PH Crowdfunding Co
Discussion
(mods, please leave this in the Business section!)
A few years ago I was the successful CEO of a multi million £ energy company which had some of the very best employees and partners any CEO could wish for. Unfortunately it didn’t exist, as it was the virtual PH Fracking Co Ltd.
This made me realise the extent and potential offered by the very wide range of PHers and how everything you’d need to start and run a successfully business was probably right here.
As you’ve guessed, I’d like to explore the possibility of doing this in the real world; developing a concept for a range of easily manufactured products into an operational business - however, not by the usual route of looking for cash investment.
What I’d like to do is gauge interest in the following. I would like to offer equity in exchange for services and processes like some additional CAD modelling/rendering and the following: metal machining, nylon moulding, e-commerce, assembly, distribution, web dev & hosting, accounting and legal.
If anyone wants to point out the potential pitfalls and how to prepare for/work around them, I’d be very interested to about it, as well as any other experiences from anyone who’s engaged in a similar approach to starting up with others.
Come on then, let’s have your thoughts and experiences please...
A few years ago I was the successful CEO of a multi million £ energy company which had some of the very best employees and partners any CEO could wish for. Unfortunately it didn’t exist, as it was the virtual PH Fracking Co Ltd.
This made me realise the extent and potential offered by the very wide range of PHers and how everything you’d need to start and run a successfully business was probably right here.
As you’ve guessed, I’d like to explore the possibility of doing this in the real world; developing a concept for a range of easily manufactured products into an operational business - however, not by the usual route of looking for cash investment.
What I’d like to do is gauge interest in the following. I would like to offer equity in exchange for services and processes like some additional CAD modelling/rendering and the following: metal machining, nylon moulding, e-commerce, assembly, distribution, web dev & hosting, accounting and legal.
If anyone wants to point out the potential pitfalls and how to prepare for/work around them, I’d be very interested to about it, as well as any other experiences from anyone who’s engaged in a similar approach to starting up with others.
Come on then, let’s have your thoughts and experiences please...
akirk, lostmotel - thanks for the thoughts you've put forward. I should probably clarify, the proposed business isn't yet formed in any way, so hasn't had the chance to be put in a perilous state. However you both put some very relevant points forward which clearly need very careful consideration. Perhaps there are PHers who've operated under similar circumstances who may be able to advise.
However I did ask for thoughts re: pitfalls so thanks for raising them.
However I did ask for thoughts re: pitfalls so thanks for raising them.
Edited by ReaderScars on Tuesday 6th December 18:26
uber said:
If the idea is that good go and raise some private funding and give away 10% and save all the stress.
The fundamental reason for taking this approach - or at least considering it - is because VC/private equity firms etc, (in my experience) like to see a team behind the business and there isn't one.Therefore my thoughts are that this possible consequence is a 'side effect' of the slightly unconventional approach and would have to be accepted.
Edited by ReaderScars on Tuesday 6th December 22:01
Trexthedinosaur said:
Rather than just reply negatively "uber", perhaps propose potential solutions or real world examples of your experience so the OPcan learn from them.
Perhaps some sort of Virtual Workplace can be created and run the business along the lines of "Valve" who generally use a peer-review system for reward(s), that way everyone gets a say on ownership % based on their respective input / expertise.
I would also think of this as a small scale operation rather than something to be initially worked on in a full time capacity? If the current risk exposure is merely a few hours of peoples time to try and define a concept, then why not.
Good luck!
Thanks!Perhaps some sort of Virtual Workplace can be created and run the business along the lines of "Valve" who generally use a peer-review system for reward(s), that way everyone gets a say on ownership % based on their respective input / expertise.
I would also think of this as a small scale operation rather than something to be initially worked on in a full time capacity? If the current risk exposure is merely a few hours of peoples time to try and define a concept, then why not.
Good luck!
akirk said:
That is a good concept, however I am not sure that this will necessarily build the best team.
They will be looking for:
- previous experince of startups / that stage of business
- entrepreneurial expertise
- financial savvyness
- expertise in the specific market
- expertise in the particular product / service
- drive and energy
- something about the team which increases % chance of success
- something about the team which a competitor wouldn't have
- a team with skin / risk in the game
Is that what you will end up with? Or will you end up with a bunch of people whose skill sets vary from building websites to CAD skills to... etc.? VCs don't want dead weight in a company, plus they will challenge why a rag-tag bunch of people own equity... A VC prefers companies which generally have followed a reasonably standard route... self-funded, brought in finance from families & friends, maybe an angel round etc. They want to see that equity has gone to those who have brought in the ability to grow the company, i.e. Investing cash to invest in and grow the business... Equity for a website is not as clean a logic... In fact your concept works better for a organically grown / non-invested company... get the right sets of skills and the correct agreement and it might work, could be challenging though to build a company for early investment...
