A Look At Crowdfunding Guidelines In India And Why It Needs To Be Revisited [Take One]

Technology startups are finding it a tad easier to get funded with the many sources of funding and the fact that VCs are more active than before. We are also witnessing that the valuations are improving too.

Crowdfunding

Apart from the usual non-traditional sources, friends & family, angels, angel networks, accelerators and seed funds, India is now witnessing the rise of crowd-funding platforms.

Raising of pooled managed investment funds has always been a regulated area. SEBI in June 2014, released a consultation paper (“Paper”) which seeks to regulate crowdfunding, which is not pool managed, but the investor directly invests into the startup.

Here’s a short critique:

The Paper defines (sort of) Crowdfunding as ‘solicitation of funds from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause.’ Perhaps, the traditional angel networks (which are not web-based) can breathe a bit easy? Well, it is yet to be seen.

There are other legislations, including Companies Act 2013, which details lengthy procedures for raising investments.

Who can set up a Crowdfunding Platform?

Class I Entities:

  • Recognized Stock Exchanges with nationwide terminal presence (RSEs)
  • SEBI registered Depositories

Class II Entities: Technology Business Incubators (TBIs)

  • Promoted by Central or State Government through bodies such as NSTEDB (National Science & Technology Entrepreneurship Development Board) under Department of Science & Technology
  • Functioning as a registered society or a non-profit company (section 8),
  • Having at least 5 years of experience,
  • Having a minimum net worth of Rs. 10 crores

Class III Entities:

  • Associations and Networks of PE or Angel Investors
  • With a track record of a minimum of 3 years
  • With a minimum member strength of 100 active members from the relevant industry
  • Which are registered as Section 8 companies under Companies Act 2013 with a paid up share capital of Rs. 2 Crores

We believe that the regulator should re-examine the intent to promote crowdfunding as not-for-profit activity.

Who can invest?

The Accredited Investors, who is:

  • Qualified Institutional Buyers (QIBs) as defined in SEBI (Issue of Capital and Disclosure Requirements) regulations, 2009.
  • Companies incorporated under the Companies Act, with a minimum net worth of Rs.20 crore.
  • High Net Worth Individuals (HNIs) with a minimum net worth of Rs. 2 Crores or more (excluding the value of the primary residence or any loan secured on such property), and
  • Eligible Retail Investors:
  1. who receive investment advice from an Investment Adviser, or portfolio manager or
  2. who have passed an Appropriateness Test (may be conducted by an institution accredited by NISM or the crowdfunding platforms)

and

  1. who have a minimum annual gross income of Rs. 10 Lacs, filed Income Tax return for at least last 3 financial years
  2. who certify that they will not invest more than Rs. 60,000 in an issue through crowdfunding platform,
  3. who certify that they will not invest more than 10% of their net worth through crowdfunding. (Net worth excludes the value of the primary residence or any loan secured on such property)

From a plain reading of the consultation paper, it appears that it is a self-certification method, with the burden of proof of accreditation imposed on the investor.

Who can be the investee company and how much can it raise?

  • A company intending to raise capital not exceeding Rs.10 crores in a period of 12 months,
  • Not promoted, sponsored or related to an industrial group which has a turnover in excess of Rs. 25 crores or has an established business,
  • Not listed on any exchange and not more than 48 months old,
  • A company which proposes to engage in non-financing ventures or real estate activities is not permitted.

There are obligations expected of the investee company.

  • In a given period of 12 months, the company shall not use multiple crowdfunding platforms to raise funds.
  • Company shall not directly or indirectly advertise their offering to public in general or solicit investments from the public.
  • Company shall compulsorily route all crowdfunding issues through a SEBI recognized Crowdfunding Platform.
  • Company shall not directly or indirectly incentivize or compensate any person to promote its offering.
  • Company shall provide provisions for oversubscription. This may include maximum oversubscription amount to be retained, which should not exceed 25% of the actual issue size; intended usage of the oversubscribed amount. The total amount retained. including the actual issue size and oversubscription, shall not exceed the limit of Rs. 10 Crores
  • The Company is also required to make certain disclosure through the “private placement offer letter” and on an ongoing basis documents such as audited financial statements, a detailed view of the current state of business, penalty, pending litigations etc.

