INSTANT FUNDING WEEKLY #4
Karl Dakin
Capital Coach | Stakeholder Investor Campaigns | Design, Stage, and Manage or Support | Reduce Time, Money, and Risk of Raising Funding | Increase Probability of Success! | Opportunity Management
CONTENTS
?·?????? Quick Calendar
·?????? SuperCrowd Chicago
·?????? Funding Points
·?????? Quotation
·?????? Successful Funding
·?????? Don Cohen Show
·?????? CAP – AI Avatar
·?????? Quick Assessment
·?????? Opportunities
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QUICK CALENDAR
?I quickly list here upcoming opportunities where I will be sharing information, lessons in funding, or meeting in person or via videoconferencing.
?June 11 – Successful Funding – currently being scheduled
?June 12 - SuperCrowd Chicago – Crafting Crowdfunding Offers to Customers
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?SUPERCROWD CHICAGO – JUNE 12 – NOW ALSO FREE ONLINE
?I am co-sponsoring and will be speaking at SuperCrowd Chicago next week. This event promises to bring together leaders in investment crowdfunding to share what works and what does not work and the next steps in advancing investment crowdfunding as an alternative, if not the best option, for small businesses raising funding.
?You have three options:
1.???? Watch for free on Internet TV
2.???? Watch for free on social media, where you can comment and ask questions of the speakers
3.???? Attend in person
?You may may watch for free on live streaming on e360tv network (Roku, Apple or Amazon) or watch at ?s4g.biz/12jun24.
?You may watch it on LinkedIn at this link:
?You may attend in person and use the coupon below to obtain a discount of 50%.
?In all cases, I will do a 15-minute presentation, and you may download my slide deck and workbook materials now at the QR code below:
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FUNDING POINTS
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CONVERTING CUSTOMERS TO INVESTORS
?A small business benefits by elevating a relationship with a customer to that of an investor. Within the relationship with a customer, the purchase of a product or service may be a one time, one and done transaction. The customer satisfied whatever motivation they had at the time and left never to be seen again. If the relationship expands to include an equity position in the small business, the relationship will continue for the life of the investment.
?As discussed in prior editions of this Instant Funding newsletter, an investor relationship may be short or last for life. Within the investor relationship, the interests of the customer/investor are in the business and not in whatever benefit comes from a single purchase. This interest may be parlayed into several actions that benefit the business. The customer/investor may:
1.???? Make another purchase and possibly a series of purchases from the business,
2.???? Give preference to the products and services of the business over those of its competitors and possibly purchase exclusively from the business
3.???? Tell others (friends, family, associates, the public) about the business,
4.???? Tell others about the products and services of the business,
5.???? Advocate for the business,
6.???? Share market feedback with the business,
7.???? Advise the business, and
8.???? Share ideas for new products and services.
?A customer may do all of these things without ever being an investor in the business. However, as an investor, in their own self-interest, the incentive to help is always present.
?When a small business seeks to raise funding, it is recommended that it consider its customers as a primary, if not the superior, target.
?Since the customers of the business may not be ‘accredited investors’ as defined by the US Securities and Exchange Commission (SEC), a business may only seek funding from its customers through investment crowdfunding at the federal (Reg CF or Reg A+) or within the regulations of an individual State.
?When seeking funding from customers, it is permitted to combine an offer of equity ownership with the products and services of the business. This investment package may be crafted in several ways to create a value of the package that exceeds the price of the investment. The offer of the investment package thereby also serves to promote the generation of new customers.
?INVESTMENT GUARANTEES
No one can predict the future, and everyone tries to predict it.
?Not knowing what will happen in the future makes every investment a risk. There is no sure thing. Or, is there?
?When raising money through investment crowdfunding, it is permitted to combine products and services, discounts on future purchases, and other perks, benefits, or privileges within an investment package. This can be a game changer.
?Instead of an investment offer that is limited to participation in futures revenues and/or profits that are unknown, a small business may include items of value that guarantee that the investor will get something of value.
