For this week’s episode of Art of the Kickstart we spoke with Kinsey Cronin, Director of Business Development at StartEngine. Learn more about how StartEngine is making it easier than ever to raise funds or invest through equity crowdfunding.

Key Takeaways

  • How StartEngine is streamlining equity crowdfunding
  • How Regulation Crowdfunding has made it even easier for companies to raise funds through equity crowdfunding
  • Why your biggest equity crowdfunding challenge may be finding time to manage a campaign
  • How the StartEngine Index is tracking equity crowdfunding industry trends
  • What current equity crowdfunding trends StartEngine is seeing

Links

Connect with StartEngine

Sponsors

Gadget FlowArt of the Kickstart is honored to be sponsored by The Gadget Flow, a product discovery platform that helps you discover, save, and buy awesome products. The Gadget Flow is the ultimate buyer’s guide for cool luxury gadgets and creative gifts. Click here to learn more and list your product – use coupon code ATOKK16 for 25% off!

backerkitArt of the Kickstart is honored to be sponsored by BackerKit. BackerKit makes software that crowdfunding project creators use to survey backers, organize data, raise additional funds with add-ons and manage orders for fulfillment, saving creators hundreds of hours. To learn more and get started, click here.

Transcript

View this episode's transcript

Roy Morejon:

Welcome to Art of the Kickstart, your source for crowdfunding campaign success. I’m your host, Roy Morejon, President of Enventys Partners, the top full-service, turnkey product development and crowdfunding marketing agency in the world. We have helped startups raise over $100 million for our clients since 2010. Each week, I’ll interview a crowdfunding success story, an inspirational entrepreneur, or a business expert in order to help you take your startup to the next level with crowdfunding. Art of the Kickstart is honored to be sponsored by BackerKit and The Gadget Flow. BackerKit makes software that crowdfunding project creators use to survey backers, organize data, and manage orders for fulfillment by automating your operations and helping you print and ship faster. The Gadget Flow is a product discovery platform that helps you discover, save and buy awesome products. It is the ultimate buyers’ guide for luxury gadgets and creative gifts. Let’s get on with the show.

Welcome to another edition of Art of the Kickstart. Today, I am joined with Kinsey Cronin, the Director of Business Development at StartEngine. Kinsey, thank you so much for joining us.

Kinsey Cronin:

Happy to be here.

Roy Morejon:

Let’s talk a little bit about StartEngine. Can you tell me a little bit about how you got involved with StartEngine and what StartEngine is doing these days?

Kinsey Cronin:

Sure. StartEngine is an equity crowdfunding platform. It’s a funding portal under regulation crowdfunding and an intermediary under regulation A+, and I’m using the word regulation because we are helping companies raise capital in return for investment in the company. It’s not a rewards-based campaign platform.

Roy Morejon:

How are you guys going about streamlining the investment process for startups looking to do equity crowdfunding?

Kinsey Cronin:

It’s actually really easy for investors to find and invest in companies on our platform. Actually, yesterday, I met somebody who has invested in three campaigns on our platform, and he did not own a computer, has never owned a computer. He’s done the entire thing from his phone. In his case, he learned about the first one from an advertisement. Now he gets our emails about once a week with a list of everything we have on the platform, and he just clicks and it doesn’t take much for an investor to participate. He just pays for his investment, decides what he wants to do, and clicks submit.

It’s actually really, really easy. I was surprised that somebody who has never owned a computer was able to do it with no problems at all.

Roy Morejon:

I guess it’s safe to say he’s not your typical investor?

Kinsey Cronin:

Actually, I wouldn’t say that necessarily. I think we do have a lot of investors who are interested in supporting companies and are interested in participating, but may not have fully adopted an Internet lifestyle.

Roy Morejon:

Got it. Let’s talk about StartEngine itself. I know the platform launched a few years ago. Talk about the progression of what you guys have seen in terms of the maturity level of companies now coming in.

Kinsey Cronin:

Sure. When we first launched, we expected that StartEngine was really going to be a platform for funding tech companies specifically. We launched the same day as the first regulation came into effect in June of 2015, and our first company that launched with us raised 17 million dollars, which was awesome. It was a car company called Elio Motors. Since then, at first, we found that companies had to have a certain amount of experience and revenue and funds to be able to pay for giant marketing campaigns and for lawyers and accountants who are still figuring out exactly what was required. We’ve come a really long way since then. We had another regulation come into effect last May, which is called Regulation Crowdfunding, and it allows companies to raise a little less money. They can only raise a million dollars per year rather than 50 million dollars per year, but the barriers for entry are much lower, and it’s a lot easier.

