VentureHealth has launched its online equity crowdfunding platform for life sciences companies. It provides accredited investors with opportunities to invest in innovative medical technology that ultimately saves lives and improves patient care.

“Ultimately, we hope that this model could help change the landscape for biomedical financing,” said cofounder Andrew Farquharson. “Since our focus is on breakthroughs in healthcare, success translates to dramatic improvements in clinical outcomes.”

The company uses a “carried-interest” model, which means that it only sees returns if its portfolio companies do, rather than a broker/dealer commission-based model. Farquharson said this approach is in line with traditional venture capital funds and means VentureHealth has a strong incentive to only select the most promising opportunities.

The goal is to increase the supply of capital to exciting biomedical companies and make it easier for individual investors to put money into this sector, which is generally reserved for venture capitalists. Venture capitalists, however, are turning their interests elsewhere, which presents an issue for startups, companies, scientists, and entrepreneurs.

Fenwick & West recently released a study on the state of the life sciences funding and found that it has fallen by more than $5 billion over the past five years.

“The life science venture financing environment remains challenging, with an increasingly short supply of capital despite factors such as aging world populations and rising living standards in developing countries that will help support long-run demand for life science innovation,” said partner Matt Rossiter. “While funding from corporate investors, wealthy individuals, and disease foundations is helping to fill some of the gap, entrepreneurs that plan to seek venture capital financing would do well to carefully consider factors, such as capital efficiency and a faster path to exit, that can increase the odds of raising scarce funding.”

VentureHealth is stepping in to address these problems. Farquharson and cofounder Mir Imran have extensive experience in medical investing. Farquharson spent two decades building, restructuring, and acquiring life sciences companies, and Imran has founded more than 20 life sciences companies and holds more than 200 patents. They previously founded InCube Ventures, a life science venture capital firm focused on solving unmet clinical needs for large patient populations. As crowdfunding and online investment platforms grew in popularity and gained legitimacy, they saw an opportunity to bring investment opportunities to interested individuals.

Channel Medsystems, a startup developing “next-generation cryoablation technologies,” raised $875,000 on VentureHealth as part of its $9.7 million Series B round.

Healthfundr is another recently launched equity-based crowdfunding platform for health startups although it focuses on opportunities in health IT, digital health, and diagnostic and medical devices. In contrast to the life sciences sector, digital health is taking off, and funding is actually on the rise. There is a lot of buzz surrounding digital health right now as changes in national policy affect care providers and mobile technology opens up a whole new world of possibilities. These areas are new and exciting, but life sciences and biomedical tech are crucial parts of the healthcare ecosystem, and they aren’t (and can’t) go anywhere. If funding slows, chances are medical innovation will too, and that’s a pretty scary thought.

VentureHealth is based in San Jose, California.

Photo Credit: Shutterstock

July 9-10, 2013
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Student loan debt has surpassed $1 trillion and yet the cost of college tuition continues to rise.

Instagrad launched its attempt to solve this problem today. The startup has built a crowdfunding platform to help parents pay for their kids’ college education. Parents create campaigns on Instagrad where friends and family can invest in a child’s established 529 savings plan. They can include photos, messages, and fun facts and share the campaign on social media to attract support. Instagrad has also built a template for holidays and birthdays so parents can turn these events into fundraising opportunities.

“All the founders come from modest backgrounds so college is what made us into the people we are,” said cofounder Didier Boucard in an exclusive interview with VentureBeat. “However, our competition is not our peers but Toys R Us, Walmart, and Target. Why?  Because parents are assailed with offers of useless toys, clothes gadgets on and offline.  With student debt at 1 trillion we want to change the paradigm and make parents refocus on what’s important: a college education.”

Boucard met cofounders Mauricio Idarraga, Vicken Kanadijan, and Sanjay Bakshani at McGill University. Years later at Bakshani was throwing a birthday party for his toddler and Idarraga didn’t want to buy him the usual baby gifts that end up collecting dust or being re-gifted.

“I personally want Sanjay’s child, Zidane, to have the university experience I had,” Idarraga said. “A college education is the best gift anyone can get.”

A college education is not easy to come by. Getting in isn’t the hard part — its paying for it that presents a challenge for most.

Ed-tech startup CourseSmart recently conducted a study which found that tuition in the US is expected to double in the next ten years. Among adults 18-34 who do not have a bachelors degree, almost half could not afford it. The average debt per students is over $27,000 and outstrips car loans and credit card as the largest sources of personals debt. The Pew Research Center estimates that nearly one in five households is paying of student loan debt.

In the face of this escalating situation, Instagrad wants to provide an easy-to-use, social tool that allows parents to rally loved one together to support a child’s future.

Instagrad is based in New York City with offices in Montreal. The startup has raised $200,000 from FounderFuel, an accelerator in Canada, and private angel investors.

Photo Credit: Instagrad

July 9-10, 2013
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Protestors against Turkey’s government ran a full-page ad in the New York Times today using money from a crowdfunding campaign.

The Indiegogo campaign went live on June 3 and achieved its initial goal of $53,800 in under 24 hours. Now it has attracted $103,282 million from 2,587 funders around the world, supporting efforts to raise awareness about the current political situation in Turkey. Protests broke out in Istanbul last week after the government attempted to bulldoze a park to build a shopping mall and military barracks. The movement quickly turned into a nationwide demonstration of tens of thousands of people protesting the government’s lack of consultation with its citizens, the police’s excessive use of force, and infringement of free speech and the right to assembly.

“Millions are outraged by the violent reaction of their government to a peaceful protest aimed at saving Istanbul’s Gezi Park,” the campaign read. “Over the course of Prime Minister Erdoğan’s ten-year term, we have witnessed a steady erosion of our civil rights and freedoms. Arrests of numerous journalists, artists, and elected officials and restrictions on freedom of speech, minorities’ and women’s rights all demonstrate that the ruling party is not serious about democracy. Time and again, the Prime Minister has mocked and trivialized his nation’s concerns while Turkey’s own media have remained shamefully silent.”

Campaign owners Murat Aktihanoglu, Oltac Unsal, and Duygy Atacan live in New York and are active in the tech community. They watched the protests and violent government response from afar but were unsatisfied with coverage of the situation. They turned to crowdfunding platform Indiegogo to raise money for a prominent ad in the New York Times that would draw media and public attention. The ad demanded an end to police brutality, a free media, open democratic dialogue, and an investigation of the government’s recent abuse of power.

Drafting and editing of the ad’s text was also opened to the crowd to reflect the nature of the campaign — fully inclusive, tech-assisted, and democratic. Furthermore, the owners asked people to provide suggestions for the extra money on community news site Reddit. The most popular response is to fund a professional team to create a documentary summarizing the situation.

Crowdfunding is a powerful phenomenon. Charitable causes, creative endeavors, and businesses have all used platforms like Kickstarter and Indiegogo to get projects off the ground. The approach has fundamentally changed the way people seek exposure and financing and opens up opportunities to people who may not have otherwise had them.

You hear a lot of buzz about the “democratizing” effects of crowdfunding. In this case, it really means democracy.

Photo Credit:  Murat Aktihanoglu/Twitter

July 9-10, 2013
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Turkish citizens are crowdfunding their protests against the government.

Turkish protestors have raised $86,000 on Indiegogo to place a full-page in the New York Times raising awareness about the current political situation in Turkey. The campaign went live yesterday with the goal of $53,800 and according to Forbes is one of Indiegogo’s fastest politics campaigns ever. The campaign has 2,210 funders from around the world.

Protests broke out in Turkey over the weekend after the government attempted to bulldoze a park to build a shopping mall and military barracks. The movement quickly gained momentum and turned into a nationwide demonstration of tens of thousands of people against the government. Citizens are “protesting lack of consultation, police’s use of excessive force, defending freedom of speech and right to assembly, and the resignation of Erdogan’s government.”

Murat Aktihanoglu, Oltac Unsal, and Duygy Atacan set up the campaign to attract attention and support they “push for true democracy in our country.” The three live in New York and are active with the entrepreneur/startup scene there. They watched the protests and violent response by the government but felt the events were not receiving adequate coverage in the Turkish press and turned to social media and Indiegogo to gain a following. They also opened up the drafting of the ad’s proposal to the crowd and allowed  supports to edit and vote for their favorite.

The current copy reads “Millions of Turkish citizens have been outraged by the violent reaction of their government to a peaceful protest aimed at saving Istanbu’s Gezi Park […] Over the source of Prime Minister Erdogan’s ten-year term, we have witnesses a steady erosion of our rights and redeems […] We demand an end to police brutality. We demand a free and unbiased media. We demand an open dialogue, not the dictate of an autocrat.”

The campaign owners also asked contributors to suggest how the extra money will be used on community news site Reddit. The ad should run on Thursday or Friday of this week in the front section.

Photo Credit: JamesReaFotos/Flickr

July 9-10, 2013
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The finance industry is under attack from startups. Dealstruck initiated the latest front of this battle today with its online alternative to business loans from banks.

Its marketplace connects small businesses with a community of accredited and institutional investors. Business owners can bypass banks to access more affordable loans from a crowd with less hassle. On the other side, investors are connected with investment opportunities that promise higher returns than other short-term, fixed income investments.

