$25 a Week Will Ignite Most Expansive Economic Growth Ever

February 22, 2012, 6:07 pm

Most Expansive Economic Growth Ever
By Howard J. Leonhardt

Friday, February 17th, 2012 – Santa Monica, California – If public and private interests unite to convince a majority of Americans to invest just $25 a week in startups, via the new crowdfunding platforms, we will ignite the most expansive economic growth ever seen on earth.   Added to this public outreach effort should be passing the entire slate of the StartUp America Legislative Agenda and the Cal-X Join the Movement package of Entrepreneurship bills.   Additional new bills should be passed with these two key provisions.
 
Foreigners that invest $25 a week in U.S. startups should be given exchangeable earned points that accelerates U.S. visa processing applications.  96% of all people live outside the USA so incentivizing this group to invest in U.S. companies could have an enormous impact.
 
U.S. companies that have funds in off shore tax havens like the Cayman Islands and Switzerland should be given tax free readmission of those funds in the USA IF they invest those funds in startups.   This is an enormous pool of cash.
 
With the power of the internet and social networking we have entered a new age.  Social media movements have a momentum in building rapid support for a cause that has never been seen in the history of man.  We believe two key elements are essential for crowdfunding to work.
 
The core of every funding should be customers of the company and members of their local community.
 We need to encourage a whole new class of investors that have never before invested in a start up to do so now.  Without investors crowdfunding platforms are a bridge to nowhere.
 
Cal-X The California Stock Exchange www.calstockexchange.com did extensive research to determine what it would take to attract a whole new class of start-up company investors.  The research work was done primarily in California itself so keep this in mind when observing the results summary below.
 
 
•  The concept of investing in their local communities to better the places where they live was the number one draw.
 
•  The opportunity to meet entrepreneurs in person to look them in the eye to develop human level trust and rapport.
 
•  A platform dedicated to only listing companies with a social good mission to their purpose (a broad large tent definition of what constitutes social good is acceptable).
 
•  A special emphasis in helping women, minorities and youth currently excluded from traditional financing routes will draw more women in to invest.
 
•  Making a requirement that listed companies agree to self audit for equal pay for equal work for women and minorities will help.
 
•  Only listing companies that have a commitment to protecting the environment with sustainable community practices would draw a new class of investors to participate.
 
•  Having a probability of survival scoring system for new companies that is easy to follow would increase investor comfort and thus increase participation.
 
•  Requiring that listed companies first have an endorsing investor that has experience in the field in question, has done due diligence and that puts their own money and reputation at stake.
 
•  A step up exit for crowdfunded small companies should be a new stock exchange that caters to small companies.
 
•  A crowdfunding platform and stock exchange should be interlinked to a network offering mentoring nurturing support to firms every step of their development.  This is necessary to increase probability of survival and potential for return on investment.
 
•  Crowdfunding investors should be able to make milestone achievement driven investments in stages just like the sophisticated VCs do today.
 
•  All IPOs should be Dutch Auction with open free access to all.
 
•  Short trading and day trading should be prohibited on a stock exchange catering to small companies.
 
•  Microlicensing which pays investors a percentage of revenues instead of just a variable of net profits should be an integral part of crowdfunding platforms and stock exchanges specializing in small companies.
 
•  Election of board directors in small companies should be fully democratic by the shareholders without having a pre-slate established and protected by the existing board.
 
•  Small companies should have high degree of transparency and access by shareholders.  Company CEOs and CFOs should handle 2 hour quarterly sessions answering un-filtered questions from shareholders much like how the British House of Commons fires questions to their Prime Minister in periodic sessions.   These question sessions should be recorded and posted on the company’s web site.
 
•  There should be no prohibition for a company to use social media tools to reach out to new potential investors.
 
•  People want to feel a part of something.  They want a cause to believe in and a sense of belonging.  They want the satisfaction of a personal connection of gratitude from the entrepreneurs and their team for the hard earned money they have invested with them.  They want a recognition that they are betting on this venture because they believe in the people not just the idea and product.  They want an end to the cold hearted distant ways of Wall Street.  They want sustainable community investing at the human level.   They want a more direct connection.  They want to know that most their investment is going to the cause and not to outside middlemen and bureaucrats not adding any value.
 
At The California Stock Exchange we run every entrepreneur through a statistical analysis with our patented Cal-X EquityNet probability of survival business plan analysis software.  We also grade the entrepreneur on their ability to make a Steve Jobs like pitch for their company and their products.  We test the fire in the belly of the entrepreneur that does not show up in data searches alone.  We combine this hard statistical analysis with more than 52 different inputs with a human emotional assessment to create a Cal-X EquityNet overall probability of survival score for the fledgling company.   Those that score better than 50% are eligible to be listed beyond our Cal-X Zimplemoney friends and family round financing on our platform.   Those that score under 50% are encouraged to enter our long term coaching, mentoring and incubating network to attempt to increase their score over time.   When their score is high enough they are nominated by their mentor to return to the Cal-X platform for financing.  This innovation is designed to work both ways increasing likelihood of an entrepreneur to get funded and improving the chances of return for an investor. 
 
We believe crowfunding platforms that do not offer value added services of nurturing entrepreneurs and protecting investor risk will fail in the long run.   Crowdfunding platforms that take a listing fee and then provide little to no feedback, no help and most important no funding, may kill the whole field early if a better alternative does not emerge to save the reputation of crowdfunding.  We also strongly believe in a private certification process in the industry to weed out early platform fraudsters.   Crowdsourcing.org is a firm organizing an accredited certification process.
 
How and why does crowdfunding startups create jobs?   Here is a short list…
 
From 1980–2005, firms less than five years old accounted for all net job growth in the United States.  Facts support new firms create jobs. Business Dynamics Statistics Briefing: Jobs Created from Business Startups in the United States, January 2009
Startups and young firms are the innovators that create products that drive worldwide market growth.
Exports create jobs and small firms create the innovations worthy of winning export customers.
Excitement of startups succeeding lifts the spirit of the country and increases consumer confidence which increases orders for products, which in turn creates even more jobs.
People work harder and are more productive when they are doing what they love.  Financing startups gets more people productive which grows the economy.
 
How important are small businesses to the U.S. economy?
 
Small firms:
 
Represent 99.7 percent of all employer firms.
Employ half of all private sector employees.
Pay 44 percent of total U.S. private payroll.  
Generated 65 percent of net new jobs over the past 17 years.
Create more than half of the nonfarm private GDP.
Hire 43 percent of high tech workers ( scientists, engineers, computer programmers, and others).
Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
Produce 13 times more patents per employee than large patenting firms.
From:  SBA.gov Fact Sheet
 
 
The most important part of the crowdfunding revolution is not the financial side it is the human side.  This one innovation has the potential to un-bottle a great reservoir of positive human energy.   This innovation has the potential to do more towards getting people to wake up excited and energized to enter the workday than anything that has been done before. 
 
We believe this innovation goes beyond the scope of just the U.S.A.   If Crowdfunding is used in Palestine, Mexico, Afghanistan and other troubled areas to put to work the youth of those regions, it can end the frustrations that perpetuate war.

Listen to entrepreneurship AUDIO speech click here

See www.calstockexchange.com
See www.entrepreneurshipparty.com
Proud supporter of www.startupamericapartnership.org
See www.leonhardtventures.com

 
 
 
 
 
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