?Depending upon what items of value are placed in the investment package, the value may be a significant portion of, equal to, or greater than the price of investment.
?Looking at the investment package from the perspective of the investor candidate, combining something of immediate value with something of uncertain value may be viewed as a better deal than simply something of uncertain value.
?There are limitations.
?The item of value must have value to the investor candidate. Like anything, the perception of value is individual and personal to the investor candidate. Even for a single investor candidate, the value may change based on the time of the pitch and other factors.
?Let’s use my favorite illustration of a product in the form of a serving of lemonade:
·?????? The value is high if the investor candidate is thirsty
·?????? The value is higher if the investor candidate is dying of thirst
·?????? The value is higher if the lemonade is in the same location of the investor candidate
·?????? The value is lower if the investor candidate is not thirsty
·?????? The value is zero if the investor candidate is allergic to lemons or sugar
?Every investment offer, regardless of whether it includes items of immediate value, must be matched with the needs and preferences of the investor candidate.
?When a small business raises funding, an investor candidate may be a customer. When crafting an offer to this group of investor candidates, inclusion of products or services and discounts on future purchases is natural.
If the small business combines its products with equity ownership, the appeal of the offer will vary with the customer and whether:
·?????? The price of the investment is less than, equal to, or greater than the value of the products.
·?????? The customer’s level of interest in the product.
·?????? The amount of product relative to the customer’s rate of consumption.
?An angel investor seeking only a passive investment with a high rate of return may place no value on the product. A consumer of similar products who lives in a different geographic area may desire the product but consider it inconvenient or unavailable. A consumer of similar products that just stockpiled such products may not have any interest till next year. A consumer of similar products may have a limited budget and must choose to buy something different from the product. There are lots of reasons to say no.
?If a customer invests and receives equity plus a product at a price equal to the retail price of the product, the customer gains from the receipt of the equity but may not or may be unable to assign any value to the equity.
?If a customer invests and receives equity plus a product at a price less than the retail price of the product, the customer gains savings in his or her spending and gains the value of the equity.
?When crafting an investment offering that combines equity and products, the small business should determine to the best of its ability how much value an investor candidate may assign to the equity portion of the investment package and how much value an investor candidate may assign to the product portion of the investment package. Since the perceived value will vary with each investor candidate, a large enough survey of investor candidates to forecast their level of interest and the potential to attain the capital campaign goal.
?Some say that investing without the risk of losing your money is not an investment, but who cares if you can raise the funding you need.
FREE?
?Free can mean different things to different people, depending upon your point of view.
?I will speak next week at SuperCrowd Chicago on Wednesday at Columbia College.
?I will be speaking for free. When I use the word ‘free’ in this context, I mean that I am receiving no fee or stipend for my work in making my presentation. In this case, it also means that I have to bear the costs of my travel, lodging, local transportation, and some meals. I will be flying into Chicago on Tuesday afternoon and arriving back in Denver very late on Wednesday night. Although it is possible to work when traveling, you clearly cannot work the entire time. So, in terms of ‘free’, my appearance at Super Crowd Chicago must also be at opportunity costs for lost time that I might have applied to work that generated associated revenue.
?With all of these commitments of my resources, it is easy to state that from my perspective my presentation is not ‘free’.
?I expect to obtain value from my commitment to resources as I may from any investment.
?As a ‘free’ speaker, I would like as many people in the world to see my presentation as possible. I gain the benefit of a public platform where I can share my knowledge of crowdfunding with more people. In addition, the larger audience builds my brand, leading to future paid consultations. The recent change to a TV and social media live stream on the e360tv network helps me achieve this goal.
?The presentation on the e360tv network and social media platforms is ‘free’ to everyone who can access this media channel or these platforms. To achieve this price point for viewers, a fee was paid to the network, and the network is charging a fee to its advertisers. In effect, the price of the presentations has been shifted to The SuperCrowd and to advertisers in addition to the investment made by myself and all of the other presenters.