“People are disillusioned with the banking and financial system, especially after the 2008 crisis,” said cofounder and CEO Ethan Senturia. “While the banks are back to earning record profits, the general population is still trying to recover. And for business owners, much of that recovery depends on access to growth capital. Small businesses drive the U.S. economy, employing more than 50 percent of the domestic workforce and accounting for more than half of GDP. The fact is that without access to affordable capital, businesses cannot expand, create jobs, or reignite the economy.”

Dealstruck is both a marketplace and a loan origination system that actively processes live transactions. It focuses exclusively on providing debt financing to established businesses for between $100,000 and $1 million. Interested businesses fill out an online application form and Dealstruck conducts credit analysis. Lenders also create profiles and select the businesses they want to fund. The technology automates funding, originating, and serving of loans. Senturia said it operates with bank-level security standards and the company has partnered with leading providers of fraud detection, identify verification, business and consumer credit information, and tax transcripts.

“We believe that debt crowdfunding is not an excuse for shortcutting diligence,” he said. “To that end, we retain much of the credit rigor of traditional lenders, but use technology to streamline the bureaucracy, paperwork, and sales process that contribute to costs in time and money for the offline world.”

Crowdfunding has become extremely popular over the past few years. Platforms like Kickstarter and Indiegogo fund creative projects, but startups are also cropping up that challenge traditional finance and use the Internet to build more transparent, accessible opportunities for borrowing, lending, funding, and investing. Lending Club is the best-known example. It is an online community that connects people seeking unsecured personal loans with lenders. Investors fund these loans and automatically receive monthly payments on these loans in their bank accounts. Lending Club is on track to originate $2 billion in loans and generate $90 million revenue in 2013.

Lending Club’s success has encouraged other entrepreneurs to tackle different areas of finance. Groundfloor emerged out of stealth mode last week and revealed its peer-to-peer platform that gives regular people opportunities to invest in real estate projects. Groundfloor’s founder Brian Dally said that banks are driven by centuries of inertia and regulatory infrastructure and hold way too much power — their practices often don’t benefit individuals or businesses. The Internet and startups are changing all that by building new ways to use and grow money, outside the confines of the banking system.

Dealstruck takes these ideas and model and applies it to small and medium-sized business loans. Senturia grew up in a family of entrepreneurs and after graduating from Wharton Business School joined Lehman Brothers in distressed credit research in 2008. The firm went through bankruptcy months later and Senturia quickly came to the conclusion that Wall Street wasn’t for him. He went on to found Dealstruck.

Loans on the site have “risk appropriate” rates of between 5 percent and 15 percent and are secured by business assets and personal guaranties from owners. Competitors include On Deck Capital and Kabbage that provide short-term working capital loans, which Senturia said are smaller, higher-risk, and more expensive than loans on Dealstruck. The startups has funded two live loan requests so far — a $250,000 loan from 21 investors in five days, and a $100,000 loan from 11 investors in under 48 hours. Fifty lenders have already signed up and committed over $1.5 million in lending capital.

Deakstruck is based in San Diego.

Photo Credit: Dealstruck

July 9-10, 2013
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CrowdIt is launching today to reign in the next generation of crowdfunding.

The company brings networking, mentorship, and support services to the crowdfunding model to increase projects’ likelihood of success after the campaign is closed. It went live with 150 projects ranging from someone trying to start a kettle popcorn food truck to a group producing animated, educational videos to help children with behavioral issues cope with emotional situations.

Crowdfunding has become extremely popular over the past couple years thanks to platforms like Kickstarter and Indiegogo that enable people to fund their creative visions from an Internet audience. They are meant as a launchpad for specific projects rather than a place to build a business, although they can be used this way. After the financial goal is achieved, however, campaign owners are on their own to execute.

CrowdIt is based on the idea that these approaches are limited by focusing on the ‘funding event’ and want to create a community that supports an idea from start to finish.

“The #1 reason over half of all US businesses fail is lack of experience – we want to change that,’ said cofounder and CEO Jason Graf. “The #2 reason over half of all US businesses fail is insufficient capital – we want to help change that too. This is the beginning of a new framework and model that is going to revolutionize the way small business is created because it addresses the two main problems for startup success. It also incentivizes people to work together, to network with industry professionals, to seek mentorship and resources.”

The community is made up of ‘dreamers,’ ‘believers,’ and ‘suits’ (business experts) who can provide expertise and guidance to people fundraising. One of the benefits of raising venture capital — as opposed to crowdfunding — is that entrepreneurs gain access to a network of resources and supporters who can help them overcome challenges, gain perspective, and form strategic relationships. CrowdIt’s goal is to bring this level of support to crowd funding and provide the best of both worlds. It’s like a virtual business incubator combined with a social crowd funding platform. Dreamers create profiles and post projects, believers contribute to projects, and suits contribute their expertise when able.

Graf is an entrepreneur who, like many of his peers, faced challenges in the current startup/VC ecosystem and thought there should be a better, easier, more democratized way to get a business going. He also realized that while the momentum of crowdfunding opened up access to capital, it did not make expertise more accessible.

“Crowdfunding arose out of necessity not luxury,” Graf said, “It is broken dreams, lost faith in traditional institutions, lack of job security and an overall unrest in the state of current affairs that is driving this crowdfunding revolution. It is necessary to give the people all the resources possible to help them be successful. The crowd has created this industry and it is our responsibility to help the crowd realize as much success as possible by giving them all we can to facilitate that success.”

The crowdfunding market is saturated. In addition to Kickstarter and Indiegogo, there is Crowdhoster, Early Shares, vertical-specific platforms like Healthfundr, Neighbor.ly and CircleUp, cause/non-profit driven sites like Rally, those that target specific demographics like Black Startup or women-focused MoolaHoop, and FundersClub, Wefunder, and Angellist which help tech startups raise money.  I could go on.

Graf and his cofounders Paul Freeman and Markus Pope are based in Springfield, Missouri and have raised an undisclosed amount of money from Baron VC to make their mark on this competitive playing field

Photo Credit: CrowdIt

July 9-10, 2013
San Francisco, CA

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Bro, no one is going to fund your Mr. Potatohead iPad case. There, I said it.

Kickstarter has just launched a new feature to let you get feedback (like the gem above) from your friends before you submit your Kickstarter project to the Kickstarter gods.

Called Project Preview, this feature will let you create a preview link for your trusted friends, family, or other advisors. Those folks can see exactly what your submitted project will look like, and they can leave feedback for you with a simple form field.

Once the project launches, all those feedback notes magically disappear.

Here’s what Project Preview looks like:

Kickstarter says the feedback can help project creators to better prepare their products for the harsh realities of the real-world marketplace, to craft a better pitch video, and to create better rewards for potential backers.

“In times like these, it’s always good to turn to your trusted friends,” writes Kickstarter editorial director Michael McGregor in the company’s announcement.

“Sharing your project with friends before you launch is one of the best ways to get feedback. We’ve heard it time and time again from creators, and we know it from our own experience.”

Kickstarter was founded in 2009 and is based in New York City. The company raised $10 million in a single round of institutional funding in 2011.

Image credit: Shutterstock

That’s British Columbia, just north of Washington State in Canada, where Vancouver ranks as the ninth top startup ecosystem globally.

“BC has had legalized crowdfunding for a decade,” super-angel Mike Volker said last night at the Vancouver Enterprise Forum event on crowdfunding. “It’s the only place in North America, and there are no restrictions, no limits.”

Volker has been an angel for 30 years and currently runs two mutual-fund like investment pools that invest in startups. One is set up “normally” for accredited investors, and one uses a unique instrument to British Columbia: an “offering memorandum,” which allows a startup to sell its securities to anyone, regardless of their relationship, wealth, or minimum value of securities being purchased.

Crowdfunding for startups is now legal in the U.S., and you can actually market your equity online now, but only to accredited investors. The Crowdfund Act opened some doors, but only that one percent of the population can participate. That’s an unfortunately small crowd.

Source: John Koetsier

Mike Volker on a panel at VEF (second from left)

And even when it works, crowdfunding for equity in the U.S. has onerous reporting requirements, which could cost up to $10,000 or more for a raise of only $100,000.

The only requirement in British Columbia? Audited financial statements. Approximate cost: perhaps $3,000.

That’s something that U.S. crowdfunding sites like Fundable would love to be able to offer, but cannot legally today. And that doesn’t look likely to change soon, given the massive amount of SEC regulation that currently encumbers the JOBS Act and the Crowdfund Act. In fact, some crowdfunding investors say that the way the SEC has implemented the new law has actually made investing harder, not easier.

“In their attempts to make this happen the SEC has made it very complicated for portals and brokers,” Volker said. “You need a broker, so he needs a commission, and then the broker has tremendous responsibilities such as validating criminal record checks. It’s basically like a mini-IPO, and I predict it’s not going to do very well.”

But be careful what you wish for, American investors.

In spite of its availability in BC, the offering memorandum has not resulted in a flood of funding, crowd or otherwise. In fact, Volker says, it’s pretty much gone unnoticed:

“Everyone in BC can do it, and most BCers don’t know it.”

Perhaps that’s because it was too early, too bleeding edge. And perhaps now in the age of Kickstarter and Indiegogo it has a much better chance. There are certainly interesting places to use it and entrepreneurs who would find it useful.

