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In a nutshell

As crowd-contribution is considered a “gift” based economy were people contribute with their cash in exchange for goods and services of similar value, the micro-lending is a business interaction in the marketplace where people and (small to medium) businesses meet and borrow for their needs and wants paying in exchange either with their products and services or with the financial rewards in the form of Royalties contracts.

Lendpool is assisting both the domestic market – people willing to contribute to the projects that resonate with them – and the commercial small enterprises.

Membership opportunities at Lendpool are open and free to any person willing to be part of this ever growing crowdfinancing portal.

This in a nutshell what is Crowdfunding in general and Lendpool in particular.

Participate in innovation. Start funding your vision today.

It’s Not Equity Funding; The Reward is.. Money

Royalty financing is a relatively new concept that offers an alternative to regular debt financing (loans and trade credit) and equity financing (venture capital and stock sales). In a royalty financing arrangement, a business receives a specific amount of money from an investor or group of investors. The money might be put toward launching a new product or expanding the company’s marketing efforts. In exchange, the investor receives a percentage of the company’s future revenues over a certain period of time, up to a specific amount. The investment can be considered an “advance” to the company, and the periodic percentage payments can be considered “royalties” to the investors.

Royalty financing arrangements offer a number of advantages to small businesses. Compared to equity financing, royalty financing enables entrepreneurs to obtain capital without giving up a significant ownership position in the company to outside investors. The founders of the company are thus able to preserve their equity position, which may help motivate them toward continued success. In addition, royalty financing arrangements—since they most resemble loans—are not subject to state and federal securities laws as some equity financing deals are. Thus the company is able to save the time and money it might otherwise devote to complex filings and legal fees. Royalty financing also increases a company’s ability to structure deals with individual investors, who might be attracted to the idea of receiving a monthly or quarterly yield over the life of their investment. In contrast, equity financing arrangements often show no yield until the stock is sold.

Compared to debt financing, royalty financing provides more convenient payback terms and less severe penalties for default. In addition, the infusion of cash may help the company increase sales, which may make it a better candidate to obtain more financing later. Finally, royalty financing enables a small business to keep its options open for later financing rounds. In contrast, a company that incurs significant debt or sells a great deal of equity in its early stages may find it difficult to attract investment later.


As an example, suppose that a small business obtains an “advance” of $100,000 against future sales from individual investors or an economic development organization. In exchange, the investors would receive 3 percent of the company’s total sales for a 10-year period, to a maximum of $300,000. If the company repaid the investment over 10 years, then the investors would earn a compound annual return of 11.6 percent. However, if the investors reached their maximum royalties of $300,000 in half that time, the initial investment would yield an annual return of 24.5 percent.

A small business interested in royalty financing may be able to negotiate a grace period so that royalties will not begin to accrue for a quarter or more following the close of the deal. It may also be possible to establish a lag between the time revenues are realized by the company and the time royalties are paid to investors. This sort of arrangement can give the small business time to put the capital to work and increase sales before paying a percentage of sales as royalties. In most cases, these arrangements are acceptable to investors since they still offer a better deal than most equity financing arrangements, which only pay when the stock is sold.

Royalty financing may tend to work best for small businesses that have some elasticity in pricing, so that they can raise prices to cover the percentage of royalties without losing customers. Royalty financing is also suitable for companies for which increased marketing efforts have an immediate impact on sales. However, royalty financing may not be a good option for companies with very tight profit margins. In summary, the capital gained through royalty financing can enable a fledgling business to launch a new product or expand its marketing efforts without having to give up too much equity in the early stages. In royalty financing, investors own a piece of the company’s revenue stream rather than a piece of the company itself. And so there is no need for (new) regulation to impede the process.

Now this is something worth talking about.

Happy Gossiping!

Plan a new venture

Think about it, it’s simply laughable. How can you project your marketing expenses if you haven’t tried to acquire customers first? It’s just an illusion. Or financial forecast – the typical way is that you find some market adoption rates from a competitor and forecast your sales based on those numbers. As an entrepreneur I can create hundreds of different forecasts showing a revenue from $1000 to $1 billion in one year and use some sort of existing metric every time I create one.

