Lena Benjamin, founder, and CEO of EmpowerHER Global, action and progress for women in business, once again interviews Florence Hardy, CEO and Founder at truCrowd Illinois Inc., located in Chicago IL, USA. truCrowd Illinois is the first equity crowdfunding platform in the state helping businesses to fund their enterprises from the crowd while offering investment opportunities to the public. This interview explores crowdfunding in more depth and additionally highlights truCrowd’s expansion. Subscribe for Progress.
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Great to have you once again on the EmpowerHER Global show Florence.
What type of businesses is more popular in USA crowdfunding?
We are finding that technology-based businesses are the most popular for crowdfunding campaigns. Technology-based companies tend to adapt faster to new funding opportunities and fundraising. Those types of companies tend to be to the ones where people get more excited about as opposed to a restaurant business. It is really hard to get the public excited, but when you are talking about new technology or a new way to deliver a service that no-one has heard of before or tried before, it is much easier to build up excitement. Those are the types of companies that are more successful in a crowdfunding raise especially in the equity space because people want to own a stake in innovative, cutting-edge companies. Although we are seeing some companies that fall into the small business realm particularly at the state level because there is some proclivity for a resident to invest in a local business and that’s the exciting part. On the national level, it is those tech companies, those innovative companies that are trending. At a local level, it is the ones where the owner of the business is known.
In the UK, and I’m sure it is the same in the USA, you are looking at the traditional based businesses merging technology so you have FinTech, InsurTech, RegTech. Is that the same in the USA.
It is yes. It is the technology-enabled businesses. So yes they are providing a traditional service or product but the way that they incorporate the technology in the delivery of the product or service that is what is innovative. we are finding that a lot of those normal industries for the most part like the financial and insurance are getting revitalized with the enablement of technology adding to their product line.
Are you finding on truCrowd a particular company that is coming to mind in the FinTech space or those types of new industry?
Right now we have an education technology company that is raising money right now on the federal platform which is very innovative right now. The company is disrupting the higher education industry which as you know for so long you go to school you sit in a class and someone tells you what to do five days a week. What they are doing is incorporating technology to provide a more – not only a customized experience but also an intriguing experience that helps with the undergraduate learning process and in that they are helping to lower the cost. At the moment it costs thousands of dollars to get an undergraduate degree and they are trying to deliver the same type of education but for under a thousand dollars. So you know – they are trying to be very disruptive in the higher education. We are very confident that they will not only have a successful fundraising but they may also have additional successful fundraises after that.
I think they coin that new industry EduTech so that sounds absolutely fantastic. It is a ridiculous amount of money to gain an education when it goes out of date because you are having to continually learn so by putting the learning online…is that how the education is delivered to undergraduates?
Individuals can participate and get their education matter wherever they are. But here is the thing about that with education right now a lot of the obstacles is financial because it isn’t like a lot of people can’t get into these schools it is they can’t afford to go once they do get in so you have a proportion of the population not going to college which should be open and free because it is for the betterment of society that everyone is educated. So that is what they are trying to do. We are pretty excited by what they doing and that they chose truCrowd to raise the funds needed.
How did they [EduTech company] find out about you [truCrowd]?
They are a Chicago based company and interested in the crowdfunding space and so it so happened that they funder and myself we run in the same circle as it relates to crowdfunding. He was running events that I attended and I held some events where he attended so it was more than Chicago is a small city when you are in the same space or same circles per say and this is how we met and I was able to open the opportunity of truCrowd to him.
I’ve been to Chicago three times before as mentioned and I would agree that there are certain places that people go in Chicago people will network in the same types of environments which is absolutely brilliant.
Are there any trends in crowdfunding across the USA?
One of the most apparent trends which is not so much of a surprise based on the limitations on how much people can invest at a federal level but one of those trends the average amount of investment by an investor in a particular campaign is actually quite low. It is around 250 and 500 dollars as an average investment. It is a good size investment but for business owners what that means is that they have reached more individuals to reach the goal. So for example if they are trying to raise 100,000 dollars and the minimum investment is 250 – this means approximately based on my math 400 individuals are needed to raise those funds. In Illinois, the average investment is 2,000 dollars so in that circumstance they only have to find 50 individuals. I think that one of the trends is that companies have to work that much harder to make that investment.
How are you finding that companies are finding the individuals to invest? Are they putting on events and sending out press releases?
Yes, I think that there is a major push on traditional marketing mediums unless instead of social media. Although everyone does social media it really is a one-to-one sell. For instance it is an investor who knows the founder of the business and the trust is already there to get the investment started and so we found that for those companies that hold in-person events and webinars that go out into the communities to hold speaking events as opposed to just relying on social media it is those types of companies. Those that use traditional marketing methods are seen to be more successful in their raises.
How does truCrowd make money?
We take a transaction fee so for every successful raise that completes on our platform we take a fee of seven percent.
What are the next states for truCrowd? You are currently in the state of Illinois, Florida and Texas are you expanding in and targeting any other state and why?
There are currently 30 states that allow for inter-state crowdfunding not just relying on the federal law. The way we consider which state to enter into really depends on the status of the crowdfunding, the progressiveness of the law in that state and so forth. We have seen an appetite in Michigan and Georgia – we see that these states have lower barriers to entry and where we have some connection or partner in those states will be the ones where we enter first.
You are a lawyer by profession do you partner with another law firm or someone in relation to that?
It is not always an attorney but someone who is in the crowdfunding space. In Texas there is a small community one of the connections is a lawyer but that is not why we targeted it. Most of the time when we look for a partner it is someone who already has crowdfunding experience but does not have the technology platform also what we look for communities that would benefit the economic activity that a crowdfunding campaign can create. It really has to be communities where we can energize reinvigorate the registered voters or the constituents of the state to support the local businesses. Where there is a business district or a chamber of commerce or business support agency to energize the residents as an opportunity to enable residents to support their local communities. It needs a partner where they have influence in the community rather than an outsider who doesn’t know how to speak “the language of the community”. The insider can introduce truCrowd and encourage and facilitate that. This is where we find the best partnerships.
How is Washington DC for truCrowd – there is a lot of entrepreneurship around there, particularly around Maryland?
I can’t speak to the Washington DC. I used to live there 14 years ago. I know that there is a thriving entrepreneurial eco-system there with the arrival of accelerators and incubators. And there is a real focus on opening these entrepreneurial clinics where entrepreneurs can speak to lawyers and accountants for free.
This has been delightful and great nuggets of information and where truCrowd is going [expanding] and how it is enabling and empowering local communities and creating a thriving economy for the different states. Thank you so much, Florence Hardy, CEO, and founder at truCrowd Illinois.
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