APR 17th 2013 (Recap): Crowd Funding – Magic or Tragic?

Is crowd funding on the investment level a good idea? Is it even possible? In this event doubts on the reliability of using crowd funding for investment were expressed. And though the outcome for this large scale innovation appeared bleak, positive reactions to minor crowd funding, such as Kickstarter campaigns, were met with great excitement.

Welcome to our discussion on crowdfunding!

What is crowdfunding? Aside from being a buzzword related to technology and entrepreneurship, it is also a source of funding for businesses, musicians, charities (and other entities) with two major subcategories.

On the one hand, crowdfunding is a way to fund a project. In the music and business worlds, for example, crowdfunding is often packaged as a way to pre-purchase a product that the project will be creating.

In other cases, such as on Watsi, crowdfunding can be a way to fund specific charity projects that you want done. What you get in return is the good feeling of having helped someone (or karma, or treasures in heaven–however you want to measure those intangible benefits).

The second (pretty different) thing that the word crowdfunding is used to describe is when a company raises money for their company in exchange for small amounts of equity. This is a new thing in the United States which was supposedly made legal by the JOBS act, but unfortunately for any entrepreneur who wants to raise money this way or for anybody else who wants to invest this way, you still can’t do it, because crowdfunding regulations that are supposed to dictate how this crowdfunding/micro-investing thing will work are still in limbo, and people aren’t allowed to start crowdfunding campaigns until they are released. The SEC was supposed to release them at the beginning of this year, but they are dragging their feet. Or should we say fortunately?

At the SVII April event (“Crowdfunding: Magic or Tragic?”), two of our speakers–Riaz Karamali, of Sheppard Mullin and Larry Udell, of the Licensing Executives Society–expressed some doubts about whether crowdfunding as an investment model will actually be a good thing.

From Udell, the concerns were mostly about whether there will be enough transparency in the fundraising process to ensure that investors will be protected.

This was also a concern of Karamali’s. He pointed out that when angel investors and venture capitalists invest in a startup, they are told upfront that they should only invest if they can afford to lose the money (because investing in startups is inherently pretty risky). When early stage investing is opened up to the public through the jobs act, there will of course be some clause in the paperwork that says this, but the likelihood is that some investors will not fully read the paperwork or perhaps not take this warning as seriously as it should be taken.

The JOBS act will likely allow individual investors to invest up to 5% of their net worth in crowdfunded ventures. (This is just speculation right now, but that’s all we’ve got until the actual rules come out.) If some individual invests 5% of his/her income into a startup that he thinks is really promising and then it goes kaput, he could be really harmed.

Of course, there are plenty of ways to lose money in the current economy as well (gambling, investing in the stock market, buying a house at the wrong time), but investing in startups may be the kind of risk for which individuals with no experience in startups are unprepared and not properly calibrated. All of this points out the need for good financial advisers, but the naked truth is that there are many people out there that invest without the advice of a financial adviser (think: why should I pay someone to help me with my money; isn’t that counter-productive?). Just because a course of action is a bad idea doesn’t keep people from following it.

Another concern expressed by Karamali was that the regulations (when they come out) will also hamper businesses that try to use crowdfunding. For example, with so many initial investors, there are going to be a lot more constituents who want to influence the way a company is run (now you have a thousand backseat drivers). Also, nobody knows yet, but it’s possible that after a company has raised money using the crowdfunding method, traditional venture capitalist firms won’t want to get in after that. It’s concerns like this that are likely making the SEC not very excited about releasing the JOBS act regulations. They may think that the world is better off without crowdfunding (as micro-investing), so the longer they wait the better.

But not all is doom and gloom in the crowdfunding world. Not only are some people excited about micro-investment crowdfunding, but the other kind of crowdfunding (as a project funding mechanism) is going gangbusters, which is part of the reason why investment crowdfunding got proposed in the first place.

Our other speaker, Justin Bailey, from Double Fine Productions, showed us the bright side of crowdfunding.

Double Fine is famous for having one of the most successful kickstarter campaigns to date. They set out to raise $400,000 with just the description that they were going to make a point and click action game and the fact that their CEO, Tim Schafer, is a well-known and beloved game designer. The campaign was so popular that they raised over $3 million. Until just recently, they were the kickstarter campaign with the most backers (87,000–just recently edged out by the Veronica Mars movie campaign).

The key lesson that Double Fine took away from that experience, says Bailey, is that community is the key to discovery. Discovery (the game industry’s way of saying, “how users find us and vice versa”) is a very pressing problem in the game industry, mostly because it is a crowded space with a winner-take-all type of dynamic (successful games are likely to be very successful; everyone else languishes in the shadows–similar to the movie industry).

