So you want to build your businesses? What Tribe are you leading?

The great part of our work at Conception Fund is we get to sit down and talk with small business owners about what they are building.  One of the first question we ask them is why?  The reason we ask why is to discover what is driving the business owner to put in the long hours, put up with heighten level of stress, and discover their passion.  It’s that simple question “why?”  which often leads to a longer conversation about how their business fills a community need and provides beneficial economic activity.  It’s that story which will lead their crowdfunding campaign.

This past week alone we talked to a new smoothie shop whose owner is trying make her town a little less obese one patron at a time by switching her customer from unhealthy sodas to nutritious smoothies.  Next we spoke with the owner of a new Arts venue who has seen one art venue after another start and fail in the community.  He is determined to make his have staying power by making sure it’s financially sound and in tune with the local arts community.  Lastly, we spoke with the newly minted farmer who after working for other farmers for two decades has struck out on his own.  He is excited about this upcoming growing season and discovering how much he can yield from his modest plot.  Each one of these business owners has a story.  They can articulate the “why?” which will help them discover ‘the who.”

In the words of Seth Gordin these owners should answer, “what tribe are [they] leading?”  That is to say, in order to have the impact they are looking to make on their small communities, they need to discover what it is they are trying to change about the status quo.  Answering this question will help them discover who else is thinking similar to them and lead to customer acquisition.  Seth gives a number of great examples in his TED talk.  It’s worth a listen.

For those looking to start a new businesses or rethink their approach to their existing business, Seth’s discussion gives insight how to lead and gain traction by understanding what Tribe you belong to. Keep updated on our weekly insight into crowdfunding by signing up for our email list and follow us on twitter

Business Planning 101: Debt vs. Equity

When a business is just starting out, its principals are face with many questions that need to be answered.  One of those questions is where will the capital come from and what form it will be.  There are two basic forms of capital.

First there is Debt, money that is borrowed.  The capital needs to be paid back, normally on a fixed schedule with a interests rate corresponding to the amount of perceived risk the lender thinks the startup presents.  A lender might ask the principals to personally guarantee that debt, meaning if the company fails, the principals will be responsible for paying the debt back.  Interests charged may be high because the lender may not feel secure lending a unproven company capital, therefore, the lender will mitigate its risk by charging high interests.

The second basic form of capital is equity.  The owner can raise capital by offering a percent ownership of the company in exchange for the capital.  The capital does not need to be paid back.  However, the owner will have to share the profits with the equity owners.

Equity is a good form of startup capital because revenue at the start of the company is too unpredictable.  The capital used to service debt interests, could be used grow and expand the company.

Crowdfunding can take the form of both debt or equity.  There are a number of platforms that offer startups capital in the form of debt.  However, as of today, there are no platforms in the United States that offer capital in exchange for equity.

Conception Fund will allow entrepreneurs to choose how much equity they are willing to offer in their company in exchange for capital from many individuals.  Equity is attractive for startups because it allows the company to put the maximum amount of capital to work.  For investors it gives them a foot in the door at the very start of a company.  While equity capital may not be right for every startup, for those that won’t have revenue starting out, it most likely will be the best form.