?People who are attending SuperCrowd Chicago in person are paying a fee. This fee is intended to cover the cost of the entire event which means that attendees are also contributing to the ‘free’ viewing on the TV network and social media platforms.
?The concept of ‘free’ is core to my presentation at SuperCrowd Chicago on Crafting Crowdfunding Offers to Customers.
?When I craft offers to customers of a business, I commonly include:
·?????? Equity ownership (equal to investment price)
·?????? Product (typically a fraction of the investment price, depending upon the profit margin within the retail price)
·?????? Discounts on Future Purchases (equal to or a multiple of the investment price)
If the investment price is equal to the price of the Equity Ownership, then the Product and Discounts on Future Purchases within the investment package are ‘free.’
?If the investment price is equal to the price of the Product, then the Equity Ownership and the Discounts on Future Purchases within the investment package are ‘free.’
?If the investment price is equal to the retail value of the Discounts on Future Purchases, then the Equity Ownership and the Product within the investment package are ‘free.’
?And, if the investor later sells the Equity Ownership at a price higher than the price of the investment, it may be viewed that everything within the investment package was ‘free’.
?From a consumer point of view, ‘free’ is good. ‘Free’ is a compelling reason to enter into a simple investment through crowdfunding.
?The fact that an investor may achieve a total value higher than the price of the investment is a compelling reason to enter into an investment.
?In a simple investment to acquire Equity Ownership, nothing is ‘free’ unless, and if, the investment can be sold at a price higher than the price of the investment. This makes the investment unattractive to a consumer who is looking to purchase something with their household budget.
?Crowdfunding offers should consider the mindset of the targeted investor candidates, their needs, and their available funding.
?In reality, nothing is ‘free,’ but it may be possible to provide something for ‘free’ by shifting the cost to someone else who will benefit.
DELIVERABLES
?In a business transaction, each participant is expected to deliver something to the other participant. This is an outcome of success.
?An equity investor in a small business expects a return on their investment. The return represents an amount of money in excess of the dollar amount of the original investment.
?In many, if not most, investments, the investor expects something beyond the return. These outcomes may benefit the investor in other ways beyond money. The benefits may be monetary or non-monetary, and they may be direct or indirect. In effect, a small business enters into a contract with the investor, and the performance of the business will be judged by the nature and extent of all deliverables.
?It is important when developing a business model, planning a business, or creating an investment offer to identify, quantify, and qualify all outcomes. Vagueness and lack of clarity in an investment proposal suggest that the outcomes are not real or that the management team does not know what they are doing. Admittedly, there are many new business ventures that are striking off into the unknown of technologies, market acceptance, and economic conditions. However, investor candidates prefer certainty. To the extent that a small business cannot guarantee the future, it must be more clear as to its intended goals and all associated deliverables.
?I have used and will continue to use the illustration of the sale of lemonade in making Funding Points. What are the goals and associated deliverables of operating a lemonade business?
?A small business cannot simply state to an investor candidate that it intends to sell lemonade. At the very minimum, it must state that it will sell a volume of lemonade, resulting in a dollar amount of profits, of which a share will go to the investor. The deliverable is quantified in terms of dollars returned. That is not enough.? If the lemonade business sells $100,000 of lemonade with a cost of $80,000, it may earn a profit of $20,000. If half of this profit is paid to the investor, they earn $10,000.
?The statement regarding the return on investment must include the time in which the return is achieved. This enables a calculation of the rate of return. This is still not enough. If the sale of lemonade and earning of profits occurs over two years, then the investor has earned $5,000 per year.
?The success of earning $5,000 a year may have no impact on the investor unless it is delivered to the investor in the form of a profit distribution or dividend.
?An investment offer must state when the investor will receive back their original investment plus the return. This is the ‘exit’ of the investor from the investment. Without defining when the original investment is paid back to the investor, the investor is along for an indefinite ride. Many investors have found themselves trapped in an investment where they cannot get out.
?If the investor invested $25,000 and is delivered only two distributions of $5,000 each, then technically the investor has lost $15,000. The investor must also be paid back its original $25,000 in addition to the $10,000 in its share of the profits before the investment is complete.