As Steve Blank pointed out in one of his books: “no business plan survives the first contact with a customer”. The reason behind it is that as a start-up you are launching a product that’s either innovative and unproven or you have a new (and unproven) business model or you target a niche but growing market. There are no benchmarks for start-ups.

There are Simply Too Many Variables in the Start-up

To cut it short business plans are made for big companies and corporate managers. If you are a marketing manager at Coca Cola and launching a new line of sugared drinks, you know you won’t do anything new and you can use same benchmarks as before – X number of billboards will bring you Y number of customers and Z amount of revenue etc. But launch a website or an app and you have no clue. Will users adopt? Will it solve their problem the way you thought? Will they come from social networks or via ads?

The definition of a start-up according to Steve Blank, and one I most agree with is: “startup is a temporary organization designed to search for a repeatable and scalable business model”.

Getting Your Business Started 2015

What’s repeatable and scalable business model? It’s the point in the start-up lifecycle when you find a consistent way to acquire customers at a cost lower that the revenue they can bring in. That’s assuming you have already built a product for a big enough market, that’s useful enough for customers to pay for it.

Starting a start-up contains many variables such as size of the market, who is your customer, what are your customer channels, what kind of solution are customers willing to pay for, how much would it cost you to acquire a customer etc.

Lean Canvas is The New Business Plan

So at this point it should be clear that unlike launching a traditional proven product, launching a start-up contains many variables. Therefore launching a start-up is a dynamic process. You can’t predict the future and it would be foolish to follow some piece of paper that’s based on fantasies and irrelevant data. That’s where lean canvas comes in. It contains a set of variables that you want to define and then go out and test them. Lean canvas is basically start-ups meet science. You start with a hypothesis, you create a controlled experiment, you gather results and those results lead to new hypothesis at which point you update your canvas.

The lean canvas replaces the traditional business plan. It’s not a bad idea to do a business plan – it’s a great brainstorming exercise, but most of what’s written in it is likely a BS. The problem with a business plan is that it assumes that you can put together a marketing plan, define your customer, product specifications, prepare your finances etc. and then you just follow it.

How To Test Your Assumptions and Adapt

The point of testing your assumptions is that instead of wasting a year or so of your life building a product and then raising money and spending them on particular “recommended” marketing strategy just to find out that you either built a wrong product or your costs of acquiring customers are way higher than you ever make (and indeed over 90% of start-ups fail just because of it) you rapidly and inexpensively test your assumptions and adapt to the results. For example, you test your product by identifying the core feature set and roll it out in a small subset of your market to get the feedback. Instead of just buying ads, you take a small budget, break it down and try multiple advertising strategies and then measure which deliver the best ROI.

Darwin Quote

Entrepreneurs Don’t Ever Give Up

We live in the world of constant attention seeking. Things that sound counter-intuitive get a lot of attention today. That’s why many “social media experts” and self-proclaimed entrepreneurs recommend giving up fast and dress it up as a new “lean” approach. Let’s see what the truly great entrepreneurs think about it:

  • Elon Musk: “No, I don’t ever give up. I’d have to be dead or completely incapacitated”
  • Steve Jobs: “The one who never gives up is the one who has only one way out, and that is to find success.”
  • Richard Branson: “Prepare well, have faith in yourself and never give up”

Currently, startups are hot and corporate 9-5 jobs are not. There is many wantrepreneurs starting a start-up, doing it half-heartedly and when they spot the first bricks they come up with a new idea that’s supposed to be better and easier. They don’t execute, nor learn anything new, they simply make up another idea. That’s not a pivot. Psychologists have a term for this and it’s called “escapism”. Unless you go out, do the execution and get black on white data that your hypothesis isn’t working, it’s not a pivot. If you don’t execute it’s just escapism.