“You can use the offering memorandum if you have investors lined up who don’t meet the angel investor qualifications,” Volker says. “It’s also useful if you’ve raised $400,000 via angels and now you want to bring on micro-angels or cherubs and add a little more.”

photo credit: marfis75 via photopin cc

July 9-10, 2013
San Francisco, CA

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Crowdfunding website Kickstarter hit a major milestone today when it finally passed over 100,000 campaigns, according to statistics released by the company. In the three years since it launched, Kickstarter has made otherwise nontraditional crowdfunding a legitimate form of project financing.

The company announced the new numbers via Twitter today saying, “It’s official! Over 100K projects have launched on Kickstarter. Can’t wait to see what comes next!”

However, while it has hit 100,000 projects, not all of them have been successful. In fact, only a little under half of those projects actually survived to the end. That’s because in order to be successfully funded on Kickstarter, you must hit a certain dollar goal in a specified amount of time. As Kickstarter notes, it’s those projects that ask for $10,000 or less that usually hit their goals. Thirty-three projects raised over $1 million out of the 42,150 total that survive.

One of the projects was the recent Veronica Mars campaign that amassed $2 million in 10 hours alone. It broke the record for fastest time reaching the $1 million mark. It did so in four hours, beating out a PC game — Torment: Tides of Numenera — which originally held the record. This has led to other celebrities using the service for similar means such as Zach Braff, whose Kickstarter for a Garden State sequel raised over $3.1 million.

Kickstarter founders image via Kickstarter

July 9-10, 2013
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Carl Esposti is CEO of crowdsourcing advisory firm massolution.

If you think that participating in crowdfunding simply means investing in smaller companies that launch games and devices on Kickstarter, think again. With crowdfunding volumes reaching $2.7 billion in 2012, it has emerged as a viable, scalable alternative to public and private finance across the globe.

After surveying more than 350 active crowdfunding platforms, including IndieGoGo, CrowdCube, Symbid, and Gambitious (full site directory at crowdsourcing.org), and completing an in-depth analysis of market trends, research firm Massolution has identified five major crowdfunding developments for 2013 and beyond.

1. Niche platforms

As crowdfunding platforms try to benefit from market differentiation, niche-, industry-, and sector-specific platforms are emerging.

Platforms offering reward-based crowdfunding see an especially high value in serving a common niche or industry. Examples include platforms focusing on video games, recording art, performing art, real estate, food and beverage, fashion, journalism, and more.

While it’s smart for a new platform to choose a specific niche simply to differentiate its service, there is another big reason why this trend is likely to prevail—it helps build a repeated crowd on the platform. Having crowdfunders visit a platform, not just because they have been invited onto a specific campaign, but because the campaigns appeal to their tastes, is extremely valuable.

#2. Locavesting

In her 2011 book, Locavesting, business and finance journalist Amy Cortese describes how “a revolution in local investing” is emerging and that crowfunding is boosting it. This year, we are going to see increased momentum in this revolution because many new crowdfunding platforms will actually specialize in locavesting.

It’s been over a year since President Obama signed the JOBS Act, but legislation is stymied in the hands of the SEC.

However, at least four states – Louisiana, North Carolina, Georgia and Kansas – have taken the initiative to allow crowdfunding for business loans. Crowdfunding platform Rebirth Financial is specializing in locavesting and offers intrastate, lending-based crowdfunding. Although Rebirth’s offerings are open to anyone within state borders, successful campaigns have so far been driven by very local support – all the way down to the customer-base level.

#3. Enterprise crowdfunding

Large enterprises and associations have begun to look into crowdfunding and how this tool carries new potential for their companies, including raising social profiles, market testing, and spin-ins of entrepreneurial ventures. The perceived benefit is not the additional funding itself, but the democratization of specific decisions that would otherwise be made internally in the company.

The American Institute of Architects (AIA) represents the interests of more than 85,000 member architects across the U.S., a sector that has been hit particularly hard by the recent financial crisis. Recently, the AIA published a report examining crowdfunding’s potential as a new source of capital for residential, commercial, and industrial infrastructure projects.

Crowdfunding shows significant promise for attracting investors to smaller projects and getting them off the architect’s drawing board. In this case, crowdfunding will be used to spur community support and financing for an assortment of infrastructure ventures that would ordinarily have difficulty finding money due to their smaller size.

#4. Crowdfunding economic development

Major development banks and similar institutions — including The World Bank and The Inter-American Development Bank — are seeking to leverage crowdfunding for economic development. Crowdfunding’s social profile and its strong connection to micro-finance are the main drivers.

Crowdfunding has historically been embraced by philanthropic ventures, especially for donation-based crowdfunding and interest-free lending. The models naturally merge with micro-finance because the funding needs are very small, and individual donations or loans are likely triggers of funding success. The next step for crowdfunding in this particular space is the evolution and scaling up to economic development at the macro level.

The Multilateral Investment Fund (MIF) of the Inter-American Development Bank is currently exploring the potential of crowdfunding in Latin America, and how crowdfunding can be used to improve small businesses and bring financing to entrepreneurs who have less access to it. In Latin America, crowdfunding is just gathering momentum with about 40 online platforms, including Crowdfunder.mx and Idea.me, established over the last couple of years.

Platforms in the areas of solar energy, education, and urban development are expected to be the most promising in this region.

5. LIVE crowdfunding

The final trend that we see emerging in the crowdfunding space are launch-party events at the initiation of campaigns or LIVE crowdfunding expos. Besides creating media attention and offering a great marketing opportunity, LIVE Crowdfunding taps into an investor need that is hard to come by through the web: exclusivity.

Exclusivity in access to new products or deal flow can be a triggering factor in itself, and LIVE crowdfunding augments online crowdfunding with exactly that.

This October, the CrowdfundingRoadmap is hosting its second Global Crowdfunding Convention and Bootcamp, this year with its first ever LIVE Crowdfunding Expo, where anyone will be able to participate in donations- and rewards-based crowdfunding campaigns right on the spot.

All attendees will need to do is simply walk up to the booth!

In addition, if entrepreneurs are unable to attend the event or are launching their projects after October, CrowdfundingRoadmap is offering them the opportunity to showcase their crowdfunding pitch videos on the big screen at the expo, with a designated QR code, to help them get in front of potential investors and industry influencers.

Crowdfunding represents a breakthrough in how businesses and local projects are funded and disrupts centuries-old financial flows. While 2012 was the year of acceleration for the crowdfunding markets, these new developments above will fuel its growth for years to come.

Image credit: Shutterstock/Hands with dollars

July 9-10, 2013
San Francisco, CA

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Nonprofits are waking up to the benefits of having a mobile and social media strategy.

Cure.org raises money for children in need, and it’s experimenting with a suite of mobile apps to draw attention to the cause.

Launching this week, the company’s new iPhone app features profiles of kids in developing countries who desperately require surgeries. You can donate directly through the app and receive real-time updates on the patient’s progress.

Cure was founded in Kenya in 1998 when it opened a new hospital. Since then, the nonprofit has served 1.9 million patients and provided over 138,000 life-changing surgeries in 27 countries. Along with medical treatment, Cure has a spiritual mission, but it says it will treat patients regardless of their religious affiliation.

CTO Joel Worrall, who joined the company over three years ago, was one of the first technology hires. “My goal is to show donors that when they give $1,000, it’s really changing someone’s life,” he told me.

Inspired by crowdfunding sites, the new app features a progress bar on each patient’s profile page [below] to show how much money has been raised to date. Once the target is reached — typically a few thousand dollars — the surgery is scheduled, and donors will be regularly updated on the patient’s recovery.

Once you’ve made a donation, the app invites you to send a get-well message. If there’s a language or literacy barrier, Cure.org claims its on the ground team will translate the messages and ensure they’re received.

Cure.org’s technology is cloud-based, so Worrall can quickly fix any issues. He said the company is using application performance service New Relic to monitor the app’s performance.

Cure.org hopes that by adding a personal, human touch to its app, more people will be inspired to make a donation. For instance, Allan [above] has clubfoot, a condition he was born with that left him feeling alienated from his peers. The app includes detailed information about his family life, schooling, and upbringing.

“This technology is doing a great thing for the kids that we are serving,” said Worrall. “Our goal is to make you feel close to someone on the other side of the world.”

Top image via Cure.org

July 9-10, 2013
San Francisco, CA

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MicroVentures has a powerful pitch for startups: We’ll help you raise money.

The Austin-based company helps accredited investors pool their cash together (usually somewhere between $1,000 and $30,000 per person) to fund early-stage startups like Ribbon and Medigram. For investors, it’s the opportunity to fork over as little as $1,000 but still get in early alongside more seasoned angel investors.

MicroVentures has reached $16 million in investments today and claims to have surpassed any other equity-based crowdfunding platform. The company issued a press release announcing the news stating that its success is evidence of “significant demand” from smaller investors in this asset class.

The release reads like a strong nudge to the Securities and Exchange Commission, which is taking its sweet time to finalize rules on the provision of the Jumpstart Our Business Startups Act, known as the JOBS Act.

“As we patiently wait for the SEC to enact rules around the JOBS Act…,” CEO Tim Sullivan begins his statement to the press (pictured above, left, with cofounder Bill Clark).

