Overcoming Obstacles in Entrepreneurship

March 14th, 2016 | Posted by Sarah Jones in Guest Blogs | Member Blog Posts - (Comments Off)

This week on NVTC’s blog: on Feb. 18, the NVTC Small Business and Entrepreneur Committee sponsored a fireside chat entitled “Journey to Success: Overcoming Obstacles in Entrepreneurship.” Nate Miller, an assurance intern at Aronson LLC, shares the top tips from that event, which featured a fireside chat with Gary Shapiro, president and CEO of the Consumer Technology Association, and Scott Case, the founding CTO of Priceline.com and founding CEO of Startup America. 


On February 18, the NVTC Small Business and Entrepreneur Committee sponsored a fireside chat entitled “Journey to Success: Overcoming Obstacles in Entrepreneurship.” The event was moderated by Gary Shapiro, President and CEO of the Consumer Technology Association, who interviewed Scott Case, the founding CTO of Priceline.com and founding CEO of Startup America.

The discussion focused on Case’s experiences throughout his lengthy career as a key member of several startup companies; Case also shared his thoughts on the potential pitfalls startup companies can fall victim to. Some of Case’s key points to attendees included:

  • The time commitment required to be a successful entrepreneur.
  • The importance of creating and expanding connections in a growing area such as the D.C.
  • Overcoming failure repeatedly is a necessary trait to success.
  • The importance of maintaining a valuable network with the appropriate resources.

Case’s entrepreneurial journey started with part time jobs as an assistant for a plumbing company and a well driller, and running a local lawn-mowing business, where he gained an understanding of mastering his trade, servicing customers, and constantly looking for the next opportunity. While attending college at the University of Connecticut, Case spent his free time developing an advanced flight simulator with fellow classmates only to discover that the startup could not generate sales due to a lack of marketing. As a result, a key lesson that Case carries with him to this day is the need to supplement a great product with a sales and marketing team and other supporting functions.

Undeterred, Case shunned more secure employment opportunities to continue working with startups and, following an introduction to Priceline.com Founder Jay Walker a few years later, joined Priceline as the founding CTO. During his tenure, Case’s team at Priceline developed a “name your own price” system in the early days of the internet that allowed the company to grow significantly and successfully undergo an IPO with an initial market capitalization of more than $12 billion. Case attributes his success at Priceline to his understanding of the available technology, as well as the ability to effectively market it and while creating a team willing to try a number of ventures without fear of failure.

Since leaving Priceline in 2000, Case has co-founded or led several other ventures focused on technology, entrepreneurship and philanthropy such as Main Street Genome, Startup America Partnership, Malaria No More, and most recently, Potomac Innovation, a new business travel purchasing company. Case stressed the need for entrepreneurs to remain connected to advisers, financiers, peers and customers if they are to be successful, and noted that incubators, such as 1776 in D.C. and others in startup hubs such as New York City and Silicone Valley, can greatly help a new entrepreneur. Case also stressed the importance of minimizing government regulation to allow new business owners to focus on their core activities, but noted that government can help by listening and responding to entrepreneurs’ needs – such as the recent decision by the city of Nashville, Tennessee to significantly increase its broadband access, which appears to be attracting entrepreneurs to the city.

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Growth Companies Benefit From Final Crowdfunding Rules

December 8th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, Alex Castelli of NVTC member CohnReznick shares how the SEC’s adoption of new crowdfunding rules could be a game changer for growth-focused businesses and investors.


The SEC’s adoption of new crowdfunding rules could be a game changer for growth-focused businesses and investors

On Oct. 30, 2015, the SEC approved final rules that permit companies to offer and sell securities through crowdfunding. The new rules provide another capital raising option for growth-oriented companies and offer additional options for investors who want to get in on the ground floor of in what could be a very successful business.

Benefits to Companies and Investors

Some of the key benefits of the SEC’s rules permitting crowdfunding or, simply put, the ability of companies to raise capital from the general public through the Internet are listed below.

  • Early-stage and growth companies that may be unable or unwilling to raise capital from institutional or private investors have access to another source of capital.
  • By offering and selling equity in their company through the Internet, companies gain a wider and more efficient distribution of the offering to a larger audience when compared to traditional sources.
  • Using the Internet to offer and sell securities should decrease the cost of capital
  • Non-accredited individual investors, previously excluded from equity crowdfunding investments, are now invited to become investors with certain limitations.
  • Investors have a level of protection since companies raising capital through crowdfunding will be required to utilize funding portals or registered broker dealers and will have certain disclosure requirements to investors. Additionally, funding portals that wish to participate in the crowdfunding process as an intermediary will be required to register with the SEC and become a member of FINRA.

