Soon You Won't Have To Be Rich To Back A Startup.

New crowdfunding rules taking effect Monday will let anyone—not just the wealthy— invest in startups. But don't bet on the "99 percent" finding the next Uber overnight. 

The change overrides a longstanding Securities and Exchange Commission requirement that investors backing private companies be "accredited," meaning they make at least $200,000 a year and have a net worth of $1 million or more (excluding their home).

Now startups raising money through online crowdfunding portals will be able to sell shares to people regardless of their wealth or income so long as the founders have submitted annual financial reports to the SEC. In exchange, companies can raise up to $1 million. 

The rules, implemented as part of Title III of the JOBS Act, were four years in the making and the result of industry lobbying to make the process more democratic. The big question is how much the change will transform crowdfunding, which has typically rewarded backers with T-shirts, events tickets and early iterations of gadgets.

While some startups are keen to sell shares to small investors, others are hanging back because they find the rules too onerous and the fundraising limit too low. Meanwhile, Kickstarter, the biggest and best-known crowdfunding site, has no plans to join the party.

It's early days but non-tech entrepreneurs who have trouble attracting venture capital are considered the most likely to take advantage of the option. People like Tom Lix, who's keen to raise $1 million on the Wefunder portal so he can expand his Cleveland liquor startup.

"I would love for my customers to be my shareholders," says Lix, whose Cleveland Whiskey LLC says it can age whiskey in 24 hours.  "I couldn't ask for better fans."

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Richard Swart, a founding board member of the Crowdfunding Professional Association, says the new fundraising rules could especially appeal to companies outside venture-capital rich California and New York. He says entrepreneurs in theater, food production and energy have expressed the most interest so far, along with minority-led businesses.

"We're hoping crowdfunding can start to equalize the distribution of funding," says Swart, who also serves as chief strategy officer at NextGen Crowdfunding LLC,  a year-old startup that provides information about funding portals, individual companies and crowdfunding regulations.
Still, he and others acknowledge that new funding option could have limited appeal. Jim Fulton, an attorney at Cooley LLP who specializes in corporate and securities law for emerging companies, says many companies, especially in tech, consider the $1 million limit too low and the costs to register and submit annual results too high. He says fewer than a dozen clients have asked about the option. Another potential turnoff: a requirement that companies communicate with investors as individuals rather than as a group.

"If you're not going to raise $5 million," Fulton says, "I don't know why you'd subject yourself to this burden."

The costs vary depending on a company's complexity and how much it wants to raise. Cleveland Whiskey expects to pay between $40,000 and $50,000 to raise $1 million while Anikona Farm, which operates a coffee plantation in Hawaii, expects to pay between $1,000 and $20,000 to raise roughly $100,000, according to owners at each company.

As of Thursday, five crowdfunding portals had been approved: Wefunder Portal LLC, SI Portal LLC. dba Seedinvest.com, CFS LLC. dba CrowdFundingSTAR.com, NextSeed US LLC. and StartEngine Capital LLC. Three dozen more are awaiting approval.

A spokesman for Kickstarter said the company has no intention of adding equity investing to its platform. But rival crowdfunding portal Indiegogo does.

"It was the original goal of the founders when we launched in 2008 and it still is," says Indiegogo Chief Executive David Mandelbrot, adding the company is working out details with attorneys now and expects to launch something later this year. "Limiting venture financing to accredited investors and treating people differently according to their wealth feels very undemocratic. It's sad it's taken this long to change that, but at least these are steps in the right direction."

Disclaimer: Following article come from Bloomberg

Startup with $10 million in funding shuts down: “From first bite to the bittersweet finale”

An on-demand private chef startup that had secured more than $10 million in funding has shut down and issued a dire warning for other tech companies operating in the food space.

Silicon Valley-based Kitchit offered a platform where chefs could visit users’ homes and cook for them, and has served 100,000 meals since its launch in 2011.

The startup raised over $US8 million in total, including a funding round it closed in December 2014.

But due to an increasingly cut-throat market and a lack of investor interest, Kitchit has shut down, another in a long line of similar startups calling it quits.