Pivot is Not Giving Up

Pivot is when one of your assumptions is wrong and you need to change your direction. Let’s say that you are building a to-do list and you assume that in order to make your customers more productive they need better organization. You invite customers in and watch them using your minimum viable product or track their behaviour some other way and you find out they still suck at getting things done.

If dig a bit deeper you may find that it’s actually the inability to manage distractions that prevents them from being productive. So with black on white data you know this won’t work, but you learned where the root cause of the problem is – the distractions. So at this point your next hypothesis would be to design some sort of web blocking tool that blocks the distracting sites and widgets or something similar.

So What’s the Difference

If Pivot is not giving up than what it is? It’s what you do when you try and hit the bricks. It’s when they drive you out through the door and you come back through the window. True entrepreneurs don’t give up, they find a way to succeed. Consider following examples

  • Instagram started as Burbn, a Foursquare knock-off app. After failing to get traction but learning that their users are actively using the photo feature, they decided to adjust and launch Instagram.
  • Youtube started as “Tune In Hook Up” a video dating site. The startup was executed but didn’t get any traction. When founders realized there was a problem to find popular videos online, they made an educated change of direction towards youtube.
  • Paypal started as Palm then became Confinity, then X.com and then finally PayPal. Every time they tried, failed and learned something but didn’t give up.
  • Mark Zuckerberg started a Hot or Not clone that took off but was banned by the University. He then built The Facebook.

There are many similar examples: Twitter started as Odeo a podcasting startup, Flickr started as an MMORPG a gaming startup, Groupon as The Point a social fundraising site, Pinterest as “Tote” an e-commerce app. Every time the founders were kicked out through the doors and got back through the window.

It’s About Managing Your Down Side

Great entrepreneurs can manage their down-side well. In fact, entrepreneurship is not about being good at risk-taking, it’s about being good at managing risk – and lean canvas is your ultimate risk management tool. In other words, business plan = risk taking, lean canvas = risk management.


DIY Marketing and Startups

The challenges of running a small business can be daunting to many. Those of us who decide to venture out on our own and become our own boss welcome these challenges with open arms.

You’re not scared of the unknown. You’re go-getter, trend setter, and above all, entrepreneur. You want to make a difference in the world with your products/services. You keep your local and global economies humming and that is why we are on the same page!

If you consider yourself to be a small business owner or an entrepreneur, you’ve probably used to the old idiom, “if you want something right done right, you gotta do it yourself.”

We know that one well and hear it time and time again. It’s even used in a Vistaprint commercial! If we can do something ourselves to save a couple bucks, then we’ll probably do it. You’re full of confidence, initiative, and motivation, but when it comes to online marketing, doing it yourself (and doing it well) can be next to impossible.

Here’s three reasons why do-it-yourself marketing doesn’t work for small businesses and entrepreneurs:

1. You can’t find the time

Anyone who runs their own business knows how hard it is to keep up with the day to day tasks. When you’re the only person running the business, you have the responsibilities of being the CEO, CMO, HR, Accounting, Support Representative, and Webmaster. It’s not just a 9 to 5 job. It takes many more hours.

These job responsibilities can wreak havoc on your personal life as well. When you spend all your time working it’s hard to find time for your friends and family. We all need that time to decompress and live healthy lives.

This means that if you’re going to do any marketing at all, it had better be easy, quick, and effective. Otherwise it’s a crapshoot and potentially a waste.

2. You can’t properly build your audience

If you own and operate a small business, then you have an audience. You need to continue building your audience to continue growing your business and generate more revenue and income. To do that you have to spend time on marketing.

The best way to build your audience online is with content (blogs, email marketing, social media). This speaks to #1 in that it takes much-needed time. So what do you do?

You have to work with someone else (usually a marketing professional or agency) or use a tool.

This can get very expensive, very fast. It’s money that you just cannot afford to gamble with. Effective audience building can mean the difference between a prosperous, growing business and one that fizzles out into oblivion. That leads me to my next point.

3. You can’t sustain it

How many small businesses do you see that are killing it and only have one employee? There might be one or two you know out there. They’re probably older businesses with well-established, loyal customer bases.

