Wednesday, July 29, 2009

VC 2.0 - Crowdfunding is go!

The Series B VC market sucks right now. The boom times of the pre-credit-crunch 2.0 world seem very far away. Although there's still enthusiasm to invest in early-stage companies at Angel or Series A rounds (small investment, large slice of equity, potential for large return) and Series C/D+ (where the company is commercialised and probably generating revenue or damn close to it, and therefore the risk is much lower) there's been a huge withdrawal of funds and appetite for Series B investments.

Which is were we are right now.

So in typical Trampo style, we've decided not to go down that route... and today we launched Trampoline's Crowdfunding process.

The idea is, simply put, that rather than persuading a few people to part with a large sum of cash, to go the Obama way and offer tranches of shares for much smaller amounts to many more people. This also opens up great possibilities for utilising the power of the extended network of many investors, all the way from getting a large network of potential contacts (it's almost like hiring a hundred part-time salesmen) to exploiting the wisdom of crowdfunders on key strategic decisions.

Of course, nothing's ever quite as simple as it sounds, and there are many FSA regulations about this kind of thing designed to protect Mom and Pop investors from the plethora of possible boiler room-type scams that could be represented in this light, such as:

  1. We can't actively solicit investment in any public setting.
    So this post is FYI only, ok? Ok...

  2. We can't discuss any details with anyone, unless they're
    1. A certified Sophisticated Investor, or
    2. A certified High Net Worth Individual, or
    3. A friend or family member (yes, apparently that's ok!)

  3. So this is emphatically NOT an exchange-less IPO! 'Cause those are illegal! It's more of a self-build consortium, kind of thing

Anyway, bearing in mind the FSA regulations, that's about as much as I can say, apart from point you at Trampoline's Crowdfunding article in todays Financial Times (also on page 12 of the print edition), and the Crowdfunding Website if you want more information