You are right ”on the money” (pun untended) Pierre. This is excactly the challenge ahead. I hope we will see more options for funding that agree that success must not be a billon dollar exit. I would also like to add the time component to the equation. Not only does a company need to have the potential to be extremely valuable, it also needs to shoe a plan that can create this in a timeframe that fits the VC funds. Often this leads to massive overspending to drive growth when the market or product is not mature enough yet. Some innovations are hard to hurry. Great article Pierre!
This a typical French view totally based on rationalist principles inspired to Pascal! It's 0 or 1, when the 1 is the unique alternative to a compulsive demonstration of inadequacy of present models (that I also criticize but for different reasons: the present evaluation models are inadequate in the first two years of startup) which is made true with rigid assumptions of time-expected return. The venture investors do not follow any more a clear time for return. Maybe on sophisticated markets this is true. There are now funds that require for investing low contributions and the proportion of Angels into capital increases is higher than in the past. It is the execution of the business models which plays a growing importance. Modifying the fiscal treatment of investments is now required. I think that fiscal detractions must reach (for at least 3 years) a level up to 100% of investment made, without any condition!
My thoughts are that it needs to be aligned with what we see in the current SAFE, preferred, no voting rights, ... I would not limit the number of holders, why would I? it needs to accommodate, within the boundaries of the law, retail investors, as small amounts are welcome. I have not thought out every detail, that's not my business, I'm just convinced that we need a different way and that stakeholders can contribute. the closest I found to it is fairmint.co. Cheers
Seems to me there is a solution for the problem. Listen I am no financial guru just a guy looking at problems then trying to solve it. So there is this big thing coming called blockchain which I am sure we all saw the news lately. So lets say my business own a Digital Assets Platform on this network then setting up a crowd sourcing fund is like 3 clicks away. I need new Innovation/technology in my business to evolve or like to pay it forward. I invite founders to pitch get some great ideas, pick what can work for my business then reach out to my network and raise the few $100k’s. This is a major 3 ways win!
1. The startup get the money they desperately needed, they actually now have a platform and a voice to get a working model/proto of the ground plus they now have a big customer me!
2. The investors give another business a shot plus make some money and feel good points
3. I win big time, I get R&D no money down, no risk. I get a loyal supplier and an additional source of revenue.
Am I missing something or going crazy? Would love to get some experts to have this conversation with as I am going to experiment with this. Like Ray Dalio would say “Lets create an idea meritocracy”
I'm no expert, an observer mainly. Crowdsourcing exists already and has turned into a pre-sales machine, not a funding one. If you have an almost ready product crowdsourcing can work, as long as you really know the total cost of your product, most people don't really, and end-up losing money. My take is that we need a new funding mechanism involving stakeholders. Cheers
You are right ”on the money” (pun untended) Pierre. This is excactly the challenge ahead. I hope we will see more options for funding that agree that success must not be a billon dollar exit. I would also like to add the time component to the equation. Not only does a company need to have the potential to be extremely valuable, it also needs to shoe a plan that can create this in a timeframe that fits the VC funds. Often this leads to massive overspending to drive growth when the market or product is not mature enough yet. Some innovations are hard to hurry. Great article Pierre!
Thank you!
Thank you for sharing Pierre!
This a typical French view totally based on rationalist principles inspired to Pascal! It's 0 or 1, when the 1 is the unique alternative to a compulsive demonstration of inadequacy of present models (that I also criticize but for different reasons: the present evaluation models are inadequate in the first two years of startup) which is made true with rigid assumptions of time-expected return. The venture investors do not follow any more a clear time for return. Maybe on sophisticated markets this is true. There are now funds that require for investing low contributions and the proportion of Angels into capital increases is higher than in the past. It is the execution of the business models which plays a growing importance. Modifying the fiscal treatment of investments is now required. I think that fiscal detractions must reach (for at least 3 years) a level up to 100% of investment made, without any condition!
Hi Pierre what are your thoughts on this "stakeholder share class" you introduce here in relation to:
- liquidity preference
- limiting the number of holders to e.g. 100
- accredited vs retail investors
- money laundering due diligence
- dilution by preferred shares if the company is successful
Really interesting idea btw:
-
My thoughts are that it needs to be aligned with what we see in the current SAFE, preferred, no voting rights, ... I would not limit the number of holders, why would I? it needs to accommodate, within the boundaries of the law, retail investors, as small amounts are welcome. I have not thought out every detail, that's not my business, I'm just convinced that we need a different way and that stakeholders can contribute. the closest I found to it is fairmint.co. Cheers
Seems to me there is a solution for the problem. Listen I am no financial guru just a guy looking at problems then trying to solve it. So there is this big thing coming called blockchain which I am sure we all saw the news lately. So lets say my business own a Digital Assets Platform on this network then setting up a crowd sourcing fund is like 3 clicks away. I need new Innovation/technology in my business to evolve or like to pay it forward. I invite founders to pitch get some great ideas, pick what can work for my business then reach out to my network and raise the few $100k’s. This is a major 3 ways win!
1. The startup get the money they desperately needed, they actually now have a platform and a voice to get a working model/proto of the ground plus they now have a big customer me!
2. The investors give another business a shot plus make some money and feel good points
3. I win big time, I get R&D no money down, no risk. I get a loyal supplier and an additional source of revenue.
Am I missing something or going crazy? Would love to get some experts to have this conversation with as I am going to experiment with this. Like Ray Dalio would say “Lets create an idea meritocracy”
I'm no expert, an observer mainly. Crowdsourcing exists already and has turned into a pre-sales machine, not a funding one. If you have an almost ready product crowdsourcing can work, as long as you really know the total cost of your product, most people don't really, and end-up losing money. My take is that we need a new funding mechanism involving stakeholders. Cheers