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In a lengthy and insightful blog post, founders Brendan Marshall and Ian Ferguson detail the startup’s journey from “first bite” to the “bittersweet finale” and the reasons behind its demise.

It begins with the team’s plans to create “the world’s largest – and its first decentralised – restaurant” and their early success with these plans, with 30-40% gross profit margins.

“An accomplishment that was unrivalled by many food companies at scale, to say nothing of food-tech startups,” the founders say.

“We believed that these were the early indicators of the venture-scale business we’d been searching for.”

But it all started to come apart, with the founders saying the company’s funding runway ended just as the industry faced some troubling times.

“We’ve navigated five years and made the most of every dollar raised,” they say.

“Nevertheless, investment runways are finite, and unfortunately ours reached its end at a moment of substantial upheaval in the food-tech world.

“While Kitchit’s business fundamentals have always been strong, our scale has been too limited to outshine the tumult around us.”

It comes as several other startups playing in the food space have been forced to shutter operations, including SpoonRocket in March due to a lack of funds, Competitor Dinner Lab earlier this month and Kitchit rival KitchenSurfing.

The founders’ blog post concluded with an ominous warning for other startups operating in the space.

“So we close our doors with a mix of sadness for our customers, chefs and employees on one hand, and on the other a recognition that our market is simply not ready to sustain a venture-scale business,” the founders say.

Disclaimer: - Following article come from SC

Food Startup Flips Business Model To Cut Down Costs, Maintain Growth.

This is a case sort of belt-tightening across different startups sectors that cut across e-commerce to food-tech companies. Faasos - one of the most highly-funded food startups, which so far retailed only self-branded food from its own kitchens - around 175 odd ones across top 15 cities - is the latest one to flip strategies to keep costs down while maintaining the pace of growth. 

The company flipped its business model last year to enlarge food variety on its menu by tying up home chefs - around 100 on its rolls now.

 

The model had limitations, though. Food from home-chefs can get high-on-demand but home chefs do not have the ability to address the consistent point in order volumes. "We will be using the strength of home-chefs for bulk party orders that we started on with about a month ago," said Revant

Bhate, Head of Marketing at Faasos.

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Faasos which handles around 12,000 orders a day is now hooking on to restaurants and independent caterers to sell their best selling products to customers, in a bid to further expand its menu without bearing the cost of setting up kitchens.

"At the end of the day, it does not matter to the customer where the food is coming from," said Bhate. At present, the Faasos menu has broadly 7 to 8 segments -north Indian, biryani, signature rice, curries, wraps, pizzas, desserts, chai and snacks and all-day breakfast.

Restaurant tie-ups are aimed at getting into other cuisines such as Chinese, salads, pastas, continental and south Indian dishes. The move will help Faasos which recently completed tie-ups with 500 restaurants across metros and tier 1 cities to double up order volumes without investing big on new customer acquisition. "The idea is to move up from 3 orders a month per customer to 6 orders from the same set of customers," said Bhate who hopes to close fiscal year March 2016 with revenues somewhere close to Rs.100 crores which was the set target for the company.

The company founded in 2011 by two friends Jaydeep Barman and Kallol Banerjee counts leading venture capital firm Sequoia Capital as its early investor and had last year raised two rounds of funding -$20 million led by Lightbox Ventures and $30 million led by Russian firm ruNet which valued the firm at around $130 million.
Disclaimer: - Following article come from ET

WHAT AND WHY??

In my previous article I have highlighted the importance of the Fashion Industry and E-Commerce. Today I will get in detail for what and why we need E-Commerce.

For any business to grow it must constantly reach new customers and communicate efficiently. If you have a physical storefront you’ve probably realized these two requirements for growth are not easily achieved.  Building an E-Commerce website allows a retail store to break-through the limitations a physical location gives, while increasing sales of its products.

E-Commerce is a term used for commercial transaction that takes place chastely through the internet. This transaction could be between a consumer and an online store, or even a trade to trade business transaction. 