For over a year, we’ve been hearing from founders of crowdfunding platforms how the rules will change sometime in 2013. At this point, entrepreneurs (and Republicans) are only cautiously optimistic that the SEC will come to a decision this year — the deadlines have passed since the JOBS Act came into effect one year ago. A new October 31 deadline was recently proposed by the House.

As IndieGoGo founder Danae Ringelmann democratically put it in a recent article, the SEC is taking “longer to introduce the Act than expected;” still, she says she’s glad they are “taking the process so seriously.”

It’s a tricky process for the SEC — the regulatory body will need to weigh up the interests of investors, entrepreneurs, and crowdfunding execs from platforms like MicroVentures, AngelList, and FundersClub.

“We will continue working hard amid a busy rulemaking agenda to get these crowdfunding rules done as soon as possible, with an emphasis on getting them right,” John Nester, an SEC spokesman, said last month in a statement to Politico.

For now, Sullivan hopes entrepreneurs will continue to open up their rounds to small dollar investors rather than relying on seasoned Sand Hill Road investors. “We may find that the crowd does an even better job at picking winners,” he said.

July 9-10, 2013
San Francisco, CA

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We could all benefit from a life coach sometimes to keep us motivated and our spirits up. ME Clock launched an IndieGoGo campaign today for its “ultimate digital life coach,” which helps people achieve their personal goals.

ME Clock combines hardware and software to serve as a “personal trainer for your mind.” The system is designed to help people break bad habits and make lasting positive changes. The ME System 24 provides a specific sequence of mind empowering exercises, behavioral modification. learning techniques, yoga moves, music and meditation. It looks like a digital alarm clock radio but has far greater ambitions than waking you up to Top 40 tunes. The accompanying apps deliver the audio content to your smartphone.

“The self-improvement industry is a 12 billion dollar a year industry in the US alone,” said founder Mike Squirrell in a Q&A.” We want to remove the never-ending burden of accumulating hundreds of self-help books and courses that cost people a lot of money and usually yield little effect, not to mention therapy. Our aim is to change the face of 21st century psychology and brain-training by giving everyone access through technology.

Squirrell spent 10 years researching and developing the ME system at his practice in London where he provided integrated medicine, personal development and behavioral training to clients looking for “sustainable transformation.” People are always striving to be thinner, richer, happier, fitter, smarter, less anxious, and more confident and Squirrell said that bad habits and negative thoughts are what inhibit people from achieving their goals. There is a whole field of study called positive psychology that centers around breaking these patterns. The ME Clock incorporates these techniques into a simple training system that customers can embark upon independently.

There are twelve “ME Programs” geared towards your specific goals, including thin, happy, calm, rich, love, energy confident, and smart. Each program has three separate levels which take between one and three weeks to complete and ME Clock will guide people through various mental exercises throughout the day. People can pick and choose the apps to suit their ambitions.

The self-help industry is massive and largely conducted offline in books, seminars and workshops, and private sessions. Sure the idea of  becoming “the ME you want to BE” invites cynicism and eye-rolls. Affirmations are not for everyone, but there are millions of people out there are looking to improve their lives in one way or another. Popular devices and tracking apps like Fuel Band, FitBit, Endomondo, MapMyFitness (and on and on) are a different incarnation of this idea. They  also provide people with information and social motivation to sustain positive habits. However, Squirrell said these systems are geared towards tracking, rather than “fixing,” and fixing requires mental training. That is where MEClock comes in.

ME Clock is hoping to raise $75,000 through the IndieGoGo campaign. The company is based in London and currently has 6 employees.

Healthfundr is an equity-based crowdfunding platform for health startups. The site provides accredited investors with opportunities to invest in a selection of curated companies working on digital health, health IT, and diagnostic and medical devices.

The JOBS Act and the Affordable Care Act are dramatically changing regulations surrounding crowdfunding and healthcare. Crowdfunding has changed the venture capital landscape and startups in all sectors are using this method to raise  funding. The landscape for health investment is also changing. Funding soared for health IT and digital health companies in 2012, while money continued to lag for life sciences and medical device companies.

CEO Jared Iverson is a former securities attorney with experience working for a pharmaceutical company. He founded Healthfundr in response to shifts he observed in both industries.

“The company is rooted in a desire to see more innovation and capital around health and medical innovation,” he said in an interview with VentureBeat. “A lot of capital goes to areas that are easier to understand or have less regulation, and I’d love to see this sector become more mainstream. This is an area that has a huge impact on quality of life.”

Healthfundr is only open to accredited investors. As of today’s launch, it features three vetted companies that are looking to raise capital. Unlike other equity-based crowdfunding sites like TheFundersClub or CircleUp, Healthfundr works with later stage companies that already have traction and are looking to raise larger amounts. Iverson said there is no shortage of seed funding or later stage capital for health companies, but many struggle to receive first rounds of institutional funding. Healthfundr is meant to be a place where companies that have traction in the market can raise growth capital of a few million dollars.

“Health startups often have to overcome regulatory hurdles and require a higher degree of sophistication and more capital from investors,” said Iverson. “One of the unique difficulties is getting investors to follow-on. We want to fill this hole by being selective about the companies we choose so investors feel more confident in their ability to carry out due diligence.”

Healthfundr is a registered broker-dealer and will take a small portion of the capital raise, either in the form of equity or cash compensation. Iverson’s ultimate goal is to become the main hub for health and medical technology deals and drive funding and interest into this space.

The first two days of a crowdfunding project are very important. Most giant Kickstarters, those with funding goals north of $750,000, tend to raise the bulk of their cash in the first 24 to 48 hours.

That’s not what is happening with Precursor Games’ Shadow of the Eternals. The Canadian-based company, composed primarily of former Silicon Knights employees, is looking to fund a spiritual successor to the 2002 GameCube horror title Eternal Darkness: Sanity’s Requiem. After two days, it isn’t even at a 10th of its goal.

Fans have clamored for a sequel to Eternal Darkness for nearly a decade, and now they have a chance to directly contribute to the existence of a game that echoes the classic. Except only around 2,000 people have contributed a total of $117,000 over the first 48 hours. That might sound like a lot, but Precursor wants $1.5 million to produce Shadow of the Eternals.

That means Precursor is at less than 8 percent of its goal through the first two days of its campaign. The first two days of a crowdfunding drive are also when projects generate the most support with exceptions that only include projects that capture the public zeitgeist after they launch (like the Pebble smartwatch).

Compare Shadow of the Eternals to the downloadable content for fighting game Skullgirls. That title’s developer, Lab Zero Games, went to Kickstarter-like competitor Indiegogo and asked its community for $150,000 to create new characters.

Skullgirls fans had 30 days to raise the money. They did it in 24 hours before going on to raise more than $829,000.

Again, Precursor has only raised $117,000 in 48 hours. With a goal twice as high as the amount that Lab Zero eventually raised.

Another project, a town-building strategy game called Stonehearth, is on Kickstarter right now with a goal of $120,000. For its first three days on the platform, 3,637 backers contributed $117,660, according to Kickstarter-tracking website Kicktraq. Through 10 days, it’s now sitting at $250,000.

An unreachable goal

Shadow of the Eternals seems like it is playing in the same league as Stonehearth and maybe, if it’s lucky, Skullgirls. It’s clear, however, that it is nowhere near the success of the biggest Kickstarter projects.

The most-funded video game Kickstarter ever is InXile Entertainment’s Torment: Tides of Numenera. Also a spiritual successor, Planescape: Torment drew fans to its funding campaign in droves.

In its first day, Torment raised $1.488 million from nearly 28,000 backers. InXile only had a goal of $900,000. That pace dropped off dramatically on the second day, when it raised $517,000 from around 8,400 backers. Regardless, that’s far more than Precursor has pulled in over two days.

In fact, Torment made more on its fourth day than Shadow of the Eternals has made in its first two.

Torment: Tides of Numenera ended up with $4.188 million in funding.

But perhaps that’s not a fair comparison, so let’s look at something a bit closer in terms of monetary goals.

Dreamfall Chapters: The Longest Journey is another sequel to beloved classic video game. It’s developer, Red Thread Games, set a goal of $850,000.

Dreamfall’s fans ended up contributing $1.538 million. Precursor wants $1.5 million for Shadow of the Eternals. Ideally, if Precursor is going to reach its goal, Eternals should have numbers close to Dreamfall.

It doesn’t.

Through its first two days, Dreamfall Chapters generated $479,038 from 8,437 backers. That is more than four times the funds and backers than Precursor has for its project.

All this isn’t to say that Shadow of the Eternals can’t reach $1.5 million by June 7. It could get a surge of support at any time. All this data suggests is that it’s very unlikely that Precursor’s project will hit its goal.

But wait, what happens to the money?

Precursor isn’t using Kickstarter, Indiegogo, or any other crowdfunding platform. The developer is using its own website to take donations.

On Kickstarter, a project must reach its goal. If it doesn’t, then it refunds all of the money. This is an automatic action.

“Our financial goal is a flexible one,” reads the Frequently Asked Questions section on Shadow of the Eternals’ funding page. “We are committed to making this game, however, if it becomes apparent that we cannot raise enough to develop this project then we will refund all pledges.”

That is in answer to the question of what happens if Precursor doesn’t reach its $1.5 million goal. We’ve reached out to Precursor multiple times to ask what it means by “flexible,” but it hasn’t responded to our requests.

