Thursday, August 29, 2013
Tapping The Power Of The Crowd For Ideas, Advice and Funding, with JumpStartFund
Story by Benjamin F. Kuo
Can tapping the power of the crowd not only help you find customers and help fund your project, but also help you shape your startup idea and find funding? A new, Los Angeles area startup, JumpStartFund (www.jumpstartfund.com) recently launched, offering up a combination of crowdfunding and crowd-advice for entrepreneurial ideas. We spoke with Dirk Ahlborn, the companies CEO and founder, to learn more on how JumpStartFund wants to not only help companies raise money for their projects, but also tap into the crowd to help shape its ideas and business plan.
What is JumpStartFund?
Dirk Ahlborn: We are coming out of the nonprofit incubator, the Girvan Institute of Technology, which has been around since 2002, and is funded by NASA Ames. It is one of the older incubators in Los Angeles, even though not a lot of people know about it. At JumpStart, we are taking a new, for-profit approach, to disrupt the way companies are being created. It's a place where people can submit their ideas and patents, and we provide a platform for them to try to find entrepreneurs who would like to work on those patents together with us an the crowd.
We offer up those ideas and patents to any user on the Internet, and they can sign up on the site to work with the entrepreneur on the idea. A case scenario is, let's say you come to our site, you can submit your business idea. It shows up on a section, where users can vote on it, comment on it, and tell you what they think of that idea.
Once a week, we go through all of those submissions, see which ones get the most votes, which ones have the best comments, and we consider what the crowd thinks. Experts then take that preselected idea, and decide which ones we'll go to work actively on. They will the look for someone, ideally a team, to take that idea, and help it become a successful company.
How do entrepreneurs get involved?
Dirk Ahlborn: People can apply to work on those ideas, as we do some pre-selection there, and have people do things like a personality test to tell us how likely they are to be successful, and if they have what it takes to be an entrepreneur. They can then join the team, and work with the crowd to further develop the idea. They might ask the crowd questions, perform surveys, and can let the crowd submit ideas o how to bring a specific idea to market, and the crowd can also vote on certain things like the business model, name of the company, the tagline, and logo. Everyone can get involved, and a person can vote on things, answer research surveys, and even a person with a great idea on how to turn the idea around and make it better. Everyone who participates gets a fair share and a certain percentage of the company's revenues. Companies will pay an average of 10 percent in a licensing fee, which goes to the person whose idea was initially selected and everyone else involved in the process.
How is this different from other crowdfunding sites?
Dirk Ahlborn: What makes this special, is we're actively going out to work with federal research labs, companies like Aerospace Corp., and NASA, as well as universities. That gives us access to the patents from those federal labs and universities have. They're able to expose those to entrepreneurs, and hopefully those entrepreneurs can come up with a great idea to use that and have it become a successful business. Once we have formed a company, that company can use our platform for crowdfunding. We offer reward based crowdfunding and investment opportunities for accredited investors on our platform. It's not just limited to companies coming through our process, but any company who wants to run a crowdfunding campaign.
Why start a new company to do this?
Dirk Ahlborn: For a long time, we've been trying to help young entrepreneurs get started. A lot of the time, once their friend and family money runs out, it's really hard for them to keep going. Founders of startups spend a lot of time fundraising, instead of working on their business. If you look at the statistics, companies fail 47 percent of the time because of lack of insight and experience. By using the crowd, you can solve those issues. You can give them market insight, early traction, and have first adopters who are already there, and are part of the company. You have a crowd of advisors. Every year, those advisors have to re-qualify, and participate in two crowdsourcing activities a company does. That allows the company to go out early, and engage with advisors and get feedback, and involve the first people who believe in them. When you're ready to fundraise, you already have a crowd of advisors, and lots of brand advocates who can help you get out there, and get people excited about what you do, and help you fundraise. That will allow entrepreneurs to concentrate more on trying to do their work.
What's your background?
Dirk Ahlborn: As I mentioned, Girvan has been around since 2002, and we have more than 109 companies who have gone through our process. It's been very successful, with a total of more than $1 billion in funds raised, and thorough mergers and acquisitions. We have done this for awhile. Personally, I'm a serial entrepreneur. I'm from Europe, and was born in Germany, lived in Italy for more than fifteen years, and built several companies. Those were mostly consumer targeted products, where I built a distribution network. My cofounders are Paul Coleman, who was a President at Girvan, and Andrew Quintero, who is in charge of IT management. They saw the opportunity for technology transfer. There is $36 billion spend in the U.S. every year to do research and development, just including the money given to federal research labs. All those tax dollars results in a bunch of intellectual property just sitting on shelves. Most of the time, startups don't know that those patents and IP are there. It's hard to get a license, and dealing with bureaucracy is frustrating. One thing we're trying to do with those patents is make it a bit easier to deal with those labs, and get a license, so that companies can spin out. That allows a startup to be outfitted with a license to a really great patent coming out of the top universities or federal research labs.
How have the universities responded to your crowdsourcing idea?
Dirk Ahlborn: We've talked to a couple, and we've already secured several patents to start with, with people who we know best, at Aerospace Corp.. We're really close to them, and have worked with them for awhile, but we have also worked with other universities and labs, and hope to work with other entities really soon.