?Although an investor may be only passively engaged in the business by providing capital and their preference is to do no more than to write checks and receive distributions, prior to making an investment, the investor candidate wants confidence that they will be delivered both a payback of their investment and payment of a return.
The investor candidate will look to other deliverables to evaluate the probability of success and the risk of failure. The question is raised as to what other deliverables must the business work to achieve that demonstrate competence and capability?
?In a startup business, all deliverables are projections. Only the prior experience of the management team has a track record.
?The ability to identify and describe the deliverables of operating a business successfully aids the investor candidate in assessing the investment opportunity and in making a selection amongst multiple investment opportunities.
?It is recommended in planning and forecasting a small business go beyond a simple cash flow and income projection and create a catalogue of anticipated deliverables that better tell the story of the business. Those deliverables that benefit any of the investor candidates should be highlighted within the investment offering.
?INVESTING IN PEOPLE
?During my Successful Funding show yesterday [see link below], my guest, Kon Apostolopoulos, with FreshBiz Solutions, and I discussed leadership. Like all good unscripted conversations, the topic jumped to investing in people as a particular leadership method.
?When we talk about raising funding, if successful, we move to spending the money we have raised. However, everything purchased with funding is its own type of investment. This is particularly true when it comes to acquiring the services of people. This extends beyond staff to include contractors, directors, advisors and even customers.
?Every dollar spent should be viewed as an investment. You should ask, what type of return may I expect? Everyone who has ever hired someone knows that the return may be positive or negative. Some investments greatly outperform others, while others may result in a loss.
?When a relationship with an employee is treated as an investment, the question should be continuously raised as to how to gain a greater return. By this, I don’t mean asking an employee to work more hours for the same amount of pay. I am talking about optimizing the performance of the employee. However, these questions are seldom asked in a small business where management of human resources is often the last task on the list that is never reached.
?Conversations should be held frequently with a team member about the mission and goals of the business. The conversation should then extend to asking the team member what they can do to assure attaining the goal and then what can be done to exceed the goal. The conversation will cover the possibility of a further investment in the team member through improving the work environment, investing in new equipment, or paying for additional training.
?These conversations not only explore improved productivity, but they demonstrate a respect for the work of the employee that can achieve satisfaction resulting in greater employment longevity in addition to increasing performance.
?It is quite possible that a team member is a rising star who may outgrow the business and move on to another job or start their own business. If this possibility is addressed at hiring and in framing work assignments, there will be no surprises, and the relationship with that person will continue after employment ends. If a significant investment is made in the employee through training, then the term of the employee engagement can be set to assure a payback of the investment by mutual agreement.
?I have found that aiding a team member in achieving their career goals has both short-term and long-term benefits. Over time, that person may become a source of future referrals and act as a walking ambassador for the business.
?It is recommended that a small business develop investment criteria to guide their hiring and an asset management plan to generate the highest yield.
NEW OVERTIME RULES CHANGE THE BUSINESS MODEL
?Just when you were beginning to believe that your small business would survive COVID, inflation and interest rates, the US government is now changing who must be paid overtime. This may represent a direct increase in operating costs with no associated revenue or other benefit. This change may blow up your business model. It may significantly change your anticipated future profits, and therefore, it may move you from an acceptable investment opportunity to an undesirable one.
?“After several years of proposed regulations and discussion, the U.S. Department of Labor has issued a new federal overtime rule that is set to take effect July 1, 2024. Under the new rule, employees who make less than $43,888 on July 1, and then $58,656 on January 1, 2025, will be eligible for overtime pay. The rule applies to the Fair Labor Standards Act’s white collar “executive, administrative and professional” exemptions. The so-called EAP exemptions determine which employees are exempt from overtime-pay requirements under federal law when they work more than 40 hours in a week.”
?In effect, it does not matter the level of responsibility or how a compensation package was structured; the requirement for overtime is now based solely upon the dollar amount of compensation.