Launching Your Crowdfunding Campaign

Even if you are a tremendously successful owner or executive, a successful crowdfunding effort will require expert marketing surrounding your efforts to raise funds. You and the members of your management team will assume the responsibility of formulating a marketing campaign to create interest in your offering. You’ll need a good story to tell investors complete with business plans, financial statements and projections.

In the crowd, you’ll be competing for investment dollars with other companies so you need to engage in strategies to elevate your offering over all others. Earning the trust and confidence of investors can lead to a successful offering. Consider activities that could strengthen your relationships with clients, customers, and even vendors. These relationships may help to support a successful crowdfunding campaign and could represent your future investors.

To launch your crowdfunding campaign, you’ll be using the services of an SEC registered broker/dealer or SEC registered crowdfunding platform or funding portal. Each will probably offer different services and fee structures. Once your customers, clients, and vendors have invested in your business, you may want to reach out to a broader base of potential investors. Getting your offer in front of the right investors will be critical to achieving your capital raising goals.

As a private company, you may not be accustomed to sharing operational and financial information publically. A successful crowdfunding campaign may require additional transparency if you are to build trust and confidence in prospective investors. If you are not comfortable sharing company information with the world, you may want to explore a more proprietary method of raising capital.

Once you have executed a successful crowdfunding campaign, you will need to have a plan on how you will continue to communicate to your new investors. How much information are you willing to share? Which rights to information will investors have? Consider creating an investor-only section on your company’s website where you can post periodic information about your company’s progress, financial results, etc. Transparency is the key if you want to keep your investors informed and hungry to make additional investment in the future.

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This week on NVTC’s blog, Alex Castelli, CPA, is partner and Technology and Life Sciences Industry Practice Leader at NVTC member company CohnReznick, explains how crowdfunding has become such an attractive financing vehicle for technology companies.


7K0A0597[1]The technology industry stands out as a major beneficiary of this promising method of capital raising. In 2014, technology was a leading sector in terms of capital commitments – at around $98.5 million – and led the number of raises that have been offered since inception, according to Crowdnetic’s Quarterly Private Companies Publicly Raising Data Analysis.2 Capital commitments in the technology industry trailed only behind the services industry.

So why has crowdfunding become such an attractive financing vehicle for technology companies? And what is required to launch a successful crowdfunding campaign?

Proving legitimacy and demand

Obtaining financing from traditional lenders such as banks, angel investors, and venture capital firms can be difficult for some early-stage technology companies. Crowdfunding offers an additional source for raising capital. Many investors are eager to support innovative ideas or services, and the growing legitimacy among accredited investors to provide financial backing through the internet has contributed to the popularity of crowdfunding. For tech startups, crowdfunding is an effective way to demonstrate to lenders the demand for a product or service and also to justify the company’s financial projections. Technology companies that have successfully secured accredited investors via the web are especially attractive to traditional lenders as their ideas have reached a level of legitimacy and approval.

Testing the markets and building brand awareness

In addition to raising capital, crowdfunding provides a platform for technology entrepreneurs to test the success of their product or service once it is officially on the market. Through this process, an entrepreneur can determine whether to continue investing time and money in a particular product or service based on feedback from potential customers. Doing so avoids involvement in a venture that may ultimately prove to be futile. The exposure of a product or service through crowdfunding offers the ability to build brand awareness and develop a loyal community of customers right from the start. Developing a loyal following can generate word-of-mouth advertising that can boost a startup business to success.

Finding success

There is a commonality among crowdfunding success stories. Deals receiving funding typically have outside sponsors who advocate on behalf of the deal. These are usually prominent investors who are willing to put their names on the deal and endorse them personally. This signals to other investors that it is a quality opportunity. “This is not so different from the way investments have always been done,” said Steven Dresner, CEO of Dealflow. “In the past, one prominent venture capitalist would put a million dollars in a deal, and then the startup could use that as leverage to attract more VC money. Now it is just taking place in a whole new forum.”

What does the future of crowdfunding hold?

Notwithstanding its popularity within the technology industry, to date, equity crowdfunding may be best characterized as a “growing” source of capital formation available to private companies. Entrepreneurs continue to test the market in determining how best to utilize crowdfunding as an alternative strategy for obtaining financing, gaining exposure, validating their products or services, and ultimately, expanding their businesses. The influence of crowdfunding on the middle market sector has yet to be fully realized. However, crowdfunding is on track to not only transform how privately held companies raise capital and interact with investors, but to also influence how businesses formulate and implement their go-to-market strategies.

1 https://www.fundable.com/infographics/economic-value-crowdfunding
2 http://www.crowdnetic.com/reports/jan-2015-report


Alex Castelli, CPA, is a partner and CohnReznick’s Technology and Life Sciences Industry Practice Leader. He can be contacted at 703-744-6708 or alex.castelli@cohnreznick.com. To learn more about CohnReznick’s Technology Industry Practice, visit the company’s webpage and follow CohnReznick on Twitter @CR_TechInd.

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