In the last quarter of this year, we raised over eight million dollars, and it seems like since January 2017, there’s been a really clear increase in companies launching and funds getting raised, investors getting involved. [inaudible 00:04:41] are really, really picking up steam right now.

Roy Morejon:

That’s great to see obviously. Let’s talk about on the investor side, what, in your eyes, makes a project a good investment?

Kinsey Cronin:

I’d say that I look for companies that have missions that I care about, that are developing technology or innovating in ways that I want to see happen because not every company is going to be a financial success or end up with a return on your investment. Nine out of ten startups fail as we all know, so I want to make sure that, regardless, my money’s going towards something that is making the world better, but also, I like to look at valuation and experience behind a team. If I feel like a deal is going to be … If I can see that there’s a pathway for a company to really grow and their valuation seems low and it’s straight equity, that sounds like a great idea to me.

Roy Morejon:

On the other hand, what do you feel makes a company a good fit for equity crowdfunding?

Kinsey Cronin:

It’s really about community. That’s crowdfunding, in general, but definitely with equity crowdfunding, if you either already have a community or you know how to reach your community, that’s going to be a good fit for you. As far as your vertical, your industry, it’s still very early, so we’re constantly having new companies break new ground for their own industry, so what we’ll see is we’ll see one big hit in the fashion industry and then we’ve got a lot of fashion companies that come on board-

Roy Morejon:

Sure.

Kinsey Cronin:

One big hit, and we’ve had, as I mentioned, our first company was Elio Motors. It’s a three-wheeled car. Since then, we’ve had two other three-wheeled cars raise capital on our platform and lots of things on wheels have done well. I love seeing a company come out and take the chance to be the first one, and that always gets them a lot of publicity. It’s a great way to do it. It’s also always a risk.

Roy Morejon:

Maybe a fashion food truck on three wheels.

Kinsey Cronin:

That sounds great. Is that your new venture?

Roy Morejon:

That’s it. Let’s do it. What would be, in terms of your advice, your personal advice, for a company hoping to raise capital through equity crowdfunding? What would you tell companies?

Kinsey Cronin:

If they’re hoping to raise capital through equity crowdfunding, I would tell them to go to StartEngine.com and start learning. Look at what the other companies have done. Get a feel for what it’s going to take on your side just by going in and starting to create a campaign page and then joining our webinars, signing up for our email list, set a call with me. There’s a lot of questions that can be answered easily by our team, but there’s still not a lot of generic information that applies to every company.

Roy Morejon:

Sure.

Kinsey Cronin:

In order to find out if it’s right for you or what you should do, you really want to get some advice from people who know what they’re talking about so that they can give you advice that’s specific to you.

Roy Morejon:

Absolutely. What would be some of the challenges that you’ve seen at StartEngine for companies looking into equity crowdfunding?

Kinsey Cronin:

The challenges? Sometimes it’s time. When you have a fast-growing company and you are the CEO and you’ve got a million things you’re trying to get done, even if you’re a perfect fit for crowdfunding, you may not have the time to learn and then sign people to do what needs to get done, to hire the vendors you need to work with. That’s probably the biggest challenge is when you’re doing really well, that’s the best time to raise money, but that’s the time when you’re the busiest.

Roy Morejon:

Certainly, certainly. Let’s talk about the secondary markets now. You guys just launched the StartEngine Index. Can you tell our audience a little bit about that?

Kinsey Cronin:

Sure. The StartEngine Index is designed to track long-term trends and progress within the equity crowdfunding industry. That way, we’ll be able to go back in a few years and have data about what was going on now. It’s fun to be … It’s really fun to be in a new industry where there’s tons of gray area and you’re always asking questions and not always knowing the answers, but we noticed that there was a lack of just central industry information where you could find out what was really going on, so we decided to start creating that and just track it. I’m not really sure how we’re going to end up using this information. I’m sure we will, and it’s going to be interesting to see why and what we learn from it.

Roy Morejon:

Absolutely. It will certainly be interesting. On top of that, what trends are you guys currently seeing or tracking in equity crowdfunding?

Kinsey Cronin:

A lot of growth right now, especially at StartEngine specifically. We’re tracking trends about the types of deals as more opinions are shared about what’s a good deal within crowdfunding, what’s safe for the average crowdfunder, sorry, what’s safe for the average crowdfunding investor to invest in and that’s really important. We’re seeing a lot of requests for some adjustments to the laws that are coming out. We’re still perfecting it. As far as trends for types of companies, we see tons of transportation companies. The alcohol industry is really good with equity crowdfunding because they generally can’t do regular crowdfunding unless you’ve got any other information on that.

Roy Morejon:

We have done a reward-based crowdfunding campaign for a tequila company.

Kinsey Cronin:

Really? On what? With who?

