Book Review: The Crowdfunding Bible: How to Raise Money for Any Start Up

The Crowdfunding Bible: How to Raise Money for any Startup is written by Scott Steinberg.  A secular definition of a “Bible” is “a publication that is preeminent especially in authoritativeness.”  The Crowdfunding Bible is anything but authoritative.  The title is misleading because it doesn’t explain the “how” of crowdfunding, which renders the book practically useless for the aspiring crowdfunder.   

The secular “bible” is only 80 pages long. Those pages contain mostly a collection of platitudes that might encourage any neophyte, but reveals very little insight into the inner workings of crowdfunding that the more advance crowdfunder wants.  This makes the book worthless if you are trying to develop a crowdfunding strategy for a new project.   

To be fair, Crowdfunding is still an evolving industry.  Equity based crowdfunding has yet to be made legal in the US.  However the author, Scott Steinberg, is an authoritative figure in the venture capital world.  You would expect more.   Mr. Steinberg gave a brilliant speech recently, where he offered more insights into crowdfunding than his “crowdfunding bible” does.  (Youtube Link ).  

It is a good thing that the book is only 80 pages. Steinberg’s style is not hip.  He is dry with a veneer of an academician, who covers the subject, but never scratches below the surface.  

Steinberg starts off with a rather dry and academic definition of crowdfunding.  “Crowdfunding is the process of asking the general public for donations that provide startup capital for new ventures.” (P.2).    

On Donation Based Crowdfunding. 

“Rather ...

Durbin: Let’s Nationalize Card Processing Under the "FRAC" Act

Senator Dick Durbin is at the forefront of the crackdown on the outrageous credit card processing rates.  He is proposing new legislation to curb the rising cost of credit card processing.  Durbin’s chief of staff said, “Everyday our office gets countless complaints from small merchants about their high rates.  They demand something be done.  Durbin apparently has solution.   We’ll just nationalize card processing under the FRAC Act.” 

Apparently,  the Durbin Amendment was not enough.    What would a full scale nationalization of the credit card processing industry look like?   “We’re looking at a 1% fee to cover the cost of the transaction and a government residual of a quarter of a percent.”  Durbin’s aide said.  

Senator Durbin’s nationalization is getting some support from other Democrats.   Senator Warren’s office is looking into the new legislation.  A spokesperson for Senator Warren said, “There is nobody in this country, who got rich on his own.   If you built a bank or an ISO, good for you.    But the banks use the money printed by the federal government.   The banks borrow the money from the Federal Reserve near 1%.  The banks use the The banks hire workers the rest of us paid to educate.  The bankers are safe in their banks because of our police forces the rest of us paid for.   It’s time for them to pay some of that back.  The transaction fees that these banks charge the merchants are outrageous.  The merchants built the businesses ...

Why Every Small Business needs an Alternative Funding Action Plan?

Why do you need an alternative funding action plan for your small business?  Credit is tight on main street.   Those too big to fail banks and corporations are swimming in cash.  Most of the money is held with a stronger grip than scrooge or is stashed away offshore to avoid the punitive 39% corporate tax, the highest in the world.   What is a small business to do when it needs working capital?   

Blindbid always advises to start with your bank.   Even if you don’t need money right now, pretend that you do.  The economic  situation will not change much in the next 3 to 4 years.   Think stagnation or worse.   Secondly, getting a loan is going to get much tougher, not because banks don’t want to loan due to risk, but because the government regulators are making it much tougher through the new Dodd Frank regulations.  

With Dodd-Frank alone, there are 3,894 pages of proposed regulations and 3,633 pages of final regulations (as of April 13) and we’re only a quarter of the way through the 400-plus rules that must be promulgated. While community banks pride themselves on being flexible and meeting any challenge, there is a tipping point beyond which community banks will find it impossible to compete.” William Grant, Chairman, President and Chief Executive Officer, First United Bank & Trust

“But the role of community banks in advancing and sustaining the recovery is jeopardized by the increasing expense and distraction of regulation drastically out ...

Crowdfunding Legal by 2020?

The US government passed the Jobs Act in the Spring of 2012.   Equity Based Crowdfunding was supposed to be legal by the Spring of 2013.  By rule, the SEC was required to issue the equity based crowd funding regulations by the beginning of 2013.     The SEC has been dragging its feet.  It is not really clear when crowdfunding for shares will be legalized.

A recent Forbes article outlined a ten point scenario that the earliest would be by January 2014.   That is if the SEC were actively working on getting crowdfunding regulations and policies done.  The SEC has other priorities.  The fact is that the SEC is busy with Dodd Frank regulations.  Crowdfunding is not a top priority.   Crowdfunding allows the people to do something.  Dodd Frank is about restricting and prohibiting activities.  Government loves to regulate, fine and tax.  Dodd Frank will drive public relations.  Dodd Frank will increase government revenues.  It is a promotion builder legislation.  Crowdfunding is none of that.  It is a side project that “some Americans” want.  The SEC is sending a message that “y’all can just wait til we get around to it.” 

If I were SEC chairman, equity based crowdfunding would be my top priority.  It would already be legal by now.  Because crowdfunding will boost the economy.  Because crowdfunding will create jobs.   And because I see crowdfunding as a private property and free speech right.  We should be allowed to do what we want with our money.  If we want to ...

Equity Based Crowdfunding is Here

If here is the Netherlands.  A Dutch company, Symbid, has launched its equity crowdfunding site and its pretty cool.  It allows people to invest in companies from all over the world although most of the companies looking for investment are European.  

So where are the Americans?  We’re mired in SEC squabbles and disorganization.  There have been three heads of the SEC in the past year, Mary Shapiro, Elisse Walter, and Mary Jo White.  

 The Feds passed the Jobs Act last spring.  The SEC will not meet its deadline to release the crowdfunding regulations.   They are now saying Summer 2013.   I would say Fall. Forbes is saying that crowdfunding won’t happen this year. .  

Crowdfunding will happen in the US.  The sentiment is leaning that way.  Why not?  It is our money.  Shouldn’t we be able to spend and invest as we want.   The government is worried about rampant fraud.  Really?  It’s an excuse.  They don’t want the competition.  If the government were worried about fraud, then half the bankers on Wall Street would be in Sing Sing.   Guys like Jon Corzine remain free despite stealing billions.   

According to Forbes, Americans spend $45 billion a year on lottery tickets.  The odds of winning the lottery are 1 in 175 million.   You’ve got a better chance at making a good return by plunking down $1,000 bucks on a few geeky ventures, perhaps the next facebook.   Does wall street really want that competition as well?  Don’t ...