CROWDFUNDx: Understanding the Risks & Goals of Equity
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In our CROWDFUNDx NYC panel discussion led by Eric Markowitz of Inc. Magazine, Jalak Jobanputra of FuturePerfect Ventures, J. Sky Fernandes of Centripetal Capital Partners, Jessica Jackley, co-founder of KIVA and Collaborative Fund and Amy Cortese, author of “Locavesting” provided an array of perspectives and weighed in on the recent equity crowdfunding developments, what it means for entrepreneurs as well as for investors, and what to look forward to.
As a professional investor with limited time to evaluate investments, Jabal Jobanputra explains that early stage funding provides credibility which translates into traction that ultimately accelerates growth. She adds that because there are many risks involved with investing, diligence and controls are crucial to regulate. Having this perspective as a venture capitalist, we were able to see a meeting of the minds and gain an insight into the thought process of an investor.
The conversation switched gears with Sky Fernandes giving us a look into what he calls the ”missing middle.” Fernandes defines the “missing middle” as the size of capital between $100,000 and $2 million. This gap in early stage funding can begin to be resolved, through equity funding and also through “capitalists’ self innovation”.
Jessica Jackley was a key player in debunking myths about crowdfunding successfully. With two companies under her belt, she advocates education for entrepreneurs to properly communicate goals and expectations to investors. She championed collaborative funding, collaborative consumption and collaborative creation to create sharing economy that embraces innovation.
Amy Cortese, author of “Locavesting: The Revolution in Local Investing and How to Profit From it” draws upon her findings of how a small shift in investment away from multinationals towards locally-owned enterprises can lead an economic revolution beginning with individuals and their community. She relates that just as people feel a responsibility to know where their food, products and services originate, the same applies for funding.
One point of debate the discussed spurred was the question: Can you treat social responsibility and making profit equally? Ms. Jackley asserted, “businesses don’t exist just to make money.” She argued investments should not be held to returns so strictly, but rather be based on supporting ideas and entrepreneurs in an educated way.
From these individual insights we were given a set of tips for investors and entrepreneurs alike:
- Invest in areas your know and can add value to.
- Be aware of how much subsequent investment will be needed.
- Know why you are investing.
See the full session:
We gathered audience reactions to the question:
Can you treat social responsibility and making profit equally?
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