13. May 2014–
There are many crowdfunding platforms for startups out there. Welcome Investment is a new one and is just getting started (therefore, as of right now, only available in German).
Different from other platforms, this one does not require an application or a long decision process by the crowdfunding platform. On Welcome Investment, the crowd gets to decide which project will be open for crowd-investing. A project needs to reach 100 votes (“likes”) in order to be open for crowd investment.
"With this process, a founder can first validate their idea and get feedback early in the game," explains Jörn Kunst and adds, “It's a very democratic system - and it's also much faster this way.“
What made you start Welcome Investment?
As a founder, I have firsthand experience with the frustrations startups have when it comes to raising money. The decision whether to give a founder access to capital shouldn't be left to the arbitrary whim of one person who gives a "thumbs up" or "thumbs down" vote, Julius Caesar-style. I believe the success or failure of a startup - in many cases, that founder's lifelong dream - is too important a decision to be left to another person. Instead, we let the crowd, the market, decide. This is what I like to call the "Democratization of Startup Financing". The experience, values and knowledge of the crowd is far more powerful than any one person's so-called "expert opinion". And it's also a far better predictor of success in the marketplace.
In general: Why do you think crowd investment is a great option for founders?
Up until now, with the dawn of crowdfunding, the way a startup raised capital was time-consuming, highly competitive and complex. A founder would have to go, hat in hand, to big banks (who normally reject untested ideas), “business angels" (who take huge percentages) or venture capital companies (who typically want control of the startup). Faced with this, many great ideas never got off the ground. The odds were stacked against the startup from the start. Even worse, because this process was so time-consuming, most founders invested between 70-80% of their time in the capital search rather than improving their product. This meant they had no choice but to take their eye off the goal - which is to create value in the marketplace. This is not a winning formula for success. So it should come as no surprise that under this formidable system, only a small fraction of startups ever raise enough capital - less than five percent. That's the sad reality.
With crowd investment, the founder is able to focus on what he does best: create the best product or service.
Looking to the future: Where do you see Welcome Investment in two years and five years down the road?
Over the next two years, big changes are on the horizon for crowd investing. The EU will soon facilitate cross-border crowd investing, and other countries will get on board as well. Right now, there's talk of the United States liberalizing the rules for crowd investing. That will open a massive market for startups of all types. It's a very exciting time. More and more countries are starting to grasp the awesome potential of mass financing.
We will play an important role as crowd investing internationalizes in the next two years. The future of the crowd investing provider lies in cross-border financing. In five years, funding will be driven by the crowd and integrated into traditional financing methods. A successful crowd investment round is considered a proof of concept and serves as a benchmark for subsequent financing or increases of financing.
What are the crowd-funding conditions at Welcome Investment?
We give startups the possibility of raising capital in the range of €5,000 on the low end to an upper limit of €2,000,000. This is an important market gap other platforms neglect: the under €100,000 range. Many startups fall into this category.
As far as an individual investor, he or she can start with an investment of €1. This opens the door to whole lot of people who - until now - were barred from joining the investment world because the minimums were simply too high.
An investor can get started with very little risk, and understand how the investment game works. He or she can grow both their investments as well as their financial acumen from there.
When an investment round is successfully completed, Welcome Investment shares in that success by earning a commission of five and a half percent. But that's only on the first round of financing. From the second round on, we earn just four percent. Compared to traditional financing, this is a bargain for any startup.
If you were not building Welcome Investment, what would you be doing?
As a serial entrepreneur, I still have a lot of ideas in the hopper. I would put my energies behind one of these as a startup.
Is there a startup that you wish had started at Welcome Investment?
To me, every startup is worthy when the people who built it stand behind it with full seriousness and commitment to the business.
For those building a startup, what is your number one piece of advice?
Focus on your core skill set, deliver the best product you possibly can to the marketplace, and save your valuable time by raising the funds you need with crowd investing.
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Image Source: Welcome Investment