If the platform should not receive any compensation for helping the company raise investments, then sustaining the platform will be a challenge.

The retail investors should be provided all opportunities to understand the inherent risks involved in investing in start-ups, illiquid nature of the securities and a possibility of losing the entire investment. At the same time, it is also important that there are no systemic risks. But, it is equally important the regulations proposed should enable platforms to operate and the start-ups getting invested.

Shot not yet ready! Take 2…

Source: http://www.nextbigwhat.com/crowdfunding-india-guidelines-297/

Is Social Media Right For Every Business?

A great man once said, “Do or do not; there is no try.” 

Fine, it wasn’t a great man, but when Yoda said that now-classic line in The Empire Strikes Back, many a geek (myself included) nodded our heads as if it were the common-sense wisdom of the Dalai Lama. In fact, the concept of “trying” something without having a true strategy or direct outcome in mind is becoming a much more sensible approach to Digital Marketing channels. This is especially true with the varied world of Social Media, where channels and platforms like Twitter and Facebook roam wild with Chat Roulette and Wikipedia. One person’s video of six dogs chasing a gazelle with 80 million views is equally layered against an audio podcast that focuses on the best burger joints in Montreal. (No joke. Check out The Montreal Burger Report).

Is there room for businesses and brands in all this random content?

Of course there is. One of the primary reasons that businesses struggle to understand the world of Social Media is that it is often compared with one particular traditional media channel, instead of being seen as a healthy ecosystem where a bricks and mortar brand (and this includes products and services with a business-to-consumer or business-to-business focus) can create and do things with content (text, images, audio and video) across multiple areas with varying degrees of impact and audience.

PodCamp could well have been wrong.

Last week, close to 400 business professionals, hobbyists, media hackers and others with an interest in Social Media spent the weekend at UQAM listening to many different types of presentations (like Revenue Generating Trends for Bloggers, Going Against the Grain with Niche Podcasts, and Your Web Content: Forever or Fragile?) at PodCamp Montreal. What originally started as an unconference (a self-organized get-together where the content and flow of the day is organized and led by all participants), PodCamp Montreal has blossomed into a full-blown, two-day professional conference with sessions in English and French. (PodCamps happen all over the world – just do a search for one in your area).

As someone who has participated in and helped organize these types of unconferences over the years, it was surprising to hear many speakers say: “Social Media is not right for every business.”

The explanation given was that some companies simply don’t have the wherewithal. They don’t have the bandwidth, budget, resources, people, experience or the right attitude. It’s as if everything has to align like the stars to get into this very complex media mix. That kind of back and forth is a huge misconception. It’s usually done so that a company hires any one of these many consultants/speakers to pay them to do the work.

The truth is, asking, “Are social media right for my company?” is a flawed question. Instead, ask yourself: “Should my business be sharing who we are and what we do with the world?” If the answer isn’t yes, feel free to pick up the computer or mobile device that you’re reading this on and whack yourself upside the head until you realize the answer is always yes!

That’s why you’re in business: so more and more customers can find you, buy from you and tell everyone that they know how great you are.

This flawed thinking that Social Media are not for everyone happens because many of these self-anointed experts focus on only two areas of Social Media:

  1. Whatever platform is most popular (like Facebook and Twitter).
  2. The notion that Social Media are all about the “conversation” taking place online about you, your competitors and/or the industry you serve.

Those are both valid spaces to play in, but they’re not even close to the only ones or the reason to get involved in the first place.

What makes Social Media (or any other type of media) truly “social” is the ability to share. Whether that is done on an internal basis with your employees or publicly (or both), sharing is the best place to start. Share everything there is for people to know about you (news, articles, white papers, your thoughts, etc.). Share beyond your own hallowed digital walls (your website) and push that information into the channels where people who might be looking for what you have to offer frequent.

Share and share alike.

