The burgeoning crowdfunding industry is giving entrepreneurs more access to capital, but if spent foolishly, even unlimited amounts of money will not support a single successful business. Money paired with mentorship can turn ideas into growing businesses.
Springfield, Mo.-based CrowdIt, a crowdfunding portal which launches today, is building mentorship into its DNA. "To support success takes a lot more than just funding, or capital," says co-founder and CEO Jason Graf. Many businesses fail, not for a lack of capital, but because the founder doesn’t have experience, Graf says. By combining crowdfunding with professional networking, CrowdIt wants to help more entrepreneurs launch startups and grow, says Graf.
As the crowdfunding industry has grown, so too has the number of platforms. In an increasingly competitive market, crowdfunding portals need to differentiate themselves. Interactive networking for entrepreneurs make CrowdIt different from many existing sites, says Graf.
CrowdIt joins several crowdfunding sites that combine funding with mentorship. For example, London-based portal Crowd Fund Magic offers networking with investors and mentors. New York City-based Pave.com allows young entrepreneurs to exchange funding from a group of backers for a portion of their future income for a period of time. Pave.com backers donate time and expertise.
CrowdIt’s term for project holders seeking funding is "dreamers," and experts providing advice are called "suits." A "suit" is anything from an angel investor to a venture capitalist, accredited investor, lawyer or tax accountant. "We view ourselves as more of a virtual incubator than we do just a first generation crowdfunding portal," says Graf. "We hope to be providing a lot of the same services that a traditional incubator would provide, but we are hoping to do that through the community."
Graf has partnered with outside organizations, like the National Business Incubators Association and Startup America, to build its network of experts and community.
One potential roadblock to creating an online community of active mentors is that experts are very likely busy and reluctant to give away time without something in return, according to Carl Esposti, the founder of the Los Angeles-based Crowdsourcing.org.
Graf is aware of this challenge. He has attempted to establish a level of exclusivity to the title of "suit," making the title desirable to relevant experts. To be a "suit," you have to be either an accredited investor, hold a higher education degree from an accredited university and provide proof of that diploma, have some certification or accreditation and provide proof, or you have to be verified by three other existing "suits" on CrowdIt. A "suit" is rewarded with access to invest in entrepreneurial projects being launched on CrowdIt.com before the public does. The "suits" portion of CrowdIt will launch in approximately one week.
Graf envisions the CrowdIt community of experts looking a lot like a LinkedIn model, with experts engaging in conversations to promote their own personal brand. For noninvestors offering ancillary services, such as lawyers and accountants, giving advice to the CrowdIt community is expected to be a way of attracting new clients. "You are going to go to the accountant that maybe gave you some tax advice early on," says Graf. Before the site formally launched, Graf was approached by a number of experts, including from some seemingly surprising industries, like manufacturing and architecture.