The implication is that they will keep the money as long as they have enough to complete development, but no one at the studio is defining what that number is. It’s possible that this campaign only raises $750,000. That’s half of what the company claims it needs to produce Shadow of the Eternals. Are backers going to get half of what they were originally promised?

It’s possible, but no crowdfunding game with a goal this size has had this slow of a start and reached its funding goal.

Shadow of the Eternals is a few hours into its third day of crowdfunding, and so far today, it has only added a few dozen backers and a little more than $1,000.

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Cryptozoic Entertainment has started a Kickstarter campaign to get fans to fund its fantasy card game, Hex: Shards of Fate.

The Irvine, Calif.-based company describes Hex as the world’s first massively multiplayer online trading card game. The company has experience at making card games — it made the World of Warcraft trading card game along with a number of others — but it needs money for the “final polish” of its Hex title.

Cryptozoic has created a tiered system of rewards for project backers.

“Since our company was formed to translate the world’s most popular MMO into a trading card game, it only makes sense that our next major project would be combining the worlds of collectible card and massively multiplayer games,” said Cory Jones, the president and chief creative officer, Cryptozoic Entertainment. “Hex: Shards of Fate is an ambitious project that goes beyond either of the genres and Cryptozoic has the right mix of video game and [card game] vets to bring it to life.”

A leading publisher of physical games, Cryptozoic intended Hex from the start as a digital card trading game. It combines collectible cards and strategic game play of the trading card genre with the community and storytelling of an online role-playing game.

Players will make their way through the dynamic MMO world. It will feature champions, dungeons, raids, and “epic gear.” Players can find cards within the world through combat, or buy them in 15-card booster packs. In-game avatars, or digital characters, can level up across a range of stats. Each card has a “double back,” which reveals digital challenges and achievements for that card. You can also add gems to socketed slots that can change how the card plays. This enables players to modify their collection to suit their play style, with a huge number of potential results.

Kickstarter contributors can get beta invites for early access to the game. The title has been in development for more than two years. Cryptozoic wants launch its beta test in the late summer, with player versus player gameplay, tournaments, and the first set of collectible booster packs. It will also have single player arena battles and character modifications. By late fall, the company will release Hex, including player versus environment dungeons with epic bosses, hundreds of booster pack cards, and extensive customization.

Besides the World of Warcraft Trading Card Game, Cryptozoic also made Food Fight and The Walking Dead Board game. Cryptozoic was founded in 2010.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

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For anyone who has ever gone into a tizzy over granola or kale chips, CircleUp is using crowdfunding to get your favorite snacks onto store shelves. This startup, which connects up-and-coming consumer product businesses with accredited investors, has raised $7.5 million to build out the platform.

Since its launch in April 2012, consumer companies have raised more than $10 million on CircleUp. CEO Ryan Caldbeck founded the company after seeing passionate entrepreneurs struggle to attract capital for their products. CircleUp features companies that are already producing and distributing their wares but looking to scale their business and reach a larger market.

“We love that investors are able to see, touch, taste, and experience the company’s products first hand,” said CEO Ryan Caldbeck. “An investor on our site can go to their local Whole Foods or Starbucks to see and test the products, which we believe helps the investor feel more connected to the investment that they are making. We also believe the lack of traditional funding for early stage consumer/retail products creates an opportunity unlike investments in other industries, where the risk of adverse selection for crowdfunding platforms is greater.”

Investors are often reluctant to invest in consumer products companies because they can involve high overhead costs and manufacturing and distribution challenges. As a result, people who lovingly produce natural face creams or kale chips can’t raise the money they need to get their businesses off the ground.  However, consumer products make up a significant portion of the economy, and people are increasingly interested in buying natural, artisanal, handmade items. Caldback founded CircleUp to act as a bridge between promising, vetted companies and investors looking to diversify their portfolio. It seeks to provide a smoother, more transparent channel for investment.

Companies featured on the site raise an average of $1 million and are able to expand their reach through partnerships with corporations like P&G and General Mills. Since the beginning of 2013, the amount of money flowing through the platform has doubled and over 70% of listed companies close deals. Caldbeck attributes this success to CircleUp’s tight focus on this particular vertical. The team has extensive experience that makes it aptly suited to address this sector’s challenges, as well as expertise in the equity-based crowdfunding space.

In a statement, CircleUp said this is the largest raise for an equity-based crowdfunding site.

Union Square Ventures, which also invested in Twitter, Kickstarter, Lending Club, CodeAcademy, and Etsy, led this round. Google Ventures, Rose Park Advisors, Maveron, and others participated in this first institutional round.

July 9-10, 2013
San Francisco, CA

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Crowdfunding can help execute creative visions, make business dreams come true, and fund medical procedures. Benevolent is using this power to help people break the cycle of poverty.

Benevolent has received a grant from the Knight Foundation and Marjorie S. Fisher Fund to grow its crowdfunding site that anyone can use to make small donations to help low-income individuals overcome a one-time economic hurdle.

“Over 104 million people are living in low-income households in the U.S. today,” said founder Megan Kashner in a Q&A. “This is a higher percent of the population than in any recent decade. For 20 years, I have worked with low-income families to help them reach their goals and prove a sound future for their children. Over and over, I would see a family derailed from their goals by a challenge that would have cost only a couple of hundreds of dollars to overcome.”

Kashner is a licensed clinical social worker who repeatedly saw families struggle to break out of their current situation. Along the lines of Kiva or Watsi, a small micro-loan or donation can make a tremendous difference in someone’s life. Benevolent’s niche is microdonations that enable people to buy a specific item or accomplish a specific task, such as getting a car fixed, a refrigerator, or business training. Sometimes, obstacles as seemingly minor as these make all the difference.

Benevolent partners with local nonprofit organizations to identify individuals with specific needs and then provides each person with a profile page where they can use stories, photos, and videos to describe their unique challenges. All funds raised are sent to the nonprofit as a grant, which then fulfills the client’s needs. Kashner said this approach distinguishes Benevolent from other crowd funding-for-social-good sites because each story is brought to Benevolent by someone personally familiar with the recipient’s need who can not only verify their challenges but also manage the implementation of the resources.

“In the past, we didn’t have the technological tools to scale this sort of help at an individual level,” Kashner said. “Today, we have the tools and the connections, so Benevolent is the actualization of my belief that no low-income family should have to become homeless, jobless, or stuck because they need a radiator fixed or have to buy eyeglasses, a work uniform, or a new computer.”

Benevolent launched in December 2011 and the pilot program in Chicago raised more than $35,000 for 70 people. The average donation is $50 and the average amount of a funded need is $470. With this grant, Benevolent will expand into Detroit, Charlotte, North Carolina, and San Jose/Silicon Valley.

Photo Credit: Benevolent/ Facebook

July 9-10, 2013
San Francisco, CA

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Crowdfunding has opened up a world of opportunity to people searching for capital, but that doesn’t mean those opportunities extend equally to all segments of the population. BlackStartup debuted a crowdfunding platform today that features projects and ideas benefitting the African-American community.

“Access to capital is a bigger problem in the African-American community than in non-minority communities,” said founder Nathan Bennett-Fleming in an interview with VentureBeat. “Crowdfunding is a powerful solution to address its unique set of challenges. I want to promote the idea of community reinvestment and provide people with a dedicated way to not only achieve innovation within the space, but also address social systemic problems.”

A University of Michigan study found that while African-Americans are almost twice as likely as Caucasians to begin the new business creation process, businesses owned by Caucasians exist at more than twice the rate of those owned by black individuals. Fleming calls this the “black startup gap” and outlined multiple factors that perpetuate it, with a lack of funding as the first. He said  most members of the black community start businesses on personal savings, credit, and the support of their friends and family because they have historically been discriminated against in terms of loans, funding, and resources. While these problems are getting better, people within the community still have limited interactions with angel investors and venture capitalists, and don’t feel there are viable financial channels bring their business to the next level.

Bennett-Fleming worked at Goldman Sachs during a college summer, attended law school, and worked on crowdfunding legislation surrounding the JOBS Act. He witnessed the difficulty that people in the African-American community had trying to find financing and realized that crowdfunding could help democratize access to capital as well as draw on the strength of the community. Along with classmates of his from Morehouse - Olugbolahan Adewumi, Elgin Tucker, Kyle Yeldell, and Christopher Hollins- they set out to build BlackStartup.

“Our community is under-valued and highly profitable,” he said. “There is already a strong affinity within the community on the ground and the ability to market directly to a community that is under-marketed creates a significant value proposition. There is already a trend towards more focused, niche crowdfunding platforms. It is a vehicle to better use the tremendous consumer and wealth power of a specific community to take on its challenges.”

The site takes a standard approach to crowdfunding- a selection of vetted projects are featured on the homepage with a project description, background about the founders, and specific goals. Members of the community back projects that pique their interest and if the goal is successfully reached, the project owners get the money to carry it out. Seven projects went live with the launch today, including a site that drives commentary on news of the day, a math curriculum taught through playing the piano, a family business that makes handmade hair products, and a mobile bakery that teaches people how to make desserts.