Optimizing your site so it can be found on search engines is important, but don’t forget YouTube is actually the second-largest search engine (after Google) and people are doing all kinds of searches within their online social networks like LinkedIn, Twitter, Facebook and beyond. They’re scanning the industry blogs and podcasts to see who is saying what about whom. The more you make your content findable, the more findable you become – everywhere.

Once you begin to benefit from this, you’ll begin to see the many additional options that are available – from tools that can help you to better collaborate both internally and by leveraging the wisdom of your crowd, to listening to the existing feedback and dialogue surrounding your brand. All this public content is there. It can help you better analyze your market position, what customers really think about you and your competitors, and it can even provide indications as to how you can improve and innovate.

Social Media is for every business… that’s just stupid.

What if you sell toilet paper? Are Social Media still right for your business? Charmin released an iPhone app called, Sit or Squat, which allows you to locate, rate, comment on and even add the whereabouts of a clean public toilet. The feature-rich application also allows you to narrow your search to bathrooms that have a baby-changing station (as one of many examples). This crowd-sourced initiative has been downloaded millions of times and – as someone who travels as frequently as I do – has a special place on the first home page of my iPhone. Charmin is enabling and empowering people like you and me to share with the intent of having a better bathroom experience (with the hope you’ll consider buying Charmin toilet paper as you make your way through your grocer’s aisle).

If Charmin can make toilet paper social, what’s got you all blocked up?

The above posting is my twice-monthly column for the Montreal Gazette and Vancouver Sun newspapers called, New Business – Six Pixels of Separation. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original versions online here:


Your Blog Is Your Business

Your Blog is your business, unless it’s not your business.
If you Blog as a hobbyist, that’s fine, but if you’re Blogging to grow your personal profile, build your business, create some semblance of thought leadership or to simply share some of your thoughts and ideas, nothing is going to really happen, unless you treat it as a serious piece of your business. It’s not easy. In fact, if you ask anyone who Blogs regularly, it’s one of the hardest things to do.
It’s easy to forget about your Blog.
Being impressed by someone who regularly Blogs would be a dwarfed emotion compared to the stat of abandoned and forgotten Blogs. For every Blog that is regularly updated, there are probably thousands of Blogs that have been
orphaned. The problem with most Bloggers is that they’re not writers. They don’t see Blogging as a craft and art that must be practiced, pushed and prodded on a consistent and constant basis.
It’s easy to let a Blog drop.
In fact, it’s easy to let any of the many Social Media channels that you use to connect and share to drop off of the priority list. Sure, there are days when
the inspiration runs dry. Sure, there are days when the day-to-day stuff gets in
the way of the words. Sure, it’s easy to say that it’s “the work” that must come
first. But, before you do all of that, ask yourself this: “what was it that made you this busy in the first place?”
It’s not easy to let a Blog drop.
Think about your clients. Think about the work you’re doing. How did you happen to close those pieces of business? I’m lucky (some might say cursed), but a majority of the success we’ve had at Twist Image comes from the work we do – right here – on this Blog. When we started Blogging in 2003, we (and I say “we” because although this is my worded playground, it is a group effort and a huge
part of the overall business strategy of the agency) had a few clients and a few employees. The mass media and industry publications didn’t care much about us, because there wasn’t much of a story there to tell. Blogging enabled and empowered us to share how we think about the Digital Marketing landscape with the world. This Blog prodded along (it still does), and whether it’s working with a major brand, securing a business book deal or getting talent bureau representation, we stay focused on the fact that a lot of that came (initially) because of this Blog (in fact, it still does). Yes, we needed the work to stand on it’s own (both the creative and strategic) and we need to keep nurturing all of those client and business development relationships, but to this day many brands find us (and want to work with us) because of the ideas we share here (amongst other reasons).
This Blog is our business.
So, when you think you’re too busy to Blog or other priorities float on to the radar, try not to forget that Blogging (if it’s a part of your overall business strategy) is your business and the important work that must get done. What do you think?
A special thanks to Chris Brogan (author of Social Media 101 and co-author of Trust Agents with Julien Smith) for the inspiration with his Blog post: Your Blog Is Not Your Job.