No matter what is your corporate standard is, you should take a closer look at E-commerce as a way to build your business.E-Commerce provides an ability to purchase without any restraints. 

Businesses worldwide are racing to conquer the E-Comm technology. It have expanded over the last 10 years due to the increase the rate of consumers purchasing online.

For those small scale business providers or those who are passionate to build their own business and finds it difficult to set up a physical store may find it easier to Set up an online store with the help latest technology platforms for their start-ups. When implemented correctly, e-commerce website should have the following features:

1.  Large customer base

2.  Hassle free services

3.  Latest technology

4.  Always open 24* 365

5.  Shop on the go

6.  Free training

7.  Opportunity to connect

If you found this article worth reading then please step up and take time to build an E-Commerce platform for your business. It may not be as hard as you think it is, and it could have a huge positive impact on your business for years to come.

FAHION INDUSTRY AND E-COMMERCE

The rise of mobile and e-commerce made a huge significance in the fashion industry. With the introduction of online companies like LIBBSY, the fashion industry is so very different as compared to what it was few years back. Most of the major fashion brands are so progressively marking their mark and tend to grow or build their market with the help of the e-commerce platform. Consumers are so engaged to spend their time on online purchasing than direct shopping as it is more convenient by saving time and effort to reach the destination. One need to create an effortless shopping experience to be positively leverage the e-commerce.

                                         

     

           

            Social network plays a vital role here.  I said so, as me as the user depend on the online or the user- generated content before making a purchase. Various social networks are now available [LIBBSY – ONE STOP DESTINATION FOR WOMEN SHOPPING]. Instagram, repost, Facebook, blogs and many more fashion buying and selling application or platforms are at ease for the customers choice. For me the urge to do online shopping have increased from the past as I have more options and seamless services to choose from a single portal rather than running around in a mall with a fuss…

                       

            LIBBSY - WE BUILD MARKET-PLACES FOR YOU TO LEARN AND GROW YOUR BUSINESS

           

E-platforms have made it easier for us. [LIBBSY PROVIDES GOOD QUALITY BRANDED PRODUCTS.] Most of the E-platform effortlessly try to provide highest level of customer satisfaction. As I have experienced that these application have made the users wanting come back for more. In fact, the retailers are keen to work with start-ups to please the hunger for modernism's. Online market-place for women clothing allow them to connect with a selection of products, indirectly helping the growing brands gain limelight through a larger platform.

            For those who want to create their own line of clothing but don’t have access to the resources or funding to do it on their own, these E-app aids to provide ability for the entrepreneurs to use E-platforms like Facebook, blogs or any related apps targeting to promote to specific individuals. 

BE SMART AND CHOOSE WISELY - LIBBSY COMING SOON

The high cost of entrepreneurship

So you are ready to start your own business! It’s a time that is both exciting and possibly nerve-racking. But there are so many reasons to do it, right? To be your own boss. To set your own hours. To realise your dream. And most of all, to provide the kind of financial reward and security that working for someone else can rarely offer. And you are re right, of course, in principle. Successfully starting, running and ultimately exiting a business can deliver on all of these promises.

However, before jumping into the waters of entrepreneurship, there are other sides of the coin you should be prepared for as well. Upon setting out on your new venture, gone will be the safety net you may well have become accustomed to: the regular salary. If you are funding the business yourself, you will hardly be able to pay yourself a salary. And if you are seeking outside funding, the last thing investors want to see in the “use of proceeds” table is a comfortable salary for you.

Without outside employment, you now also have to consider things like health insurance. The cost of being self-insured is becoming increasingly higher. Once your company may qualify for a small business group rate, it helps. But remember, you are the company. If you have the company pay your insurance, it is still you paying for your insurance. Every dirham or dime spent, is less money you have to work with in growing your business.

And as you no longer have someone to pass problems up to, be prepared to be the receptacle for all of the company’s problems. With the addition of employees, even good ones, you will also take on the role of parent, guidance counsellor, marriage counsellor and confessor. Which takes an inordinate amount of time.