BlackStartup recently won the Yale Entrepreneurial Institute’s Fellowship, which invokes $20,000 in seed capital, an elite mentor, and a 10 week business boot camp in New Haven, Connecticut. Bennet-Fleming said his ultimate goal is to provide a funding solution that extends to all marginalized communities on a local and national level, to help them overcome obstacles attracting capital. BlackStartup is based in Washington, DC.

Photo Credit: BlackStartup 

New York-based Crowdcases wants to bring together a community of designers to raise funds for nonprofit organizations.

Each week, the startup picks a charity, and asks artists to submit a design for a custom iPhone or Samsung Galaxy case. These cases are sold on the website, and the profits are split between Crowdcases and its charity partner. The nonprofit receives $7 for each case sold.

In addition, the winning designer is rewarded $500 in cash. “Not only do they win money, but their designs can go to work to save lives,” said CEO Dwight Peters.

It’s a deceptively simple idea that might just work.

Peters plans to scale the site by partnering with high-profile nonprofits with a large social media following.

Jamaica-born Peters is a keen advocate of social entrepreneurship, the idea that change-making and profit-making should be aligned. Successful companies in this space include online petitioning site Change.org, and Kiva, an online lending platform for the developing world.

This isn’t Peters’ first foray into entrepreneurship; his first website, QuarterWaters, features interviews with founders of “tech for good” companies.

The next challenge takes place on May 26, and Crowdcases is currently accepting applications from nonprofits and designers.

July 9-10, 2013
San Francisco, CA

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When he was 15, Shaun King was brutally assaulted during a hate crime. Three surgeries and a year-and-a-half later, he recovered from his injuries with a commitment to help those in need.

King is the founder of HopeMob, a nonprofit crowdfunding site dedicated to supporting charitable causes, organizations, and individuals around the world. HopeMob primarily funds smaller scale, focused projects and provides direct aid to recipients instead of just wiring money. Despite the proliferation of crowdfunding platforms, King felt that too many people remained underserved because they did not have the tech or social media savvy to wage effective campaigns.

“We founded HopeMob to fill holes that we saw in the crowdfunding space,” King said in an interview with VentureBeat. “I don’t see our competition as other crowdfunding sites, I see it as the ills of society that cause people harm and prevent them from living their best life. A lot of people with compelling stories are totally blocked on other sites and this is often because if you don’t already have a crowd, you struggle to raise money. We flipped that on its head by building the community first around the idea that when generous strangers come together, we can get a whole lot done.”

HopeMob’s community is now 150,000 people strong and has funded over 100 campaigns, ranging from $400 for a medical procedure to $100,000 for victims of Hurricane Sandy. Before campaigns go live on the site, they go through a series of steps to make sure they are legitimate, as well as presented in the best possible way. HopeMob verifies stories that goes through the system by asking for references, conducting interviews and researching on social media. The fact that campaigns don’t receive money, but rather the actual aid they need, also weeds out disingenuousness. For example, a teacher raising money for her school receives the specific textbooks or water purifiers she needs and a cancer patient may have her bills paid for her, rather than getting a check to do it herself.

Once HopeMob approves a campaign, the user can ask for help building a compelling profile. King has extensive experience leveraging social media to achieve goals and built that into HopeMob so that if someone goes to the trouble of posting a campaign, they have a better chance of reaching their goal. Before founding HopeMob, King raised millions of dollars for the relief and recovery after the earthquake in Haiti, largely through social media, and he realized that bringing together social good with social media as “his calling.” He went on to launch an auction site called TwitChange where people could bid on the chance for celebrities to mention them on Twitter.

Along these lines, King launched Upfront today, an online community for influencers and their devoted fans. King said that the “value of fully engaged celebrities in a platform” is huge. Upfront provides opportunities for influencers to communicate with their fans through messages, photos, videos, emails, unreleased music, status updates, and live-streaming of events. Access is available on s subscription basis and a percentage of every transaction completed on Upfront goes into the Upfront Foundation to support causes they believe in.

King has played a number of roles through his life, including victim, teacher, pastor, community organizer, social media consultant and entrepreneur. He is driven by the desire to empower the downtrodden, and believes in the power of social media (and the influential people using it) to rally support for charitable causes.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Elizabeth Smith Kulik, the co-founder and CEO of crowdfunding incubator ProHatch.

Crowdfunding has once again become a hot topic in the financial world, given the recent one-year anniversary of the JOBS Act on April 5. The JOBS Act legalized equity- and debt-based crowdfunding in the U.S. However the SEC has missed congressionally mandated deadlines to complete the rulemaking process to the detriment of capital-seeking entrepreneurs.

While the parts of the JOBS Act that legalized equity crowdfunding for accredited and unaccredited investors may not be implemented until late this year, the crowdfunding movement has seen explosive growth.

The entire crowdfunding market grew by 81 percent last year, funding more than one million campaigns, according to Massolution, which recently issued its crowdfunding report for 2012. Western countries accounted for approximately 95 percent of the total market. Carl Esposti, CEO of Massolution, says that he expects the crowdfunding market to nearly double again in 2013.

If anything, these figures demonstrate that communities around the country (and around the world) are hungry to support and contribute to issues and organizations important to them. Everything from film and TV projects to natural disaster relief has been funded with the help of the crowd.

No one can now plausibly deny that crowdfunding (be it equity-, donations-, or rewards-based) is not filling a crucial gap in capital formation for businesses, social impact, and communities. The fact that entrepreneurs are finding it more difficult than ever to raise funding, which the JOBS Act was designed to address, is perhaps one of the motivating factors behind not one, but two separate hearings about Titles II and III provision delays in the House of Representatives in April.

The House Small Business Committee quizzed SEC officials on the delay, where witnesses stated that while they did not have a firm date set for completing the process. It was understood to be a top priority by both Congress and the new SEC chairwoman, Mary Jo White. Another hearing followed in the House Oversight Subcommittee regarding Title II, featuring SEC Commissioner Elisse Walter. These are encouraging developments.

So while there may be more political battles to come on the domestic front, crowdfunding is booming, and enterprising small businesses and nonprofits can still leverage their social networks to fund today’s most pressing causes and tomorrow’s most innovative ideas with donation and rewards campaigns. Investor protection and fraud prevention are top priorities not only for regulators, but for those of us deeply involved in the industry.

In addition to significant measures taken by the majority of legitimate crowdfunding portals to implement industry best practices and accreditation, my own company and others have their own vetting standards and procedures. And let’s not forget the crowd itself: part of the beauty of crowdfunding is bringing those who understand an idea, a company or an industry together to air any and all concerns to other would-be investors.

Even though the JOBS Act anniversary has come and gone, I’m not at all disappointed with the state of things as they are. Although a solid regulatory framework that protects entrepreneurs and investors will take time, with crowdfunding gaining so much attention and traction around the world, there is even more reason to be optimistic about the future of social enterprise and community-supported initiatives.

Elizabeth Smith Kulik is the co-founder and CEO of ProHatch, a crowdfunding incubator that offers best-in-class business and social advisory services, and partners with entrepreneurs, start-ups, SMBs and communities to optimize their crowdfunding goals. She has created and executed development, acquisitions, dispositions, repositioning, and growth strategies for more than $75 billion of institutional operating company and real-estate investments.

We live in the Golden Age of turn-based tactical strategy games. The Nintendo 3DS has the amazing Fire Emblem: Awakening and Ghost Recon: Shadow Wars. The PC has XCOM: Enemy Unknown and an upcoming Civilization V expansion. Now, Danish developer Full Control is bringing us one more title to cement a great couple of years for taking turns firing guns.

The studio opened up its Kickstarter campaign for Jagged Alliance: Flashback this morning. This new Jagged Allience aims to update the classic squad-based tactics mechanics of the series for a new generation of gamers on Windows, Mac, and Linux. Full Control set a goal of $350,000.

“The original Jagged Alliance was a thinking man’s game with a focus on characters, firepower, and strategy,” Full Control chief executive officer Thomas Hentschel said in a statement. “Our vision at Full Control is to bring back the tactical turn-based action that the original games were known for. We look forward to working with a community who shares our vision and wants to experience a new Jagged Alliance that returns to the classic turn-based action of the originals.”

Jagged Alliance: Flashback warps players back to the 1980s Cold War. The action takes place on San Christobal, a Caribbean Island that serves an important strategic purpose to both the U.S.S.R. and the U.S.A. After a coup d’état knocks out an American-friendly ruler, a group of highly trained special operators are sent in to restore balance.

In other words: ‘Muricah!

Full control wants to retain the deep strategy the franchise is known for while expanding on its character role-playing elements, squad management, and base building.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Updated at 1 p.m. Pacific with new information.

Fighting game Skullgirls is a crowdfunding legend. Developer Lab Zero Games took the 2D fighter to the Indiegogo funding platform and asked fans to chip in so the studio could create new downloadable characters. The effort ended up raising more than $829,000.

Earlier, the developer was facing new problems in the form of PayPal, as first reported by Eventhubs. The money-transfer company, which is handling over $700,000 of the user contributions, froze Lab Zero’s account last week. It worries that a large number of backers could demand chargebacks (in which PayPal puts the money back on the customer’s credit card) if their favorite characters don’t make the final DLC character roster.