With a crowdfunding campaign, gaming companies can short circuit two related problems: seeing if anyone wants the game, and spreading the word about the game. A crowdfunding campaign determines demand before the company invests a huge amount of time and money in the game, reducing the need for careful prediction and also the accompanying stress. Likewise, a crowdfunding campaign is a perfect vehicle for spreading the word about a game. If people want the game (see previous dilemma), then they will spread the word about the kickstarter campaign for you, and your discovery problem is halfway solved (contingent on the success of the crowdfunding campaign).

Not all kickstarter or crowdfunding stories have had that happy ending. The game Haunts, for example, was promoted via kickstarter and raised over $29,000. However, that wasn’t enough, and the game was never finished–adding an ironic twist to the chosen name.

Let’s come back to the original question: Crowdfunding–magic or tragic? As in all good mind-bending dilemmas, the answer is yes. In fact, the question should be much more nuanced, but isn’t that always true? When it comes to investment crowdfunding, the jury is out (because we have no data), but there is a good likelihood that there will be success stories and failures. Whether investment crowdfunding as a whole is considered a success or a failure likely depends on how well it’s success rate compares with the success rate of startups funded by angel investors and venture capitalists (hard to measure, but considered to be anywhere from 1 in 4 to 1 in 10). Crowdfunding as a project funding mechanism has been in general successful, but still, within the space, there are successes and failures.

Bottom line: crowdfunding can be very rewarding, but you would be wise to proceed with caution.

APR 17th 2013: Crowd Funding – Magic or Tragic?

presented by SVII and Sheppard Mullin

Sheppard Mullin

Everyone who ever started a company eventually spends a considerable amount of time thinking about funding. The oldest form of funding is still the dominant one, savings, friends and family. In other words, fund it yourself along with the people you know.

In the past fifty years, two more fund-raising mechanisms have emerged: professional investors (venture capitalists) and amateur investors (angels). But now the internet is introducing a new way of funding a business (or project): crowd-funding.

As one might expect, no funding method is without pitfalls as well as advantages. In this event, people with backgrounds ranging from entrepreneurial to venture capitalist will give their perspective on the pros and cons of using crowd-funding and where they think it is heading in the future.



Larry Udell, Executive Director at California Invention Center, Center for New Venture Alliance, and Intellectual Property International, Ltc.

Lawrence J. Udell serves as Executive Director of both the California Invention Center and Intellectual Property International, Ltd. He has created and taught “New Ventures and Entrepreneurship” courses for over 25 years, plus a special course on, “Technology Marketing” at the Cal-State Hayward, School of Business and Economics. He has served as a Lecturing Professor at U.C. Berkeley teaching course on Technology Transfer & Commercialization, plus other universities in the U. S. and Canada. He is an active member of the Licensing Executives Society, and is co-founder and Managing Director of the Silicon Valley Chapter of LES. He also serves as Senior Consultant to General Patent Corporation of Suffern, NY. Founder of over 30 corporations, he provides consulting to both start-ups and Fortune 500 companies. He lectures frequently at inventor, corporate and government functions throughout America and for the USPTO. Also in other countries for the World Intellectual Property Organization (WIPO division of the United Nations).


Justin Bailey, Vice President of Business Development at Double Fine Studios

Justin Bailey spent a dozen years in business development and strategic planning in the entertainment industry. During this career, Bailey has lead M&A initiatives, closed venture deals, setup crowd funding campaigns, and helped publishers make the transition from retail to digital distribution at Accenture, NAMCO BANDAI Games America, Perfect World Entertainment, and Double Fine Studios – where he currently presides over all business operations and is exploring how to effectively leverage crowd funding and crowd sourcing as a repeatable business practice.



Riaz Karamali, Partner at Sheppard Mullin

Riaz Karamali is a partner in the Corporate Practice Group in the firm’s Palo Alto office.Riaz has extensive experience in corporate law, venture finance, mergers and acquisitions and technology transactions.  Riaz has worked with hundreds of start-up and emerging companies, guiding them from their pre-founding stages through their angel and venture capital financing rounds, significant commercial contracts and strategic alliances to their ultimate exit transactions. He has acted as outside general counsel to many such privately held companies in a wide range of industries including Internet, social gaming, biotechnology, semiconductor technology, medical devices and consulting.


MAR 20th 2013: Achieving Intimacy AND Reach Through Social Media

“I present myself to you in a form suitable to the relationship I wish to achieve with you.” -Luigi Pirandello

– How do ancient practices of communication inform our use of social media?

– Do companies need social media polices?  …SHOULD they have social media policies?

– Is it possible to achieve intimacy with your audience without sacrificing reach?

– What is the best social media strategy for YOUR organization?

Join us on March 20th as we discuss the digital campfire!

This event will take place at the offices of Sheppard Mullin:
379 Lytton Avenue
Palo Alto, CA 94301
Don’t forget, the doors open at 6:30PM for networking with complimentary food and drinks, so don’t forget to join us early and introduce yourself!

** Ample parking is available


6:30 – Registration
7:00 – Refreshments & Networking
7:15 – Panelists’ Presentations
8:00 – Moderated Panel 
9:15 – Wrap-Up (Networking till close at 9:30)


Pre-Registration Tickets ($20)  – on SALE NOW!