Roy Morejon:

On Indiegogo.

Kinsey Cronin:

When?

Roy Morejon:

Years ago.

Kinsey Cronin:

Did they stop allowing that or is it still allowed?

Roy Morejon:

I believe it’s still allowed, but I’ll have to double-check with them. We haven’t run one since.

Kinsey Cronin:

They can’t reward their own product, right? That’s the challenge?

Roy Morejon:

They were rewarding it with new product where they had distribution in the states already.

Kinsey Cronin:

You could only get the reward if you lived in certain places. There’s some limitations there that doesn’t apply to regular rewards crowdfunding. It’s easier to just raise working capital on StartEngine-

Roy Morejon:

Sure.

Kinsey Cronin:

If you have an alcohol company. That’s definitely popular. Also, brick and mortar locations, stores, restaurants, that’s definitely a trend that I think we’re going to keep seeing.

Roy Morejon:

Awesome. Kinsey, this gets us into our Launch Round. I’m going to rapid fire a few questions at you. You good to go

Kinsey Cronin:

I’m ready.

Roy Morejon:

All right. What inspired you to become an entrepreneur?

Kinsey Cronin:

Working with entrepreneurs every day at StartEngine is really, really inspiring. I feel like I’ve learned good and bad habits from them. Just seeing so many people who are pursuing their own way, their own path, and watching how they approach problems has been beyond inspiring.

Roy Morejon:

All right. If you could have a sour ale with any entrepreneur throughout history, because I know sour ale is your favorite, who would it be?

Kinsey Cronin:

I think it would probably be Thomas Edison.

Roy Morejon:

If you were able to meet Thomas Edison, what would be your first question?

Kinsey Cronin:

Oh, my gosh. I don’t even know. I would probably ask him what his biggest daily frustration was and how he was going to fix it.

Roy Morejon:

Who did you look up to when you grew up?

Kinsey Cronin:

I looked up to my parents.

Roy Morejon:

Solid answer. What book is on your nightstand?

Kinsey Cronin:

Right now, I have a book called How Remarkable Women Lead. It’s just stories of different types of successful leadership, not just in business, but in other types of accomplishments made by women specifically. I find it very inspiring.

Roy Morejon:

Beautiful. Last question in the Launch Round, what does the future of equity crowdfunding look like?

Kinsey Cronin:

The future of equity crowdfunding is really big. It’s really big. I think it’s going to be something that’s a lot more normal for entrepreneurs, but also for regular people. I think people who are thinking about … I think it’s going to be as common as the stock market actually.

Roy Morejon:

That would be the hope, right?

Kinsey Cronin:

Yeah. That’s big.

Roy Morejon:

That is big.

Kinsey Cronin:

That’s really big, but I think people will … I think it’s more exciting to invest in a new company where you get to watch a video and understand what it is they do and why they’re doing it and where they’re going, and then you can track them long term and get email updates from them and know what they’re up to and feel like an owner. I think that’s a lot cooler than investing in a stock market company.

Roy Morejon:

Corporate transparency. It’s an unknown.

Kinsey Cronin:

It’s the way of the future.

Roy Morejon:

Kinsey, this has been awesome. Please give our audience your pitch. Tell them what you’re all about, where people should go, and why they should go invest in an equity crowdfunding campaign on StartEngine.

Kinsey Cronin:

All right. We are about helping entrepreneurs achieve their dreams by taking on investment from the crowd. If you want to invest or if you want to learn about how to launch a campaign, go to www.StartEngine.com and you can learn about the campaigns that are raising now, you can find a way to talk to one of us at our company, which is based in LA. If you want to stop by our offices, we’ll set up a time for you to do so.

Roy Morejon:

Kinsey, this has been awesome. Audience, thank you again for tuning in. Make sure to visit ArtoftheKickstart.com for all the show notes, the full transcript, and links to everything we talked about today. Of course, thank you to our crowdfunding podcast sponsors, The Gadget Flow and BackerKit. Kinsey, thank you so much for joining us.

Kinsey Cronin:

Thank you for having me.

Roy Morejon:

Thanks for tuning into another episode of Art of the Kickstart, the show about building a business world and life with crowdfunding. If you’ve enjoyed today’s episode, awesome. Make sure to visit ArtoftheKickstart.com and tell us all about it. There, you’ll find additional information about past episodes, our Kickstarter guide to crushing it, and, of course, if you loved this episode a lot, leave us a review at ArtoftheKickstart.com/iTunes. It helps more inventors, entrepreneurs, and startups find this show and helps us get better guests to help you build a better business. If you need more hands-on crowdfunding strategy advice, please feel free to request a quote on InventusPartners.com. Thanks again for tuning in, and we’ll see you again next week.