Text
FAQ
1. What’s the bottom line? We’re flipping the standard funding model on its head. 33needs enables anyone to invest in change. At our core, we’re a
deeply social experience to finance impact. We know the desire to
connect is so deep in who we are, and our platform is built around
that truth. We make investing a social (and emotional) experience. Think about how the Obama campaign flipped the standard campaign
fundraising model on its head through harnessing small repeatable
donations from the crowd. The internet shifts power from institutions
to you. 33needs is pioneering the idea of “people-powered investing.” The rise of social entrepreneurship, the convening power of the
internet, and the reduced costs of launching a startup in today’s
wired world are driving the opportunity. For-profit crowdfunding
platforms exist in the music, film, and fashion industries. We believe people will see 33needs as a portal to an entirely new
impact-based asset class. Here’s how it works: A 37-year-old man in Los Angeles, CA could invest as little as $10 (or
1 “Part”) in Husk Power Systems, a venture providing low-cost energy
services to rural India. A 19-year-old woman in Mumbai could invest $20 (or 2 “Parts”) in
Voxiva, a venture using cell phone technology to improve health-care
delivery in developing countries. 2. Who benefits? The investor (called a “Backer”) receives a % return based on venture
revenue. The venture receives seed capital. 33needs receives 9% of the
total funding target. The world gets just a little stronger. Overview of the 7 “Big Need” Categories: 1. The Planet - How can we help promote a cleaner and more sustainable
global ecosystem? 2. Education - How can we help more people get more access to better education? 3. Community - How can we help connect people, build communities and
protect unique cultures? 4. Heath - How can we help individuals lead longer, healthier lives? 5. Opportunity - How can we help people better provide for themselves
and their families? 6. Sustainable food - How can we provide for a growing population in a
sustainable way? 7. Everything else - Sometimes the best ideas don’t fit into any
category at all. 2. How can your social objectives be sustained in a for-profit model? 3. How do we make money? We’ve selected the initial 33 startups for a December 10th launch
through a nomination and application process. Each social venture has
60 days to raise $20,000. 33needs collects 9% of the funding target as
a platform fee. We’re doubling the number of ventures on the platform from months 6-12
and tripling the number of startups from months 12-16. 3. Who is your target user? A 24-year-old graduate student. She’s purposeful, but pragmatic. She’s
not afraid to make mistakes. She’s bored by blah websites and
apathetic companies; she demands authenticity. Born between 1978 and
2000, she’s a Millennial, which include 95 million young people up to
30 years of age — the biggest, most diverse, and best-educated age
group in the history of the nation. 4. How will they pay? Through purchasing “parts” in social ventures on the site. Her
purchase of one, $10 “part” in a particular social venture entitles
her to a % of their revenue, but not equity, for a period of two
years. Before her money is released in stages to the social venture,
it accrues interest in a 33needs escrow account. 5. How is this legal? If the investor’s core motivation is not an expected financial return,
but impact or consumption, the securities laws do not always apply.
Additionally, the “Parts” do not share many of the common elements of
stock. We’ve been working with law professors at the University of Michigan,
the University of Denver, Harvard Law, Pittsburgh Law, and others to
create a structure that satisfies investor, startup, and regulatory
interests. 6. How will you source opportunities to put on the website? To date, 33needs has received 679 applications from startups around
the world. We have a 4-person investment committee comprised of
attorneys and investment professionals that review, interview, and
select companies. Over 11,500 people have registered to begin
investing in them when the site launches. 7. Why will entrepreneurs want to use 33needs vs. other microfinance options? A few reasons. First, most of the companies are raising between
$15,000 - $20,000. The average size of a microfinance loan is $522.8
globally, according to MIX Market, a research group specializing in
microfinance. Secondly, microfinance just isn’t widely available in
developed economies (e.g., US, England, Australia) where 60% of our
companies are based. Thirdly, the web-based and social network
elements (e.g., investment teams, blog widgets, etc.) of 33needs drive
lots of interest in their products and users to their sites. 8. Is there a marketing plan to draw investors to the site? a. Internal Viral Loop 33needs is powered by a viral expansion loop - just by using the site,
it spreads. Here’s why: A startup requesting funds has an incentive to
invite friends, family, colleagues, and like-minded strangers to sign
up, and each new member brings others with him. We estimate a viral
coefficient of 2.0: each person who signs up is worth, on average, two
people. b. Connect w/the Influencers Reach out to the influential blogs and thought leaders. Some have
330,000+ followers on Twitter and hundreds of thousands of
subscribers. A positive mention by one of most influential blogs or
thought leaders creates a heard mentality of positive retweets, other
blog mentions, and positive reviews. More mainstream sites and
magazines, including Inc Magazine, Fast Company, and Entrepreneur
Magazine frequently pick up stories from their content. We’ve done this before: I targeted a few on Twitter, which drove lots
of traffic to a piece I wrote for the Huffington Post. The result?
