Crowd Funding: A New Way to Finance Your Startup

Amidst the chaos of a global financial meltdown, it can be easy to overlook certain aspects of banking that are less urgent. VC funding seems to have flown under the radar as of late, however, it makes a big difference for entrepreneurs who are looking for funding to jumpstart their new businesses. Sadly, it’s now at its lowest point in 10 years. Even with 2010’s first quarter $4.71 billion wagered on venture opportunities, the outlook isn’t rosy.

Enter Crowd Funding. Crowd Funding or “crowd financing” basically uses the power of the Internet to fund startup organizations. An entrepreneur who is searching for funding could seek pledges of small amounts to support the growth of her venture. Whereas traditional venture financing is generally limited to wealthy or “accredited” investors (think Caddyshack country club members making deals on the golf course), crowdfunding allows the average person to partake in the potential growth of a startup and at the same time benefit a small business.

Though bootstrapping sounds like a groovy dance move, it can be one of the more difficult means of generating money for a venture. ┬áBut recently, certain companies are making entrepreneurs’ lives easier. The brilliant Jessica Jackley, cofounder of Kiva.org, is in the midst of starting Profounder.com, an online platform for entrepreneurs created to raise equity and debt financing via the internet. A recent venturebeat posting says that Jessica has the likes of Reid Hoffman, LinkedIn chairman, and Chris Larsen, CEO of Prosper, as advisors on this project so her team is not short of expertise in Web 2.0 and financing realm.

Other companies involved in crowdfunding have sprung up recently as well. One that seems to be setting the standard is kickstarter.com. On its website you will see an array of projects and the amount of funding it has raised to date. For example, you can finance a one acre rooftop farm in Brooklyn supplying fresh produce to local communities of New York City. How ’bout supporting an all-cartoon web based channel called Kaboing? Or supporting an organic snow cone business that already has 108 backers throwing in $2900?

With confidence in the markets slowly returning, the clean tech sector is seeing vast improvements in funding. In fact, the number of deals in cleantech were up 29% from last quarter and almost 85% from a year ago. Allowing small investors to partake in what otherwise have been limited to the ultra-wealthy would create a more fair playing ground in an otherwise unfair investment world

Dale Wannen

Dale Wannen is President of Sustainvest Asset Management, an investment advisory firm focused on sustainable and responsible investing (SRI). Prior to Sustainvest, Dale was a portfolio manager at Harrington Investments and specialized in ESG investment strategies, securities analysis, and shareholder advocacy. Prior to this position, Dale was a financial advisor with UBS Wealth Management Services in San Francisco. He is often a guest speaker on the topic of ESG investing and shareholder advocacy.Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He earned a B.A. in Economics from Rowan University and currently is a volunteer with Mentor Me Petaluma, Rebuilding Together Petaluma, and the founder of Green Drinks Petaluma.He also currently sits as Board of Director and Treasurer of San Francisco human rights organization, Global Exchange, teaches Economics for the Oakland non-profit Game Theory Academy and is a committee member for the National Resources Defense Council (NRDC) in San Francisco. Previous volunteer work has included Treasurer and Board Member for bird conservation organization, San Francisco Bay Bird Observatory (SFBBO), committee member of the Petaluma Pedestrian and Bicycle Advisory Committee (PBAC), and President of the Social Venture Finance Club at Presidio Graduate School.Dale currently holds the Series 65 FINRA license and has previously held the Series 6, 7, 63, 66 and California Life and Health Insurance Certification. He is a member of National Association of Professional Financial Advisors (NAPFA) and the Financial Planning Association (FPA).Dale lives in Petaluma, CA with his wife Lauri and their Malamute Shadow.