How To Build Your Digital Footprint In 8 Easy Steps

"Where do I start?" More often than not, that is the first question many business professionals have when it comes to dipping their toes into the digital channels. They simply have no idea how to begin… and then what to do after that.

Here are 8 easy steps to build your Digital Footprint:

1. Create a strategy. Far too often, people will hop on to Facebook with no set plan other than, "trying it out." There’s nothing wrong with trying out any of the many digital channels, but it doesn’t take long to jot down what you want to accomplish (and, more importantly, why you want to accomplish it) first – before filling out any online social networking profiles. If you uncover the strategy after you have already started, you may wind up having a couple of online profiles and spaces that really don’t match your strategy. If someone comes by and sees those initial forays (that you have since abandoned), it might not be the ideal first digital impression of you.

2. Choose the type of content channels and online social networks that match your strategy. All too often we see people on Twitter who would be that much more interesting if they were Blogging. There are people doing things with text that might be better suited for creating images. It’s best to focus on creating and publishing the type of content you are most comfortable with, and that you would enjoy creating the most. The amazing thing about these channels is that anyone can publish. The sad thing is, that some people forget that it’s not just text. You can create audio, video and images as well (and many combinations).

3. Digital Footprint Audit. There are tons of free tools that enable you to listen and see what is being said about you, your company, your products and services. Google News Alerts, Technorati, Twitter Search, and even doing some quick, generic searches on Google, Yahoo and Microsoft can give you the overall temperature of who is saying what. In order to best manage these many tools, you should consider grabbing all of these feeds and unifying them in one singular space. Something like Google Reader or Netvibes is a great place to start.

4. Follow First. Without question, there is somebody (probably many people) already out there using all of these channels. From videos on YouTube to Blogs and Podcasts. Find out who your industry considers to be the top "voices" in the many online channels. Subscribe to their content in your reader and make it a point to read, listen and watch the content at some point everyday. By following those that are already respected, you will be better positioned to see where you can add your voice – both in their environments and on your own.

5. Add your voice. In a world where everyone can (and should) publish their thoughts, you might find it more interesting to either become a frequent commentator on the more popular spaces, or offer to become a contributor to some of the many multi-authored places online (this includes things like industry association Blogs or trade-specific publications). By adding your voice in places that are highly trafficked you can build your presence (and Google Juice) without the stress of maintaining your own. Places like The Huffington Post are prime example of non-industry specific online outlets that are highly trafficked, highly indexed by the search engines and will give you incredible visibility to new people.

6. Start your own, but have a plan. Your overall strategy (step number one) will become your lighthouse. As you fall deeper down the rabbit hole, you’ll always be able to fall back on your strategy to ensure that you are on course, but once you choose to publish your own thoughts on your own platform, you might have an easier time if you create some kind of plan to get started. Think about what goals you want your channel to accomplish, how often you will need to publish, how you will tweak the content as your community grows and what will happen if you were to stop publishing? A plan (even one that includes specific dates for when you should publish content) will help you focus, and it will also get you in the habit of contributing and publishing.

7. Stay active and aware. It’s not just about your space, and it’s not just about following and commenting in the other spaces. It’s about being aware. From Twitter to FriendFeed, there are many new types of publishing platforms being created all of the time. It’s easy to sign-up for all of them and then to forget about them. Some of the channels may not even make any sense to you at the beginning (how many people do you know that still don’t understand what Twitter is, or why anyone would care about that type of content?). It’s also easy to forget about some of the channels that are not mentioned as frequently as the ones that are currently the topic du jour. Be aware of the new and older voices and platforms that are around and the new ones that are coming out.

8. Have fun. One of the primary reasons why people abandon either their own spaces or the ones they used to actively contribute to is because they were no longer having fun with it. It became a job. The trick is to always turn your job into work that you are passionate about. If you start out with the notion that you have to create, comment and participate because it’s your job and that is what is expected of you, it’s going to get ugly fast. There are so many channels out there. Find the ones you really enjoy and create the type of content that gives you the most pleasure. Find your muse.

What are some of the other ways people can dive in and start to explore how to build their own digital footprint?

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