Hello from Broderick McClinton and Eric Sonnier, co-founders of Equity Endeavor, a platform that leverages the power of crowdfunding to allow small business owners to raise funds for improvement and growth projects. Our platform exists for two reasons. First and foremost, we’re sick and tired of so much attention being devoted to the financial struggles of large corporations while small businesses in America struggle. Large corporations have access to a litany of capital sources; however, this is not the case for small businesses. According to the Small Business Administration, as of September 2012, U.S. small businesses make up:
- 99.7% of U.S. employer firms
- 64.0% of net new private-sector jobs
- 49.2% of private-sector employment
Why aren’t more people paying attention to the amazing entrepreneurs who take massive risks in order to build businesses that make their communities a better place? These businesses are facing a massive struggle in trying to grow. Banks won’t lend to them (or if they do, they face crippling interest rates), because their loan sizes are too small to make due diligence and monitoring cost effective. Not to mention the movement towards stricter credit requirements. This means that your Mom & Pop neighborhood business, such as the coffee shop on the corner, doesn’t have the funds to improve or grow, over time making them uncompetitive against the larger franchises. These are the types of businesses that give communities their character. If our communities are going to retain their identity, it’s important that the customers and communities of these businesses step up and support them.
The second reason behind the Equity Endeavor movement is rooted in the growing awareness of crowdfunding. We wanted to leverage crowdfunding to create a real tool for small business owners. If done right, we believe crowdfunding could fill the void left by the difficult lending environment. Many small business owners are unfamiliar with the concept of crowdfunding so we’ve made a large effort to spread the word. Crowdfunding, at its core, has been around for a very long time. It’s the simple idea that large goals can be attained when large groups of people commit a small (relative to size of the goal) dollar amount. Think of the U.S. tax system or the Red Cross. All of these are examples of crowdfunding.
More recently, the advancement of technology has allowed everyday individuals to explore crowdfunding through Internet platforms. There are 4 main types of crowdfunding: equity, lending, rewards, and donations. (1) Equity crowdfunding, which has gained prominence because of the passage of the JOBS Act, is the idea of selling equity to large pools of investors through online funding portals. Currently, unaccredited investors are not allowed to participate but as the JOBS Act is implemented this could change. Many entrepreneurs and companies are watching this closely. (2) Lending-based crowdfunding involves crowdsourcing debt capital, which is something the “Buy Local” movement should be watching closely. (3) Donation-based platforms are used for non-profit causes. (4) The final type, rewards-based, does not swap equity or debt but instead offers rewards and perks with real value to crowdfunders in exchange for their contributions.
Equity Endeavor is a rewards-based platform. We allow business owners to raise funds without giving up equity or having to pay principal and interest payments. In exchange for their contributions, Community Builders (our term for crowdfunders) can receive a variety of rewards, which include products, services, rentals, and experiences. These rewards have REAL economic value as well as an intrinsic value. Most importantly, everyone involved benefits from the expansion/improvement project once the campaign goal is met and the project is completed. Example projects include the addition of outdoor space in a usually crowded restaurant, or a local yoga studio building a new dressing room. Check out our platform at www.equityendeavor.com to see the impact we’re currently making in Austin and New Orleans. Drop us a note if you think you’re city should be the next to have a platform, or if you have a great business in Austin or New Orleans that could benefit from a crowdfunding campaign.