“Whee! Paypal’s freeze on our account is making it so that I can’t pay people today,” Lab Zero chief executive officer Peter Batholow wrote on gaming message board NeoGAF. “I am pretty fucking pissed. I sent them all the documentation they asked for last night, hoping it would be resolved today, but didn’t hear anything back.”

As frustrated as Bartholow is, he does understand PayPal’s position.

“I think it’s sketchy, but their logic sort of makes sense,” wrote Bartholow. “Basically, they are terrified of chargebacks. If we spend all the money and don’t deliver and everyone [requests] chargebacks, PayPal is concerned they will be on the line for [the money]. So, they are effectively treating it as a loan. I mean, the guy flat out said: ‘Until the threat of chargebacks has passed, PayPal is effectively financing your development.’”

PayPal asked Lab Zero if it was good for the $700,000 if a wave of fans demand refunds.

“I said no, because, well … we’re not,” said Bartholow. “The whole point of crowdfunding is to give us the money to develop stuff — not to take out a loan.”

That changed this afternoon as PayPal shifted its position on Lab Zero’s account.

“Paypal called me today to inform me that the restrictions on my account had been lifted, so I can get back to paying our contractors today,” Bartholow told GamesBeat.

While PayPal unfroze the account, the financial company is still holding $35,000 “as collateral.”

“I think this is still pretty sketchy and have filed a complaint with the Consumer Financial Protection Bureau, so hopefully that will become unrestricted in the near future. But now that we have unrestricted transfers on Paypal again, we shouldn’t need that money anytime soon if they can’t be convinced to release it.”

Lab Zero Games is holding a fan vote to decide which characters will make the expanded roster. Some gamers are threatening to pull their contributions if the characters they want don’t win those votes.

Bartholow says that they haven’t even seen one confirmed chargeback yet, but the threat from fans is still scaring PayPal. At the same time, the studio head also confirmed that they won’t delay development because of PayPal.

“It’s likely a vocal minority, but it’s still something we’d like to address, if possible,” wrote Bartholow. “We did this because we thought it would make people happy and excited, and we would rather it stay that way.”

Bartholow asked fans what they want him to do. That included the possibility of abandoning the user vote and having the development team pick a character. Vocal fans quickly shot down that idea. Voting continues on the game’s Facebook page.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

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Small business owners play a big role in the battles against disease, climate change, and corporate wrong-doing. In the past year, a company called CircleUp has helped them with their fight.

CircleUp is a crowdfunding platform for up-and-coming consumer product businesses. In the year since its launch, CircleUp has helped 12 companies raise more than $10 million.

Investors are often reluctant to invest in consumer products companies because it is hard to make millions of dollars on granola. Accordingly, passionate entrepreneurs who lovingly produce organic food products, handmade jewelry, or natural face creams struggle to attract the capital they need to reach consumers.

CircleUp bridges this gap by providing a platform where accredited investors can access a curated, vetted selection of consumer products companies and make equity-based investments.

“We love that investors are able to see, touch, taste, and experience the company’s products first hand,” said CEO Ryan Caldbeck. “An investor on our site can go to their local Whole Foods or Starbucks to see and test the products, which we believe helps them feel more connected to the investment. We also believe the lack of traditional funding for early stage consumer/retail products creates an opportunity unlike other industries, where the risk of adverse selection for crowdfunding platforms is greater.”

In honor of its first birthday, the company shared some information about its momentum. Featured companies raise an average of $1 million on the site and have also been able to expand their distribution through partnerships with large corporations like P&G and General Mills. Since the beginning of 2013, the amount of money flowing through the platform has doubled. Over 70% of companies listed close deals, including products in accessories, back foods, baby food, healthy and beauty products, and food. The fastest raise closed in two weeks, and seven of the twelve companies are women-owned.

Caldbeck attributes the success to three factors- the team, a exclusive, vertical focus on consumer products and retail, and a regulatory approach that lets them help small businesses ahead of the JOBS Act implementation. Furthermore, CircleUp is at the intersection of two significant trends. Crowdfunding is popular right now, as are small-production, high-quality, unique products with a story behind them.

So for all you people out there who appreciate health-food, slow-food, boutique, artisanal, organic, local, seasonal, natural stuff, CircleUp could be partially to thank next time you find kale chips at your local market.

Photo Credit: sleepyneko/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Kids are devilishly good at raising money, tempting those of us in the adult world with their delicious treats, cute outfits, and pledges to walk for miles in the name of a good cause.

And startup Piggybackr is making the job even easier for kids with the launch today of a kid-friendly approach to crowdfunding.

“[Kids] are super tech savvy and everyone and their mom is fundraising online,” founder Andrea Lo told VentureBeat. ”While entrepreneurs, artists, and nonprofits fundraise online with great success, I wondered why this hasn’t spread to youth and their communities.”

Lo was first inspired by her 11-year-old sister, who was trying to earn money by selling bracelets. Lo wanted to help her sister be more savvy and business-minded and ultimately achieve a higher financial goal. She began investigating why kids are largely not involved with crowdfunding and found that there were a specific set of challenges that could be addressed.

On Piggybackr, kids learn how to set up a fundraiser and wage successful campaigns. There is a strong educational component, with suggested ideas, instructional videos, and tools so they can reach out to and engage their audience. The gamified task list helps keep kids motivated. Kids can also earn “effort points” to reflect their hard work in ways other than dollars, and they can earn skill badges for specific achievements. Since kids often fundraise socially, Piggybackr also offers features for organizing team members, communicating, and working together to achieve goals. The site is armed with safety features, and kids under 13 need their parents’ permission to use the service.

“The reality is, most kids are raising smaller amounts from friends, family, and local businesses,” Lo said. “Teaching them how to maximize their potential with that audience is key, and then they can start to think about getting larger. We are really focused on teaching kids tactically what they can do.”

During the private beta, kids raised an average of $75 per individual supporter. For anyone who has ever peddled Girl Scout cookies door-to-door or swum 100 laps for Cystic Fibrosis, you know this is a significant amount. Piggybackr has helped youth raise over $250,000 while still in beta. It launched today with 1,500 participants, which Lo expects will grow quickly now that the product is public. Piggybackr is also working with 10 partner organizations to expand its distribution. The United Way Youth Venture is one of the partners and looks at Piggybackr as a way to build problem solving skills and entrepreneurship, as well as to fundraise.

Projects range from a wheelchair basketball team in need of new equipment to an individual kid raising money for a turtle protection project in Costa Rica. Piggybackr takes 5 percent and 30 cents per transaction that comes in. The company is based in San Francisco and currently has three full-time employees.

Crowdfunding payment service Flattr is no longer welcome when it comes to Twitter, the startup announced this morning.

Flattr enables people to donate money to the content that’s freely available online. You set a monthly allowance on Flattr for how much you want to spend per month (say, $20), and it can split it up among the various creators you donate to. Last month the service switched from requiring content creators or services to embed a Flattr button on their sites to a model in which you reward those same creators just by using many of the social networks you’re already plugged into. Perhaps the best example was of the new model was the process of making a Flattr payment when clicking the “favorite” star/button on Twitter.

But as of today, you can no longer do this.

Twitter correctly pointed out that Flattr’s use of favorite button data was in violation of the Twitter API terms of service. Specifically, the clause in violation states that third-party companies cannot receive compensation for tweet actions, which prevents spammy promotional services from selling retweets to people and limits the amount of fake Twitter user activity. But Flattr isn’t trying to sell retweets or inflate activity, yet it does take a cut from the overall transaction. This means Twitter had a big problem with it.

“The idea of not letting people use their favorites in the way they want is in no way is mentioned in the API terms. We feel that Twitter is reading things into their terms that is not there,” said Flattr co-founder Linus Olsson in a blog post.

Here’s further explanation from Olsson:

With Flattr you can not of course pay people to retweet, follow or favorite you. Flattr is the opposite, a way to voluntary reward someone for something that they have created. It’s not possible to use Flattr to pay creators to get a certain result.

Well, the reality is that this was not how Twitter read it. After mailing with Twitter’s “Platform Operations” about this Twitter replied to us that, “If your service compensates content creators … in a manner that is not attached to Tweet Actions, this would be in compliance with our API Terms of Service.” To favorite somebody is considered a Tweet Action.

We have tried to suggest different solutions asking for an exception to the terms, even forgoing our cut, etc, without any result. But, this does not mean that we will give up negotiating with them over this on behalf our users and also their users.

Flattr contacted Twitter to see if it would make an exception to the clause, and it offered to forgo its 10 percent cut of all transactions initiated by a user, but the company won’t budge. Olsson previously told me that his company hadn’t reached out to Twitter prior to launching the new Flattr functionality, but my guess is had he tried they would have told him the same thing.

Twitter’s decision to block Flattr from using the API for its payment platform mimics an earlier decision by the company to shut down in-stream payment service Ribbon a mere 90 minutes after launching. And while Twitter doesn’t appear like it’ll make a return anytime soon, the Flattr team did say its working on a way that people can compensate artists through its payment platform on Twitter that doesn’t violate the TOS.

The one bright spot in this situation is that Flattr did manage to add support for YouTube videos. And, of course, the service is still integrated within Instagram, Soundcloud, Github, Flickr, Vimeo, 500px, and App.net — with Facebook is still noticeably absent from that list.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by designer Jim Clark 

When I first found out about Kickstarter, I thought it was a great idea. I’ve been making things all my life. As the owner of a visual effects and imaging studio, designing, rendering and visually developing creations is right up my alley. I wanted to use Kickstarter to prove the popular viability of my creations. If the crowd funded my ideas, there was a good chance that the market at large would also be interested.