?The National Federation of Independent Businesses (NFIB) will present an online seminar on this new regulatory mandate this week on Wednesday, June 5, at Noon EDT.
?If your business model was created with expense projections based on your prior practices that would have resulted in a lower payroll, you will need to update your projections.
领英推荐
?If your business model was incorporated into your cash flow projections for raising funding, you must update the projections and amend your offering documents.
?It is good practice within an offering document where you declare risks that may impair or prevent the small business from attaining its goals to include a statement that the small business is subject to local, state, federal, and international laws and regulations, which, if changed may have a significant impact on the business.
FUNDING UNDERSERVED MARKETS
?The capital markets do not serve everyone equally. This should not be news to anyone.
?The capital markets favor those businesses and projects that can offer a low risk, high rate of return over a short term. In addition, it favors businesses run by older, white men like me.
?A just published article in CrowdFund Insider tells of the underfunding of small and medium enterprises run by women. The bottom line is that the capital market views these businesses as risky. This unfair and unsupported bias causes investor candidates to choose other businesses in which to invest that are run by men. These men are white and not people of color.
?As I have stated within this Instant Funding newsletter, one of the three keys to raising funding is for the entrepreneur to know the investor candidate. This requirement contributes to underserved markets not participating equally in funding because the market acts as an old boys' club.
?The question then is presented as to whether this natural bias in the capital market can be cured. Almost all current and proposed solutions require intentionally biasing funding to a selected group of businesses and entrepreneurs: women, people of color, economically distressed neighborhoods, etc. Preferences are given, to the extent permitted by law, to engage in discrimination against a class of people or places.
?Preferences are not enough. New ways of investing are needed that are not dependent upon being wealthy to qualify for funding.
??TIME RESERVES
?Over the past week, several discussions were held on the need for a ‘cash reserve’. This is money that may be specifically dedicated to addressing emergencies, disasters, unexpected expenses, or other cash demands. This pool of money often shows up on a use of proceeds statement within an offering memorandum under the label of ‘cash reserve’, ‘unallocated’ or ‘miscellaneous’. It is a best practice to set aside cash for the unexpected.
?As I sat in the Dallas airport last night waiting for my flight, I received a series of weather delays, resulting in my arriving home in Denver at 2:30 a.m. instead of the planned 8:55 p.m. These delays in travel impacted everything I did today, from how much coffee I drank to deferring decisions on important topics. As I was working through this challenge, it occurred to me that I had not created a ‘time reserve.’ I had not built into my schedule and commitments for different projects a chunk of time that would allow me to deal with time overruns.
?In entrepreneurial adventures it is commonly joked that everything will take twice as long as planned. However, we often fail to allow for these missed deadlines with a specific allocation of time to catch up. This results in a cascade of other challenges that can prove expensive.
?It is recommended that within every time period (day, week, month or year) that certain time be blocked out with nothing scheduled that is in reserve to address all too common missed deadlines.
FUNDING SOUL MATE
I am coining a new term – “funding soulmate’ – to describe a situation where a business is seeking funding and it finds the perfect, optimal, wonderful, spectacular investor candidate. I can add more superlatives, but you get the idea. This is like the romantic movie where a couple finds one another and birds start singing, rainbows glow on the horizon and world peace seems possible.
?The purpose of placing this concept on display is to challenge any business seeking funding to consider who may be their best funding candidate. More commonly, investments are accepted by anyone willing to write a check. This gets the job done of hitting the funding campaign goal, but, like in the movies, would life be different if they had chosen someone else?
?It is possible that a funding soulmate does not exist for every business seeking funding or that finding a funding soulmate proves too difficult requiring too much time and money to find the perfect match. However, it is possible that searching for a funding soulmate may actually accelerate the funding campaign resulting in funding in less time with less effort.
?To aid in the search for a funding soulmate, it is very helpful to know what one is looking for. Using an “I’ll know them when I see them” makes it difficult for anyone to play the role of a matchmaker. No one can help if they do not know what you are looking for.