But lest you get the idea that I am dissuading budding entrepreneurs from pursuing your dreams, I would assure you I am not. For many (myself included), the benefits mentioned in my first paragraph far outweigh the obstacles and challenges listed in the next three. But it is a decision that should be carefully considered before committing. Especially as one of the biggest changes you are likely to experience in starting your own business is one that is often the least anticipated: the change in lifestyle! In making the shift from employee to entrepreneur, you will be moving from enjoying a regular salary and the ability to budget your time and expenses in the pursuit of happiness to wondering what each new day will bring.

Let’s start with the budgeting of time. At the helm of your new enterprise, evenings and weekends become extended work hours where they used to be time for relationships and recreation. Whether it be business opportunities or operational issues, right now will always be the right time to handle them. So an unhappy client at 9pm can be a once-again-happy client at 9:30pm with a little handholding. 

But push them off to the morning when you may prefer to call them and they could well be on the way to becoming an ex-client. This weekend’s operations issue, if left to fester until the work week, could cost you far more than a few hours it may take to address it immediately. This is not to say you’ll never have free time to relax in the evening or on weekends. But your business will demand that you are always on call. Even travelling takes on a new complexion as you will undoubtedly spend an inordinate amount of your time on your email or phone handling business affairs.

Now on to the financial impact on your psyche and daily life. As an employee, you generally know how much you’ll make each month (apart from commission-based sales jobs of course). And you know your core expenses of housing, etc. So you have a reasonably good idea of how much you can place against your culinary, social and recreational interests. Well, now it is “disposable income, goodbye”!

If you are committed to building your new venture and you are placing all available resources against this goal, then discretionary funds for fun take a hard back seat. When I started my business in Manhattan, in 1999, I chose self-funding at the onset to preserve my ownership stake and to test the market before seeking outside funding. As the business started developing, I committed more and more funds. Within a few months, I had cashed in every account and mutual fund I had set aside over the years to fund operations. And all during this time without any income.

So my daily life changed significantly, in ways I struggled to cope with. Such as coming home at the end of each month and telling my wife: “No, I couldn’t take salary again this time.” After having provided very well in my past life as an employee, this was a rather bitter pill to swallow.

I also recall a conversation with my executive vice president (EVP) of sales and marketing a few years ago. When I hired him initially, he was fresh out of college, without experience and hungry to sell. We had a small team in those days, and they tended to go for lunch at one of the nearby delis in New York. 

They would often ask me to join, and I always politely declined. Now that this young salesman was an executive and had known me for several years, he spoke about the early days of lunches and said at the time that the staff thought I was being elitist in not joining them for lunch. I told him it was not at all the case.

In fact, I would have been happy to, but I could not let myself spend $10 (AED 36) a day on a sandwich when I had no income and was living on credit cards. So from my perspective, it would just be more debt. Clearly, I put a good face on it, since they thought I chose not to eat with them. But internally, I was distraught at not being able to do something my young staff took for granted.

I only point this out as an example of how one’s lifestyle can change in making the move to entrepreneur. Unless you are independently wealthy, things you once took for granted, like joining the beach club or having that expensive dinner, should suddenly be viewed through a new lens. And seldom have I seen a place as lifestyle-oriented as Dubai. Golf, beach clubs, and flashy cars are the expected norm. So preparing yourself mentally for not having the time or money to pursue these Dubai standards will be key.

So where am I going with all of this? I’m certainly not suggesting you forgo your dreams of starting your own business. The rewards are well worth the pain, as I myself discovered. But no great accomplishment comes without great sacrifice. And in the early days, the most profound area you are likely to experience in terms of sacrifice is in lifestyle. Expect to compromise in having the time and the funds to enjoy many things you take for granted currently.

And a parting bit of advice, if I may. Before committing to your new venture, make sure you discuss this at length with your spouse or partner. It’s important to have them on board with the commitments of time and funds that will be required, and the change in lifestyle that comes with it. Because it will be changing their lifestyle as well.

CITATION FROM : ARABIAN BUSINESS - http://goo.gl/9zRm6h