When I came up with the concept for the UNRULY line of GoPro cases and accessories, the Kickstarter crowd loved the idea. Our two primary products, the Headcase Pro and HeadGear, hit $36,000 in funding — $9,000 more than our original goal — in 30 days.

I thought I understood the process that came after funding was complete. Prior to Kickstarter, I’d taken multiple product lines from concept through manufacturing and delivery. These products were sold in high-design outlets, including Fred Segal and MOMA San Diego. It turned out that those previous victories had little bearing on what happened with Kickstarter. Funding was only half the battle.

With Kickstarter, everything that came after the funding was unexpected and frustrating. Here are my lessons learned.

It’s not a hobby, it’s a company

Creators often overlook the fact that funding a project can quickly become a serious game. You might launch on Kickstarter as a fun way to finance a fun project, but when you start executing that little project, it can easily balloon into a $1 million proposition. At that point, it’s no longer a hobby. It’s a company.

In order to manufacture and distribute your product, you end up beholden to suppliers, manufacturers and everyone else along your supply chain, as well as investors. With Kickstarter, your funders aren’t given any information about how hard it really is to pull off the successful delivery of your product. They’re continually reminding you of what they want and need, and you’re scrambling to assuage their fears.

This became a real problem for us. In general, if you’re successful, Kickstarter funding is only equal to one-third to one-quarter of the sales that you get through wholesale and other retail. While 200 people ordered our products on Kickstarter, we also ended up with a tremendous amount of sales outside of that.

We’d raised $36,000, but in order to pay for everything, we had to raise another $100,000. It could take up to three weeks after your Kickstarter is fully funded to get your money, so it’s not uncommon to find yourself scrambling for additional funds.

Delays are the norm

That lag is one reason that roughly 75 percent of Kickstarter projects are delivered late. Another reason is that Kickstarter doesn’t provide you with any resources beyond your initial funding. If you get into trouble later, you’re on your own.

Many creators face unexpected costs. Our injection mold, for example, relieved us of $25,000. Other creators run into problems because they don’t have the know-how, the expert advice or the resources to produce their products. Without the support of outside entities, creators can run their entire business into the ground before they even deliver their first product.

In our case, the manufacturers delivered all of our products to us three months late. Because of that delay, we missed our primary summer sales. By the time we shipped to our customers, GoPro had changed their entire product design. That obsoleted all of our products, which were designed for the previous model of GoPro, and we’re still paying for it today.

Some policies can stifle creators

Kickstarter’s lack of ongoing, post-funding support is one of several problems that have turned the company into a non-starter for us. Kickstarter has several other policies in place that stifle creators.

They deny projects without explanation.

Kickstarter turns down 25 percent of project applicants, but is notorious for not providing an explanation as to why. The process appears to be subjective and opaque. They won’t allow any projects related to pets, for example, but they’ll let a guy raise $5,000 to hire a skywriting plane to write weird things in clouds. 

Creators aren’t allowed to show virtual renderings, only finished products.

In today’s Apple design society, the design component of any product is critical to its acceptance, regardless of the technology. It is imperative that we show our idea as a visualization. The key to a succesful design project is the visualization stage. Kickstarter is against this because it doesn’t want backers to confuse photo-realistic renders for a final product. The platform does allow drawings and CAD designs, but virtual renderings are important to a lot of pitches.

Because Kickstarter is an important step in testing an idea and funding it, it’s really important that the creator is able to use all of the tools possible to communicate what the end product is going to be. This includes photo-real renderings to communicate the message or idea of the product. Without the ability to use these visualization tools, the creator is forced into taking an idea further down the road than they may be comfortable with, before they test the waters and acceptance in the market.

For example, our newest product, the Reactor, is very technically challenging and cost-prohibitive to put into production. If we’re not allowed to show potential designs before manufacturing the product, we wouldn’t be able to proceed, because there’s no way to communicate what we’re trying to make.

They eliminate the ability to buy more than one of an object

Kickstarter says “we are not a store.” Yet there are a number of projects that were successful on Kickstarter precisely because consumers were able to buy them in quantities. Kickstart is kicking themselves in the butt by wiping out the ability to buy more than one of something. They’re alienating their user base of entrepreneurs by dictating how those creators should create a message around their product and how many to sell. There’s a sort of idealism in that dictum that doesn’t sync with Kickstarter’s user base.

There are greener pastures for crowdfunding

A crowdfunding site should be designed with the highest regard to the needs of the crowd, not of the founders of the site or the people programming it. Kickstarter is trying to fit its creators into a format that isn’t the best one for building a sustainable business. Their rules aren’t necessarily for the benefit of the people paying the bills.

Starting a business is a commitment. In leaving Kickstarter, I’m looking beyond the dating phase of a funding-only platform. I want a crowdfunding platform that can give me a long-term commitment. There are other fish in the sea, so for the Reactor launch we’re casting our funding nets from a better-built vessel.

Designer, inventor, animator and entrepreneur — Jim Clark pushes the digital industry envelope, from tech product creation to innovative visual effects techniques. Jim’s industrialist momentum derives from his finite attention to detail, insatiable curiosity, and sincere desire to create and improve design as a whole. With a true appreciation for virtual and tangible products that look aesthetically pleasing and exude sentient excellence, Jim approaches his day-to-day with an eye to achieve perfection and his mind’s eye is already envisioning the next best thing.

Jim has developed and launched a number of high-design and high-tech products, leaning on practicality, design aesthetics and creative branding efforts. Along the way Jim also founded Hive-FX, a successful visual imaging studio, with the credits of Grimm for NBC, NIKE and HP, and the brands MONSTERCINE, UNRULY, NOWWATCH, Pinata and Ruins, which Jim developed.

Kickstarter and classic role-playing games go together like gin and tonic. Many of the old-style RPGs that go up on the crowdfunding platform typically pull in enough to meet their goal. Finally, one of the successfully funded titles has a release date.

In April, developer Harebrained Schemes launched a Kickstarter to fund the development of Shadowrun Returns, a 2D RPG update of the classic cyberpunk fantasy series for PC. The company set a $400,000 goal and ended up bringing in over $1.8 million.

Today, the studio revealed the title is due out in June. Fans that didn’t secure a copy through the crowdfunding campaign can now preorder it through Harebrain Schemes’ website. The studio is offering a $15 basic edition with just the game, a $30 Deluxe version with the soundtrack, and $75 Collector’s Edition with extra in-game content.

Harebrained is also working on fulfilling its backer rewards. If you’re a backer, you should receive an email telling you how to ensure you get everything due to you. More details are available on the studio’s website.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Just as an elaborate wedding does not necessarily lead to a good marriage, neither does a successful Kickstarter project lead to a sustainable, scaleable, long-term business.

Daily Grommet is an online marketplace and product launch platform for up-and-coming consumer products. Many of the companies featured on the site launched successful crowdfunding campaigns on Kickstarter or Indiegogo, but then they found themselves faced with the monumental task of getting their products to market. Once the flowers are cleared, the cake is packed up, and all the guests are gone, the Daily Grommet steps in to help entrepreneurs with the nitty-gritty of running a business.

“Crowdfunding captured people’s imaginations and made it seem heroic and interesting to participate in physical products being born,” said founder Jules Pieri in an interview with VentureBeat. “But the misperception is that then the game is done. My point of view is that crowdfunding platforms yield products but not businesses, and that initial market acceptance is not deep enough to ensure a product can go the distance. Our job is to collaborate with these platforms and the entrepreneurs to help people realize their dreams.”

Pieri and her team receive hundreds of ideas a week from various sources. They vet the proposals considering values they think people care about, like “Made in the USA,” eco-friendly, social missions, and compelling stories. Each week, they feature five products with original video content and data about their sales, social media response, supply chain, and operations. Then the “citizen commerce” element kicks into gear: People in the community offer feedback about the products. According to Pieri, Daily Grommet’s community is representative of the wider consumer community and how a product fares within the test group is representative of how it will do out in the real world.

If response is positive, the ultimate goal is to help the company behind it achieve their business goals. In some cases, this could be national distribution, while for others it could be getting their products into high-end, elite stores.

“Retail is a secretive, old-fashioned, relationship and luck driven industry,” Pieri said. “It is not only difficult to break into, but also difficult to succeed. Consumers these days want to know what businesses are doing for the world and they want innovation, but the more innovative a product is, the less likely it is to do well in retail with our a story or assistance. We are always searching for tomorrow’s big product.”

Pieri grew up in Detroit as the daughter of factory workers. She said she spent her whole life around people who made things, which led her to become the first industrial designer at Harvard Business School. She worked for computer and telecom equipment companies and consumer products brands and cofounded multiple startups.

She started Daily Grommet in 2008 to combine all these areas of expertise and level the playing field for consumer products, which represent 65 percent of the U.S. economy. Over the past four years, 1,600 new products and companies have participated on the platform: things like Fitbit and even baked goods. The Boston-based company closed its second round of funding in August 2012 and is using that financing build out the marketplace and forge relationships with retailers.