?The act of defining who would be a funding soulmate is a great exercise. It quantifies and qualifies the characteristics and capabilities of an investor candidate that can be most helpful to a business, bringing value beyond their checkbook.
?Even if the search for a funding soulmate is unsuccessful, a business may still benefit by raising the bar of who it will consider as an investor candidate.
I LOST MY BELT (NO REWARD)
?As I went through security at the Austin airport, the security screening device disappeared my belt like a sock in the dryer. A magician may have performed the same trick in a shorter period of time at a much lower cost to the taxpayer (for the machine, not my belt).
?I quickly learned that the only store that sold belts were limited to women – no men’s belts. This edition of my Instant Funding newsletter could jump off at this point into a number of topics dealing with gender, equality and the like, but I am going to follow up on my edition on Monday where I addressed the need to prepare for disasters.
?When I prepared the business plan for the project, which took me to Texas and back to Denver, I did not include the threat assessment of what might happen if I lost my belt. This possibility was not even considered. If I had thought of it, I would have assigned the probability so low that I would not taken any special action. Even if the probability had been higher, I would have assumed that I could quickly take corrective action that would have solved the problem.
?This is the situation in which a business commonly finds itself. A problem arrives unexpectedly. It is not a disaster. It can be fixed. Nonetheless, it is one more thing that may stress the budget, timetable, or a sense of wellbeing. Is this like the story of the English king who lost a battle for lack of nail to hold a shoe on a horse needed for a battle or is it just a nuisance that will be dealt with and quickly forgotten?
?Early in my career, I took what I thought was a minor risk that proved to be of greater magnitude, costing me six months of delay and a loss of time. I took away from this lesson of life that I should try to avoid all risks whenever possible.
?I describe the situation as an illustration of the difference between playing on the edge of a cliff and playing at a distance from the edge. The same act conducted in different ways may have wildly different results.
?As an entrepreneur, where risks occur constantly and threats are given, it is possible to become too accustomed to risk-taking. This may be a desire for a constant adrenaline high or simply taking for granted that things can and will go wrong.
?It is recommended that a small business block out time periodically to do a threat assessment. If necessary, make a game out of it and reward members of the team for their creativity. However, this exercise may surface legitimate threats that had not been considered or recognized threats for which a proper counter or fall back has been prepared.
?Now, I have to do this assessment in real-time and find a belt or a reasonable substitute.
LOCATION, LOCATION, LOCATION
?Today, I had an opportunity to visit Longneck Manor in Fredericksburg, Texas, which is a private wildlife reserve for giraffes, rhinos, and more animals. This reserve is located in the hill and wine country of Texas, about 1.5 hours from both Austin and San Antonio. As I was informed, this is no big distance for a day or weekend trip.
Location is important when physical presence is needed to complete a transaction. You may only view these animals at the reserve.
?Last week, I shared information on a basic business model using the sale of lemonade as an illustration. In this information, I did not have the chance to focus on location, although I did get into details on the complexities of brick-and-mortar storefronts.
?It used to be that travel was limited to a small geographic area unless taking the family cross country on vacation. This travel expanded and then shrunk due to COVID. Depending upon the type of entertainment, travel is again taking on greater distances with cruise lines reporting record sales and other attractions fully rebounding.
?I am visiting this part of Texas as part of my site selection work for The Ultimate Dinosaur Park in partnership with Dino Don. This part of the world scores high marks because:
·?????? It is close to major population centers
·?????? It has few bad weather days compared to other locations (heat, snow, storms, etc.)
·?????? It has several other entertainment attractions of note nearby
·?????? It is family-friendly
·?????? It is business-friendly
?The theme park would not do as well in locations that:
·?????? Are not near anyone
·?????? Have more bad weather days than good ones or the potential for just a few catastrophic weather days
·?????? Is all by its lonesome where people would have to make it their sole destination
·?????? Favors adults over kids
·?????? Is business-unfriendly
?This minimal description of site preferences points out that for a physical presence business, the location is a critical decision.