Owning a business is great but you should always have your head in the clouds when it comes to your goals. You shouldn’t aim to stay small forever. You want to be scalable. When you grow your business, everyone benefits. You create jobs and make a difference in your community.

Doing marketing yourself can work for a short time, but you simply cannot keep it up by yourself and expect to grow your business, or even tread water for that matter.

Here’s what you can do to make your online marketing successful as a small business or entrepreneur

Co-marketing is the easiest way to grow your business online. It saves you hours each month and promotes your business to larger audiences than you’ve ever had before. What is co-marketing?

It’s the process of working together with other marketers (your partners) to build your audience and your customer base.

Right now in the crowdfunding network there are thousands of other businesses who are already working with your best prospective customers and want to help you too. They’re experts in their fields, making some experts in your field.

You need to tap into these folks because there’s thousands of pieces of free, high-quality content waiting for you to add to your website. You can also convince these marketers to promote your business by publishing your content, earning you relevant backlinks worth their weight in gold.

No matter what web marketing tools you’re using to promote your business, you must have audience and content before you can be successful.

Think about it.

  • Email marketing tools are worthless unless you already have a big email list (audience) and send regular messages (content).
  • Blogging doesn’t work unless you regularly come up with new posts (content) on topics that will attract the most new online visitors (audience).
  • Social media falls flat unless you have thousands of followers (audience) and lots of interesting posts (content).

If you’re a solopreneur or small business owner, we’d like to hear about your experience with online marketing. Have you hired an agency or used any tools (free or paid)? Tell us what’s worked and what hasn’t. Have you ever worked with any marketing partners to build your audience? Thanks for your comments!

Why Campaigns Fail (and what can do about it)

Editor’s Note: The following is a guest post from Andrew Cravenho, the CEO of CBAC LLC, which offers invoice factoring for small businesses. Cravenho looks at reasons for crowdfunding failure, and offers suggestions on how to work around those potential obstacles. As always, guest contributors’ opinions are their own and do not necessarily reflect the views of Lendpool.com.

The number of crowdfunding campaigns continues to skyrocket, though not all can achieve record-breaking success. Crowdfunding campaigns fail due to several reasons, such as a lack of merit in the idea or the project failing to garner enough attention. But though failure is common, there are things you can do to get back in the game. As sincerely as we hope this never happens to you, being prepared for all eventualities never hurt anyone.

Why Campaigns Fail

You have nothing new to offer. Often a crowdfunding campaign fails because your idea is not unique and is already being pursued by someone else. A field that is already crowded will hardly attract the attention or interest of funders. Competition is justified by a compelling idea that has a competitive advantage; otherwise the idea is a tough sell.

Investors will compare your idea/project with others. You will need a highly differentiated idea with high return value to your target audience to generate greater interest from the participants on a crowdfunding site.

Not being clear about your purpose. When you ask for funding you need to be clear about what the money is for. Your potential contributor is less likely to take any action unless you’re being specific about how you intend to use their money. Many crowdfunding campaigns fail to provide timeline, action steps, and future plans which are important to attract the attention of the contributors. Besides, it is important to explain the benefits of funding.

A poor operating structure. An operating structure that is not well-defined and well-planned will result in poor execution. Your core team should be ready to go even before you list the project on a crowdfunding site. If you study the successful crowdfunding campaigns, they mostly have one thing in common: a group of dedicated individuals who are passionate about the idea. It is also important that all members of your core group are on the same page.

Apart from 100 percent commitment, solid skill sets are required to top the chart on any crowdfunding site. Your plan should be well-placed and properly laid out. Focus on the details and use them to guide your path. Agility is also essential to be successful in your crowdfunding campaign. Remember that funders are more interested in projects that are looking further down the road.

Inconclusive messages. What are your goals and objectives? How do you plan to achieve them? These are some factors many crowdfunding campaigns overlook to answer. But a clear, concise message can take you a long way. It will help your funders to have a clear idea about what to expect from your project. Inconclusive messages often lead to unrealistic expectations on the backers’ part, which is even more harmful as it might ruin your market reputation.

