describes each in more detail.

THE MANUFACTURERS

Manufacturing firms take beans from the market (usually wholesalers and commodity markets, sometimes from actual farmers) and create various levels of chocolate for their own end products or wholesale to smaller chocolatiers. 

Although chocolate manufacturers start with the same raw ingredient - cacao- there is a wide spectrum of how this is done.  For a majority of the chocolate on the market, cacao beans are purchased on the commodity market through dealers.  The largest supplier of cacao is the Cote d'Ivorie.  There has been a movement recently where chocolate manufacturers (mostly smaller start-ups) are sourcing beans directly from farms.  These firms are referred to as "bean-to-bar".   Firms go directly to farms for a variety of reasons such as reducing likelihood of unethical practices such as human rights violations (child labor), obtaining better quality beans, and supporting sustainability practices.  (Please note that some just do it for the marketing rights.) 

Big incumbents and old faithfuls –

You know who they are. They are the prize of every child's Halloween basket, the makers of Easter bunnies, and the permanent fixture at the check-out of grocery stores.  They give you a break, melt in your mouth, and satisfy.  These firms are the mass market producers and dominate the market.  In fact, Mars, Mondelez (Kraft), and Nestle have 40% of the market with Hershey, Ferrero, and Meiji making up another 27% (www.icco.org/about-cocoa/chocolate-industry.html; www.forbes.com/sites/bethhoffman)

Subsidiaries –  

Over the last 50 years, there has been a huge consolidation in the chocolate manufacturing industry.  Some of the most contentious fights included the Kraft purchase of Cadbury in 2010 and Hershey's take-over of Scharffen Berger in 2005. 

Start-ups –

Since about 2009, the start-up chocolate scene has flourished.     Some describe this as the New American Chocolate Movement since there has been such a flood of companies entering the market.  But the increase has not been confined to the United States.  Check out the company list to see the new chocolate makers around the world.

THE CHOCOLATIERS

This may be surprising, but most companies outside of mass manufacturers and bean to bar firms don't make their own chocolate.  These firms are referred to as "Chocolatiers" who use chocolate made by other companies as a base, but innovate with flavors, textures, fillings, and combinations.  For example, the majority of chocolatiers in the Bay Area that I talked with source their chocolate from Guittard in Burlingame, CA. Some of the best known figures in the chocolate world are actually chocolatiers such as See’s, Russell Stover, Lulu’s and Whittman’s.

Pitching a Fit

Today, the F50 held a pitch fest for their first season of firms (http://f50.io/) at the Computer History Museum in Mountain View.  The founders of 25 companies presented their business ideas to over 200 investors along with a large room full of interested business founders and ecosystem participants (e.g. consultants, attorneys, and press).  F50 identified these firms as some of the “most fundable start-ups” and then matched them with investor mentors to help them raise capital.  Thus, it is no surprise that many of these firms have revenues and some have angel or VC funding already.  Many have been through Y-Combinator or (and) 500 StartUps Accelerator. Many founders are serial entrepreneurs.  This is not the typical start-up crowd.  They are experienced, savvy and ready to take on the world. 

“The best of the best of the best, Sir.”

It was a really interesting pitch fest with a wide range of ideas.  Some good, some excellent, some just plain bad. 

Trends:

Almost all of them had something to do with the internet.  If the firm wasn’t completely contained on the internet then they relied heavily on it for reaching customers.  Seven were “platforms”.  Seven were market places (think ebay).  Eight were social such as dating, networking, or photo sharing.  (There is some overlap in these categories.) Other start-ups ideas included on advertising, gaming, and sensors.

What not to do while pitching:

Oh yes – it is back - the list of what not to wear (see previous post).  This time I have included what not to do based on what I saw here and comments that I heard.  I got to sit up front with the investors and VIPs and listen to their comments.  It was hilarious. 

#1 – Don’t dress like a slob.  Seriously.

Holy Guacamole!!

For the love of ironing boards everywhere – get one.  Half of the presenters were dressed like “slobs”.  (Direct quote – I can’t make this stuff up.)  One VC said that he was so distracted by the presenter’s horrible clothes that he completely missed what the company did.  Face it, the dress down look is so 2001.  Actually, if you want to stand out, dress well. All of the investors dressed professionally.  If that is who you are targeting, take note. 

Rule of thumb – First Date Attire or Better.  Dress as least as well as you would on a first date.  That is what this is, your first date with someone with whom you will have a long intimate relationship – if it goes well.  Dirty athletic shoes do not impress.

And do us all a favor – take a shower and shave.

One of these things is not like the other...

#2 – Don’t wait until minute 3 out of 4 to tell us what the firm does. 

We really don’t care if the firm has backing if we don’t know what your product or service is.  Same goes for your pedigree.  Give me a clue of what you’re doing before telling me that you are from Ivy League University. 

#3 – Don’t take your phone.

You think that I am joking.  Nope.  It was probably to help keep time, but boy did it look bad.  How long have I been talking?  Wait, let me look at my phone.  Oh, and Mom called.  (By the way, there is someone in the front row with 1 minute and 30 second left signs.)

#4 – Don’t be mysterious about how you will use the money.

Far too few of the presenters discussed what they would do with an investment.  Just because the firm has traction doesn’t mean that you know how to scale.  For all we know, you will spend all of the next round of funding on t-shirts for marketing.

#5 – Don’t read the slides.

Many venues have the technology that displays your slides in front of you in addition to the larger screen for the audience in back of you.  Unfortunately, some presenters now think that just because the display is in front of them, they can read it like a teleprompter.  Not so much.  And the audience might not know that there is a display on the floor in front of the presenter, so it just looks like he or she is staring at the ground. 

#6 – Don’t go over the time limit.

This is really difficult since the time is so very short.  However, you don’t want to be the one where the organizer walks on stage to usher you off.  The audience understands that you don’t have much time.  The audience is also watching another two dozen presenters (or so).  Don’t be rude.  Share the podium. Play nice. 

Jennifer and the Chocolate Factory

Sometimes, I love my job.  As some of you know, I am working on a new research project about entrepreneurship and innovation in the chocolate industry.  I have learned so much already!  Many people that I have talked with requested that I post information about the types of chocolate companies out there and the choices for consumers.  So I am writing a series of posts that will describe the types of firms that exist or are being created, the choices that they face (suppliers, markets, etc … particularly entrepreneurs just starting out), and the products that reach consumers from these choices.  I am also making my list of firms available.  Since over 1000 chocolate makers exist, the list will be broken into tabs based on the location of the headquarters.  This is a work in progress and will be updated frequently based on the feedback I receive from you and any other digging that I do. So stay tuned.