This episode of The Angel Next Door podcast is a special edition of Minutes with Marcia. In this episode, Marcia reflects on the impactful journey of the podcast and shares three powerful takeaways from our previous shows that could transform your understanding of entrepreneurship and investment. Whether you're an entrepreneur seeking advice and resources, an investor looking to diversify your portfolio, or just interested in the dynamic world of startups, today's episode will offer you valuable insights. She discusses the significance of supportive networks for entrepreneurs, explores why diversity in startups matters more than ever, and discusses the ever-evolving landscape of crowdfunding. Plus, Marcia will share exciting details about her upcoming book. Don’t miss the lessons we've garnered— listen now to find inspiration right next door!
This episode of The Angel Next Door podcast is a special edition of Minutes with Marcia. In this episode, Marcia reflects on the impactful journey of the podcast and shares three powerful takeaways from our previous shows that could transform your understanding of entrepreneurship and investment. Whether you're an entrepreneur seeking advice and resources, an investor looking to diversify your portfolio, or just interested in the dynamic world of startups, today's episode will offer you valuable insights. She discusses the significance of supportive networks for entrepreneurs, explores why diversity in startups matters more than ever, and discusses the ever-evolving landscape of crowdfunding. Plus, Marcia will share exciting details about her upcoming book, which you can check out here! Don’t miss the lessons we've garnered— listen now to find inspiration right next door!
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Marcia Dawood
Hi, everyone. We're coming up on three years of the Angel Next Door podcast. And I started the podcast in hopes that more people would want to become angel investors, hence the name the angel next door. I've seen entrepreneurs struggle so much to get funding, and several years ago, I was just getting frustrated watching not only the struggle, but how so many of them were going out of business because they simply didn't have enough support and adequate funding. I started to imagine a world where there were a lot of investors and they were helping these companies to grow. So for today's episode, I've picked three takeaways from the last three years. Number one, there are many resources out there to help entrepreneurs, and entrepreneurship is lonely. So we heard from Nicola Corzine of the Nasdaq Entrepreneurial center about all the free resources that they offer.
Marcia Dawood
Stacey Bowers came on from the SEC and told us about the free resources on the SEC's website. Doctor Sylvia Ma came on and talked about the accelerator programs and all of the amazing things that Stella offers to entrepreneurs. Venture well is another incredible resource for entrepreneurs. And we heard all about that from christina tamer. We also heard from Kiersten Moorfield of Cloverleaf. And. And her message was, having the right advisors and mentors early on is so important. And that's one of my big takeaways.
Marcia Dawood
Entrepreneurship is lonely. And, yes, we need advisors, mentors. We need lots and lots of people to help. Sometimes. We also need cheerleading. It's hard work to build a company. And these entrepreneurs, they need more than just our money and our expertise. In a lot of cases, they need, yes, cheerleading.
Marcia Dawood
It is so important for these entrepreneurs to have people in their corner for the days that don't go quite as planned and the things that don't happen quite the way that they want to. But they know that if they just have somebody in their corner who's cheering them on, they're going to be able to get through it. And Sue Bevan Baggot was definitely that person for Kirsten Moorfield, who helped her in the very early days to get cloverleaf off the ground. Now, they just finished raising their series A, so they are doing great. Number two, diversity matters. We heard from all kinds of people who came on the show talking about how hard it was to fundraise as a woman or a person of color. We heard from entrepreneurs like Alison Greenberg, Colette Cordeon of Joy Lux, Lindsey Harper from Rosie. Laureen Pendleton came on and told us all about her new venture firm, 125 Ventures.
Marcia Dawood
Laurel Mintz told us all about how she has a pitch session where entrepreneurs can showcase their companies. And we heard from Naseem Sayani of Emaleline Ventures. Diversity does matter, and yes, gender and racial diversity matters. But I'm also talking about geographical diversity, where people went to school, where they were raised, how they grew up. All of these things can add to the conversation, especially when a company is being built from scratch, which is obviously extremely difficult. We are now starting to see more and more studies that show that diverse teams get better results, higher revenues, lower expenses, and quicker time to profitability. And number three, crowdfunding is here to stay. And I've had several people come on the podcast and talk about different crowdfunding platforms.
Marcia Dawood
We had Howard Markson from Startengine and he told us all about that platform and how it works and entrepreneurs that are getting funding there. We also heard from George Cook of Honeycomb credit about debt crowdfunding. And if you go back a couple episodes, you can also hear from two different entrepreneurs who talked about the crowdfunding campaigns that they ran, how they did them, and how they were quite successful raising several hundred thousand dollars. That would be Jake Whitman of really good boxed wine. Yes, it is actually really good boxed wine. And Brian Scott of Pitmoss. And if you remember, Pit Moss is the peat moss substitute that uses recycled newspapers in order to have plant growers use less water. And they are doing great.