?In the illustration of the lemonade sale, placing a lemonade stand on a busy road is good, but a busy road with a pull-off area is better. Placing a stand on an urban side street or a cul de sac does not present opportunities for people to see an opportunity to quench their thirst, consider the option, and act on it.
?Similarly, when pitching for funding, placing the pitch where people can see it is important. As an illustration I commonly used in training, would you buy a billboard on an interstate highway where thousands of people may see it each day or would you buy a billboard on a back country road that see a few locals a day? Would you advertise expensive cruises in a poor neighborhood or an upscale neighborhood?
?Is your pitch on your website with few visitors? Is it placed on social media where it may be lost in the noise? It is sent to people who will never invest (wrong deal, wrong money, no interest)? The location of pitch placement is necessary to make investor candidates aware and to make it as simple and convenient as possible to decide to invest. This goal is hampered by overly burdensome securities regulations that assume that everyone is unqualified to invest or that the few people who might make a bad investment must be protected at great cost, collectively and individually, to everyone else.
?The best placement of a pitch is where the best investor candidates go regularly. This may be a magazine, podcast, newsletter, industry conference, or other source of news and information.
?The placement of a pitch may follow the placement of a promotion for the sale of a product or service if the customer is the investor candidate. If not, then a different location is needed.
?Blanket presentation of pitches, also known as spamming, may not only not be seen, but if seen may result in frustration and may be illegal (permission is needed). The ability to send hundred, thousands or tens of thousands of unsolicited emails may get you nothing except the fee for the list.
?The content of the pitch is a different issue. A topic for another day.
DISASTER PREPARATION
?When an investor places their money with a small business, the leadership of the small business has a legal responsibility to manage that money responsibly. This includes anticipation and preparation for disasters. Although the risk may be statistically low, when disaster strikes good preparation will result in the business to pick up the pieces and start over.
Over the last several weeks, severe weather has taken lives and destroyed property across the United States. In many instances businesses suffered harm ranging from an interruption in business to their facilities scraped to the ground or covered in water.
?Natural disasters are a risk that everyone accepts. There are standard practices to avoid or limit the harm. The common approach is to buy insurance. Standard insurance policies do not cover everything. It may be necessary to purchase rider’s that extend coverage to a specific threat to the business.
?A small business should first conduct a threat analysis to determine what might hurt or kill the business. Information on these threats may be available through a knowledgeable insurance agent, through an industry or professional association, or through the collective wisdom of a board of advisors.
?Keep in mind that there are a number of threats that are new or growing: computer data hacking, personal privacy, and new government regulations. Give some thought to how these may impact the business.
?If you are unclear on whether a specific threat is covered because the language of the policy is beyond comprehension, you may ask the agent for a letter from the insurance underwriter that states the threat is covered. The agent does not have the authority to make such a statement. You may also ask the state insurance commissioner who regulates the insurance underwriter for assistance.
?It is possible that the dollar limit on what the insurance company will pay is lower than the possible dollar amount of the threat. In this situation, you can purchase ‘umbrella’ insurance which covers any claims that exceed the basis insurance policy.
?Recently, more businesses are finding that there is no insurance available due to wildfires or hurricanes. Standard underwriters have decided not to provide insurance for these threats. It may still be possible to obtain insurance through a specialty insurance company, an industry association or a government program, but more work will be required to find insurance coverage.
?If no insurance coverage is available, then it is possible to self-insure. This will require putting aside an amount of money periodically to build a cash reserve that may be drawn upon if a disaster occurs.
?Many small businesses are finding insurance rates substantially higher, outpacing the rates of inflation. This places the small business in a position where it may appear the best path is to buy less insurance. However, this may fail the level of responsibility owed to investors. The board should approve any decision to purchase less insurance for directors or managers. Better yet, the decision may be made by the investors for their input.
?Where insurance may not be available to cover everything, a small business should carry enough insurance to pay back all creditors and all investors.
QUOTATION
I received a humorous birthday card from my oldest daughter and son-in-law with a fictitious quote attributed to Theodore Roosevelt:
“Speak softly and carry a big stick. Unless you can ride a dinosaur. Then do that instead.”