You lack emotion. How emotional are you about your project? If you’re not very passionate or emotionally connected with your project, you cannot create a compelling story to sell your idea. The trick is to make investors/funders excited about your project so that they are compelled to put their money in it. So share your excitement to motivate others!

You don’t have enough social capital. This is the number one reason most crowdfunding campaigns fail. Strong social capital helps you build a lot of interaction and activities around your project. But for that you need to build a community even before you ‘activate’ the project on a crowdfunding site.

Here are a few more tips to make your online business funding project successful.

How to Make Your Crowdfunding Campaign Successful

A strong social presence. Let’s begin from where we left while discussing the reasons crowdfunding campaigns fail. Contrary to what many aspiring crowdfunding millionaires think, the success of your funding project largely depends on your social capital. Even before you start your project on a crowdfunding site, you need to start selecting the social media platforms that are likely to be most effective in getting your message out.

Who are your target audience? Who will buy your products once they are in the market? Where do these people socialize? What do they enjoy? What kinds of messages/marketing content do they best interact with?

These are some questions you need to understand to determine the right social platform(s) for your project. Also, start creating content or marketing messages for your target audience. You need to give at least 6-12 months to build a social following before launching your crowdfunding project.

If possible, create a landing page for your project to collect the email addresses of your potential investors/funders. Most importantly, you need to communicate with them on a regular basis to establish trust so that your investors don’t get cold feet when it comes to putting their money on your project.

Use a strong video in support of your vision. Certain projects, especially those pertaining to creative or social topics, need a demo video to attract the attention of potential contributors. A video will help your potential investors see what they’d be getting.

The video needs to be compelling and serve your mission. Instead of answering the ‘how’ of your project, use the video to answer the ‘why’ of it. Why are you launching the project? Why should people invest in it? Why will your idea be successful? These are a few things you need to focus on.

The video must be shareable. Therefore, don’t make it too long; up to three minutes-long should suffice. Also, the quality of the audio and the video must be good so that people can hear and see it properly.


There are so many reasons why crowdfunding campaigns fail, and quite a few of them are unanticipated. This is why you need to be prepared and plan out the campaign properly. If your crowdfunding campaign failed the first time, don’t fret over it. Instead, examine the lessons learned and give your best to make it second time around. If required, change the crowdfunding platform or add to a new one.

Royalty Based Crowdfunding – Conserve Your Equity

Although many of past crowdfunding experiences focus on rewards and equity crowdfunding, much of the information applies to the industry as a whole. With this in mind, let’s introduce another form of crowdfunding, one currently tied-up in JOBS act regulations but is expected to have a huge impact on the startup climate, royalty based crowdfunding.

Royalty based crowdfunding offers investors the chance to earn a percentage of a project’s future revenues (royalties). How many royalties an investor receives depends on a variety of factors — primarily the investment size — but the main idea is that startups mustn’t part with equity or acquire debt in order to raise capital.

How Can Startups Benefit from Royalty-Based Crowdfunding?

One reason royalty based crowdfunding is growing in popularity is its simplicity. Before an investment’s made, both parties know approximately how much money will flow into either the company or the investor’s pocket. This is a useful tool for startups interested in immediate capital but wish to contain an investor’s influence in all future company proceedings. By promising royalty instead, start-ups sign a mutually beneficial pact — it’s in everyone’s best interest to sell.

Should a start-up depart with too many royalties, however, the long-term consequences can greatly hurt that business’ growth. Consider the fact most crowdfunding investments will go toward first-wave production and distribution: If the business has not kept an adequate share of the revenue, production and distribution moving forward becomes an expense the business must carry without the support of income. As a precaution, most portals implement a “buy-back” clause to limit the longevity of a contract.

Where Can I Launch a Royalty-Based Crowdfunding Campaign?