Founder & CEORight Mix Marketing Inc. 

Tom Treanor is the Founder and President of Right Mix Marketing Inc., which focuses on helping companies of all sizes succeed through the effective use of Content Marketing, Search Engine Optimization (SEO), Business Blogging and Social Media. He has an MBA from the Wharton School of Business, as well as a Master of Arts in International Studies from the University of Pennsylvania. He teaches a course on Social Media Tools at San Francisco State University’s Social Media Marketing certificate program and has deep experience coaching and consulting corporate executives, small business owners and startup teams. Tom speaks regularly at live and virtual conferences and meetings.

Tom is the author of the Search Engine Optimization Boot Camp and he has been quoted in the Investor’s Business Daily and is a previous Google Adwords Professional and Microsoft adExcellence Member. Prior to Right Mix Marketing, Tom worked for Hewlett Packard in leadership roles in marketing and operations, at PriceWaterhouseCoopers and Booz-Allen & Hamilton as a strategy consultant, and at Sony Electronics in product marketing.

Tom is a prolific business blogger and has been featured on top blogs such as Copyblogger.com, Problogger.net and AllTop.com. Kred has named him Kred Elite, part of the top 1% of influencers.

Principal ConsultantMarketing Possibility 

Principal Consultant of Marketing Possibility and also known as the Social Marketing Diva, Kathryn blends social media with core business strategy to create integrated online marketing strategies for small and medium-sized businesses.  She specifically focuses on leveraging the vision and value at the heart of the business into quality customer relationships and conversations. She applies over 17 years of experience in high tech marketing and sales to her marketing consulting business with medium and small businesses in the Silicon Valley area.  She helps businesses clarify their brand and business persona to use in building conversations with customers and prospects through social networking.  She also develops social media marketing plans, teach all aspects of engaging online, and can conduct online campaigns for clients. She has spoken at conferences, workshops, meetings, and corporations on topics ranging from the future of marketing and social media to the application of high availability systems in the financial industry.  She teaches Marketing Strategies for Entrepreneurs and Small Business Owners at UC Berkeley Extension San Francisco  several times a year, is the President of the Stanford Entrepreneurs Alumni Group, Founder of WomenLaunch, and leads the NorCal BMA Marketing Strategy Roundtable. She has held marketing and sales leadership positions at IBM, Amdahl, Stratus, and Tandem and has served in executive roles on non-profit boards and community organizations.  She has a Masters in Philosophy from Stanford University, a BS in Mathematics from William and Mary, and an MBA from Santa Clara University.

Founder & CEO, Fisher Vista LLC 

Mark Willaman is founder and president of Fisher Vista, LLC, the owners of HRmarketer.comSocialEars.comFisher Vista Marketing Group, HRVendor PhonebookSeniorCare Marketer, and ShirleyBOARD.com. Mark has nearly twenty years experience B2B marketing, including being a pioneer in the use of web-based technologies for the delivery of HR services. Mark has a track record of conceptualizing and implementing innovative, creative and highly effective marketing campaigns targeting human resource and other B2B decision makers. Mark also has extensive expertise in developing web-based software applications including HRmarketer.com and most recently, SocialEars – proprietary algorithm that analyzes the online “social” activity in the HR and B2B marketplaces, the trending topics and the key influencers driving these discussions. Mark received his BSBA in Marketing from the University of Denver where he was a three-year letterman in Lacrosse, and his MBA from Pennsylvania State University where he was an appointed member of the MBAA Honor Council for two consecutive years. Mark is also a published author and speaker on various marketing topics, and a regular contributor to the HRmarketer Blog. In his spare time, Mark enjoys training for triathlons. 


Paul Cowie is a partner in the Labor and Employment Practice Group in Shepperd Mullin’s Palo Alto office.  Mr. Cowie represents employers in the full range of employment matters, with his focus on litigation and class actions.  Mr. Cowie specializes in litigation avoidance counseling and has successfully reduced client’s litigation docket to zero many times.  Mr. Cowie’s experience includes litigating and advising on matters involving all forms of discrimination, harassment, and retaliation; wrongful termination; wage and hour disputes and compliance; independent contractor status; reductions in force; workplace investigations; discipline; grievance; whistleblower claims; workplace violence; and Labor Code violations.  Mr. Cowie practices in both state and federal court, and represents employers in all forums.

Before practicing in the US, Mr. Cowie practiced in the UK for approximately five years, representing and advising employers at all stages of employment litigation, including as lead counsel in UK Employment Tribunals.  Mr. Cowie’s UK experience means that he has drafted hundreds of employment contracts, dozens of settlement agreements, negotiated warranties and indemnities in corporate transactions and is very familiar with the challenges faced by US-based companies operating or expanding into in the UK.

Pre-Registration Tickets ($20)  – on SALE NOW!