Crowdfund Investing For Dummies
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You should be able to locate the meat of the business model on the same funding portal where you find the crowdfund investment's pitch video. The entrepreneur or business owner should provide the equivalent of an executive summary from a business plan, which contains about three pages of information on the entrepreneur, her team, her competitors, and the business model.

As you read this information, take notes and consider what questions you have.

If, after reviewing all the available information, you still have unanswered questions, you need to reach out to the entrepreneur or business owner directly. The online funding portal provides discussion forums that allow you to do just that. Don’t be shy about asking questions, especially when the answers will help you determine whether to spend your money.

Instead, assume that you’re doing a community service here; if you couldn’t find all the answers you were looking for, chances are, other potential investors are in the same boat.

Watching how an entrepreneur answers your questions gives you a very good glimpse into how she will relate to her investors after the investment campaign reaches a successful completion and she is growing her business.

If questions are left unanswered in this phase, you may assume that it will be hard for you to get information from the entrepreneur down the road. (If the entrepreneur is busy now, just wait until she has launched her business!) This person needs to demonstrate that she can manage her time effectively, and this questions-and-answer interaction is a good window into her time management and communication abilities.

If the campaign is for an existing business and the business owner is looking for growth capital, the executive summary information should feel quite solid. After all, this person isn’t just speculating about what the business will look like; he’s in the midst of it and should know the company’s strengths and weaknesses and its competitors.

The pitch information section should address why this company is better than its competitors and how it’s going to overcome any existing weaknesses.

About This Article

This article is from the book:

About the book authors:

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

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