Due to regulation delays, rewards-based crowdfunding, like its parent equity, has yet to fully emerge in North America. However, there are a variety of platforms offering this service to interested businesses and investors. Lendpool is considered the first in N.America to offer royalty based crowdfunding to art creators and tech makers. Other portals now participating include Pearltreess, RoyaltyClouds, and LendingClouds (check to see if still in use). Quirky has also engaged this movement, but with a few changes: Projects involve the community in the invention process, giving those that contribute ideas a percentage of the final share.

Keep your eye out for more royalty based crowdfunding portals!

Royalty Crowdfunding Apps

Paul Neiderer, an international equity crowdfunding authority, predicts royalty based crowdfunding will attract more businesses by 2020 as better systems emerge for revenue management and disbursement. While this pocket of the industry does not quite compete with the equity sector today, perhaps this prediction will come true for the mobile market in particular.

As of February/March 2014, the App Store advertised 1,134,183 active apps for download, while Google Play boasted 1,173,187. As app developers strive to add their own published apps to these banks, some realize how infeasible production can be. To help in this regard, the following four crowdfunding portals offer royalty based crowdfunding apps development and distribution solutions.

AppBackr.com (US)

On this platform’s marketplace, donors receive funds for a determined number of apps sold. In this way, both developers and funders profit when an app launches. When the designated number of apps sells out, however, the backer no longer receives a portion of the revenue, protecting developers from permanently departing with too many royalties.

AppsFunder.com (Hong Kong)

App backers can purchase reward packs or opt to receive revenue shares from Google Play and App Store sales. Project owners retain 100% ownership of the project, offering instead a potential ROI capped at 120%. The portal uses “milestones” to help project owners access the funds quicker and to give backers the chance to see where their money goes.

AppSplit.com (US)

This crowdfunding platform allows app creators to run one of three campaigns: (1) fundraise, (2) sell or (3) develop. Through these models, developers can offer rights to certain apps or solicit company shares. For those in need of extra help, campaigns can also help producers find eager freelancers to assist in the app’s production and design.

SellanApp.com (Netherlands)

SellanApp.com supports the notion anyone can invent an app, regardless of technical expertise. Using the tools provided to create an interactive mock-up, app producers collect funds over a 30-day period in hopes of bringing the idea to retail. Those who pledge receive a portion of the app’s revenue; however, if a developer does not also approve and select the app, all money goes back to funders and the project ends.

Create A Winning Crowdfunding Campaign

We all have a dream. Some grand vision we’d love to see come to fruition one day. Something that scares us, compels us and energizes us at the same time. So why is it that so many people seem to put those dreams in a box and shelve them away for a day that never comes?

It’s tragic to think of all those boxed up dreams, slowly dying away, deprived of oxygen and never likely to see the light of day. I don’t want to see that happen anymore.

I want you to court bolder dreams and make them a reality.

The biggest excuse I hear aside from people’s natural, inherent fears of failure (or success) is lack of funds to make it happen. Well I don’t really think we can use that as an excuse anymore because of this phenomenon called crowdfunding. And it’s a winning strategy.

A Clear Case Of Successful Crowdfunding

To make it dead easy I’ve posted the name of the campaign, the summary of the project, the outcome and the reason why it kicked ass. Get ready to learn a lot.

Seth Godin – The Icarus Deception

The Project

“Please help me show my publisher, the bookstores and anyone with a book worth writing that it’s possible to start a project with a show of support on Kickstarter (one of Lendpool’s competitor in US). The Icarus Deception is an experiment in publishing, an opportunity for real growth, an invitation to challenge your friends and something you can touch.”

The Outcome

Seth was asking for $100,000 to make this project happen and he raised this within 3 hours of posting it! Normally you’re given a month to reach your goal and only when you raise that amount does it get completed and funded and all the pledge payments are authorized. He was on over $286,000 with 7 days till the end of funding campaign!

Now, that’s funding! In the world of main street investment this could never happen; the investor would put in (if that) only up to the amount requested and would ask in return for a lot more than the project founder would be willing to partake.

Do you know about other successful crowdfunded projects? Share them with us here.