Marcia Dawood
So in February of 2024, the Angel Capital association, we did a webinar with Woody Neese of CClear, and he brought some data to us that is extremely interesting related to crowdfunding. I'll just give you a few of the highlights. His data is from the year 2023. The number of deals over 8000, the amount of funded capital, 2.2 billion. And while 2.2 billion, in the grand scheme of things, of fundraising, considering how many trillions of dollars are raised through private offerings, 2.2 billion is still a lot of money. There were 1.9 million investors creating 310,000 jobs, and the economic stimulus was $6.8 billion annually. So people are fundraising and they're getting this funding that they need, especially people who need it. Another statistic that Woody told us about was about diversity.
Marcia Dawood
41.7% of all offerings had at least one woman or minority founder, 41.7%. That's a lot. That tells me that some of these founders, who absolutely have so much trouble raising at the earliest of stages, especially that friends and family round, they are using regulation crowdfunding in order to get the funding that they need, in order to get off the ground. The other statistic I found really interesting, that Woody brought up was about longevity. The Bureau of Labor and Statistics reports that approximately 50% of all new businesses fail within five years. 50%. But within investment crowdfunding, only 17.8% of funded companies have gone out of business. So a much lower percent.
Marcia Dawood
Many of you that I serve on the securities and Exchange Commission Small Business Capital Formation Advisory committee, that is a mouthful. And we just had a quarterly meeting recently where we talked a lot about regulation crowdfunding, where we are now, and what's been happening over the last several years. And remember, this was something that was put into action. It was approved in May of 2016. So we're up on the eight year anniversary of this avenue for people to use in order to fundraise. One of the things I found surprising, which I did not know, is that if you raise more than $124,000, it used to be 100,000, but then it's been indexed a little bit for inflation. If you raise more than that amount, or you set out to raise more than that amount, you have to provide reviewed financials. Now, we had a discussion amongst ourselves, and you can watch all of this.
Marcia Dawood
It's on the SEC's website, SEc dot gov dot. You can see the entire conversation that we had, but we were talking about how this is very. It's burdensome for the companies to have to pay, especially ahead of time, for a review like this. Sometimes. My colleagues estimated that it could be anywhere from ten to $20,000 for reviewed financials. And then past a certain point, I believe it's around $618,000. You actually have to have audited financials, which is even more costly. So if somebody is raising, maybe, let's say, only 200,000 or $250,000, but they have to pay $20,000, for example, for a review of their financials, then that can really be a high cost of capital for that fundraise.
Marcia Dawood
So we discussed, should we increase this limit? And it turns out that the limit was increased during COVID for about two years to $250,000. So you were able to raise on an investment crowdfunding site. And I say investment because in a lot of cases, it is for equity. And you hear about equity crowdfunding sites. But as we heard from George Cook, Honeycomb credit is a debt crowdfunding site. So a little bit different. And then we also heard from Justin Renfrew from wefunder about revenue based finance crowdfunding. So there's a couple different nuances if you're curious about any of these, please go back and listen to some of those episodes we talked about.
Marcia Dawood
Were there any ramifications during the time that this limit from $124,000 was raised to 250,000? And nobody really knew if there had been any problems with that. So I believe one of the recommendations that you'll see come out of this committee in the future is to possibly have that limit increased, which I think would help entrepreneurs at that very earliest of stages. $124,000 seems like a pretty small dollar amount, and in a lot of cases, companies only need maybe $250 to $300,000. I think it just depends on the company. But that limit, it does seem quite low. And I know George, who is on the committee with me, also was a podcast guest not that long ago. He was very vocal about explaining how onerous it is for these companies to have to get those reviewed financials prior to even fundraising. So let's say that they were even willing to pay whatever it is, $20,000 to get their financials reviewed.
Marcia Dawood
They would have to do that prior to even fundraising. So they would have to have that be all out of pocket ahead of time. As a committee, I believe we were quite supportive in removing some of these barriers that can really hurt an entrepreneur as they're trying to fundraise. Those are at least three of my takeaways from the last three years of being a podcast host of the angel nextdoor. We've had some really interesting guests over the last three years, and I'm really excited for all of the other things that we're going to talk about for the years to come. And I do have another announcement I think I have mentioned on the podcast before that I do have a book that's coming out in September 10 of 2024. That link is now live to pre order on Amazon, and you can go to my website at marciadawood.com, in order to be able to find that link and pre order the book. Thanks for listening.