SUCCESSFUL FUNDING
On Tuesday, June 4, my guest on my Successful Funding show was Kon Apostolopoulos. We discussed leadership. The conversation focused on the investing in relationships where a business may benefit from advancing the careers of its employees.
?You may see the show recording at:
?You can see all of my shows at the time of broadcast or recordings of past shows at my profile on LinkedIn.
?
DON COHEN SHOW
On Monday, I was a guest on Don Cohen’s show with Kon Apostolopoulos where we discussed strategy. Strategy is the map of getting from where you are to where you want to be. The greater challenge is often the communication of the strategy to the team and to the public.
You can see a recording at:
Tomorrow, Monday, June 10th, I will be a guest on Don Cohen’s show with Todd Dewett where we will discuss leadership.
You may view the show at:
I enjoy being a guest and engaging in conversations with other guests and with Don on building communities and using LinkedIn as a communication channel. Every show is its own adventure as we start with a word of the day and then see where the conversation goes from there.
Don is an expert on LinkedIn, particularly on the use of Live streaming to build brands and communities. We will discuss using LinkedIn as a social media platform for building communities that support raising funding.
All shows where I have been a guest can be viewed on Don Cohen's LinkedIn page under Posts.
CAPITAL COACH
?I am now field evaluating the Capital Coach, an artificial intelligence learning management system avatar (AILMSA) that I have trained on the topic of funding. The Capital Coach is embedded as a widget on my Dakin Capital website at https://dakincapital.com/CAP. The Capital Coach represents a proprietary data set on the Knowledge Avatars learning management system with licensed access to Open AI. Could you give the Capital Coach a try and ask it questions about funding?
I am working with Knowledge Avatars to make CAP the ultimate tool to support small businesses and community projects in raising funding. Two current challenges are (1) training the AI avatar to match specific funding situations and (2) explaining that a highly personalized AI avatar is so much more than a chatbot powered by a Large Language platform. Unique, non-public information about an individual or an organization cannot be obtained through a chatbot. The recent advances in AI have narrowed the field of prospects who stand to gain from personalized AI to high-net-worth individuals, professional service providers, organizational leaders, and other similarly placed who work with fast-moving, fast-changing information that may never be public.
Please share your feedback. Karl Dakin at [email protected]
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QUICK ASSESSMENT
?I frequently receive direct requests for assistance in funding. As much as I would like to help everyone, I realize that constraints of time, money, distance, prior knowledge of an industry or capital market may prevent me from making a significant contribution.
?People send me slide decks and ask for money or for me to introduce them to an investor. It takes time to evaluate an investment opportunity. I cannot refer to an investment opportunity without completing an evaluation first.
?To aid me in assessing an investment opportunity and determining if I may be of help, I have created a short set of questions that span a variety of small business topics. Anyone seeking my assistance may download and complete these questions from a folder I have set up in my Box.com account. The answers may be sent to me at Karl Dakin – [email protected].
OPPORTUNITIES
RCI Community Funds
I am teaming with a number of experts in community engagement, organization and funding to develop a model for a community investment fund that can provide capital to a set of local projects that can collectively and interactively generate sufficient economic activity to serve as a foundation for a community’s future growth.
We are seeking seed funding in the form of a short-term loan that will be repaid out of the Reg CF crowdfunding campaign. Anyone interested in learning more and discussing a demonstration, please contact:
Karl Dakin at [email protected]
AeroCine
With avian flu in the news and a growing number of cases of diseases and pathogens transmitted by air, I am advocating the use of cold plasma as a safe and effective way to continuously disinfect the air and surfaces within any kind of building.
I can provide Pathogen Focus disinfection equipment and conduct a small-scale clinical demonstration on-site in the field. Anyone interested in learning more and discussing a demonstration, please contact:
Karl Dakin at [email protected]
SUBSCRIBE
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?Karl Dakin, the Capital Coach
Dakin Capital LLC
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