Perhaps I haven't been clear - the reason for taking this approach is so VCs/Private Equity outfits wouldn't need to be approached, at least at the outset, if at all. Maybe (perhaps further down the line) and as usual, once all of the hard work is done, then a VC/angel/private equity outfit might possibly be approached to help the business realise it's full potential. If ALL VCs/angels approached at that stage don't like the formula then another method of finance would have to be considered.They will be looking for:
- previous experince of startups / that stage of business
- entrepreneurial expertise
- financial savvyness
- expertise in the specific market
- expertise in the particular product / service
- drive and energy
- something about the team which increases % chance of success
- something about the team which a competitor wouldn't have
- a team with skin / risk in the game
Is that what you will end up with? Or will you end up with a bunch of people whose skill sets vary from building websites to CAD skills to... etc.? VCs don't want dead weight in a company, plus they will challenge why a rag-tag bunch of people own equity... A VC prefers companies which generally have followed a reasonably standard route... self-funded, brought in finance from families & friends, maybe an angel round etc. They want to see that equity has gone to those who have brought in the ability to grow the company, i.e. Investing cash to invest in and grow the business... Equity for a website is not as clean a logic... In fact your concept works better for a organically grown / non-invested company... get the right sets of skills and the correct agreement and it might work, could be challenging though to build a company for early investment...
edc said:
This has already reached a level of complexity where a forum discussion will find it difficult to move things forward to the next level. A lot of this stuff would be thrashed out or "brainstormed" with the relevant leaders/managers/stakeholders.
Yep, agreed - hoping that some interest from those involved in alloy machining, legal and plastics moulding will be forthcoming before going further.uber said:
1% equity for £2000 of professional time might give you the services you need without paying up front but locking them in long term will be a nightmare. It only takes a better designer to come along or a guy who can produce stuff cheaper and the ship will sink faster than the Titanic.
Thanks for the equity figure and the additional consideration.
Yes, sorry 48k et al, I gave a poorly worded response.
Once a full complement of interested parties are in place, so to speak, I'd like to issue NDAs by email. If the interested parties accept the terms, then once I have that confirmation I'll send out the outline of the business and follow it up with a phonecall. If the interested parties stay interested then great.
However the thread's been up for a few days now, no full complement of expertise has been met yet, so this proposal clearly isn't of great interest to the majority of visitors. Let's see what happens over the weekend, perhaps, unless something comes up earlier. Incidentally should be in possession of 3D prints of the parts referred to in my OP over the next week or two, depending on forthcoming quote.
Once a full complement of interested parties are in place, so to speak, I'd like to issue NDAs by email. If the interested parties accept the terms, then once I have that confirmation I'll send out the outline of the business and follow it up with a phonecall. If the interested parties stay interested then great.
However the thread's been up for a few days now, no full complement of expertise has been met yet, so this proposal clearly isn't of great interest to the majority of visitors. Let's see what happens over the weekend, perhaps, unless something comes up earlier. Incidentally should be in possession of 3D prints of the parts referred to in my OP over the next week or two, depending on forthcoming quote.
edc said:
I don't think the proposal is not of interest as such but it has taken over a page of extra posts to determine some 'issues' and to establish some clearer understanding. Those now checking in and looking at the first page may have similar queries but not the inclination to read on. Like most proposals and presentations you need to grab the audience quickly. This medium is possibly not the best way.
Another curve ball is how you vet and validate quality and competency of participants. Anyone can put their hand in the air but how do others have trust in them that they can deliver?
Personally EDC I thought I was very clear in my OP that I wasn't looking for investment in the traditional form, if that's one of the issues you mention.Another curve ball is how you vet and validate quality and competency of participants. Anyone can put their hand in the air but how do others have trust in them that they can deliver?
I fully accept this is an unconventional approach and that for some, alarm bell circuits will be warming up if not ringing. If I have to adapt my approach to secure the remaining interest (not investment of time/skills/services), then I would appreciate being shown what approach to take, because I've already tried to make contact with those who are in a position to assist and it hasn't been successful.
edc said:
My point was not so much whether you think you are clear but the real perception of the clarity of your message.
If the opening message is meant to be a pitch, allay fears and present a tangible and understandable opportunity then it looks like it missed the mark because the majority of response is asking for clarification or raising queries. There are few responses that are totally in tune with your thinking who look like they are 100% sold from the outset. For that reason I would treat this thread as one big collective 'brainstorm' and then re-pitch again in a separate thread later where the message is clearer.
The other problem is credibility. Others want to know this has a likelihood of success. How can they assess that if they don't know the other contributors? Perhaps showcasing your background/credentials is needed to convince people you are the wo/man to bring this all together. Similarly, the forum and text is a very impersonal way to interact. That's why timeshare sales people lure you in to a meeting and some freebies. Perhaps what you need is an initial push to get people with the skills you need and you to sell them on how they can make additional money from them outside of their normal current employment.
edc, thank you for the considered response; your views based on your external and professional position are welcomed and very useful.If the opening message is meant to be a pitch, allay fears and present a tangible and understandable opportunity then it looks like it missed the mark because the majority of response is asking for clarification or raising queries. There are few responses that are totally in tune with your thinking who look like they are 100% sold from the outset. For that reason I would treat this thread as one big collective 'brainstorm' and then re-pitch again in a separate thread later where the message is clearer.
The other problem is credibility. Others want to know this has a likelihood of success. How can they assess that if they don't know the other contributors? Perhaps showcasing your background/credentials is needed to convince people you are the wo/man to bring this all together. Similarly, the forum and text is a very impersonal way to interact. That's why timeshare sales people lure you in to a meeting and some freebies. Perhaps what you need is an initial push to get people with the skills you need and you to sell them on how they can make additional money from them outside of their normal current employment.
I'm going to take the advice you've offered and make a clearer proposal based on the outcome of the current development work (3D printing) which is well under way.
When tied in with some collateral/promo docs it should make for a clear proposal. As far as being the person to lead this, business development and guidance would be a requirement and would almost certainly be best brought in and hopefully the completed proposal would make it a better/good proposition for the right contributor.
Again, thanks for your advice. It will be brought into play when the 'crowdfunding of skills' goes ahead.
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