1,443 retweets, 45 Facebook shares, and one of the most popular posts
in February. Here’s a link to that post: http://huff.to/aSQXS8 The community is larger and more interconnected than one would think. c. Storm the campus Through 50 events across the country in the next few months, we’ll
have an opportunity to talk with students about investing in good and
starting their own venture on 33needs. Additionally, we’re signing up
33needs clubs and investment teams to spread the message. I’m speaking
with UPENN students on 11/12 about what we’re up to. d. Email Marketing (from our growing list) / AdWords / Meetup Groups / SEO Additional materials? Another pitch, although a bit more informal: http://bit.ly/bplrsJ
Beta (test site): http://alpha33needs.heroku.com/
“How it Works” presentation: http://bit.ly/9nKBOh
Josh’s bio: http://huff.to/d9ZRUL 49 Having the 679 applications and 11,500 pre-signed-up investors
shows great traction. Could you elaborate how 33needs received those
679 applications, and once the website is up and running, what is the
mechanism for generating a sustainable stream of high-quality
investment applications? Will you have people on the ground, partner
with organizations, solicit solely through the website? We’ve received approximately 50% of the applications from entrepreneurs
excited to start their own ventures at 33needs events on social
entrepreneurship; most recently here: http://bit.ly/bqbaD0. I’ll be
speaking with business and economics students at the University of
Maryland next week. Most of the events are organized by two eager students leaders. We ask
the student leaders, in exchange for speaking with their groups, to
aggressively spread the word to their friends, other student leaders,
and organizations on campus. They get knowledge and connections; we
get student-fueled virality. The other 50% come from a combination of directly reaching out to
start-ups and interest from articles and tweets (and retweets). For
example, my op-ed in the Philly Inquirer last week
(http://bit.ly/d5H8mx) led to lots of partnership inquires and
start-ups interested in listing. See attached screen shots for an
example of a start-up expressing interest and tweets from three
influencers, including New York Times best-selling author, Dan Pink
(who has over 97,000 twitter followers). Once we’re up and running, we’ll continue to employ our strategy of
speaking, writing, and reaching out to the influencers, which will
lead to applications solely through the site. Additionally, we’re
exploring partnerships with universities (e.g., Cornell and the Rhode
Island School of Design) and organizations (e.g., Fast Forward Fund,
Philadelphia Education Fund, United Nations Development Program, and
Village Capital) to establish a pipeline of high-quality investment
applications external to the site. 10. If not microfinance, who are your competitors for providing capital
to this type of entrepreneur? How does 33needs’ cost of capital to an
entrepreneur (% of amount raised to 33needs + revenue share to
investors) compare to the competition? Our competitors range from more traditional sources (e.g., friends and
family) to web-driven models (e.g., kickstarter.com). According to
feedback from hundreds of conversations with entrepreneurs, our core
competitors, in order of relevance, are: 1. Capital from friends and
family; 2. Crowdfunding models, including kickstarter.com,
indiegogo.com, and prosper.com; 3. Credit card debt; and 4. Grants and
fellowships from the world of social enterprise, led by
startingbloc.org and others on this resource list we compiled:
http://bit.ly/91Ql5n. Our platform allows investors (aka, everyone) to fund ventures and
generate returns based on the venture’s revenue, rather than via debt
or equity. For some, it’s a more flexible, entrepreneur-friendly way
to fund growth. Attached chart compares 33needs’ cost of capital (and
other metrics) with some common alternatives. 11. What is the mechanism 33needs will use to monitor investments,
verify revenues, collect investor returns, etc.? At scale, have you
estimated what the cost structure for this will look like on a per
investment basis? Each venture is required to submit quarterly statements to 33needs
that, at minimum, pass through a compilation stage of review. Investor
returns are calculated and debited monthly via ACH and pushed into
each investor’s 33needs portfolio. We’re exploring mobile transfer
options, too. Our developers are designing the web application to do most of the
work automatically, somewhat similar to how etrade.com or
sharebuilder.com automate their investment processes. At scale, we’re
estimating a cost of approximately $2 per venture. 12. Have you lined up any commitments from “influencers” to tweet/blog
about the launch of 33needs? Some have, but we usually just send out a brief email asking for their
help. I employed the same strategy to bring lots of attention to my
op-ed in the Philadelphia Inquirer last week (http://bit.ly/d5H8mx). A
sample of influencer tweets is attached. 13. What are your financial projections? You can check out our income statement summary, sales projections, and
operating expenses here: http://bit.ly/9ruzoh. 14. Can you share a little more about your background and your team’s
background? Josh Tetrick, CEO and Founder
Recent bio: http://bit.ly/bqbaD0 Speaking clip (demonstrating ability to inspire):
http://bit.ly/94Asug Speaking clip (demonstrating tenacity, creativity):
http://bit.ly/cwO7M9 Speaking clip (mindset on starting things):
http://bit.ly/bIkkLV Michael Wallander, Legal
Bio: http://bit.ly/bayXuj Tony Huynh, Developer
Linkedin profile: http://linkd.in/bMXMdw Jill Hundenski, Marketing
Linkedin profile: http://linkd.in/cgQhis
deeply social experience to finance impact. We know the desire to
connect is so deep in who we are, and our platform is built around
that truth. We make investing a social (and emotional) experience. Think about how the Obama campaign flipped the standard campaign
fundraising model on its head through harnessing small repeatable
donations from the crowd. The internet shifts power from institutions
to you. 33needs is pioneering the idea of “people-powered investing.” The rise of social entrepreneurship, the convening power of the
internet, and the reduced costs of launching a startup in today’s
wired world are driving the opportunity. For-profit crowdfunding
platforms exist in the music, film, and fashion industries. We believe people will see 33needs as a portal to an entirely new
impact-based asset class. Here’s how it works: A 37-year-old man in Los Angeles, CA could invest as little as $10 (or
1 “Part”) in Husk Power Systems, a venture providing low-cost energy
services to rural India. A 19-year-old woman in Mumbai could invest $20 (or 2 “Parts”) in
Voxiva, a venture using cell phone technology to improve health-care
delivery in developing countries. 2. Who benefits? The investor (called a “Backer”) receives a % return based on venture
revenue. The venture receives seed capital. 33needs receives 9% of the
total funding target. The world gets just a little stronger. Overview of the 7 “Big Need” Categories: 1. The Planet - How can we help promote a cleaner and more sustainable
global ecosystem? 2. Education - How can we help more people get more access to better education? 3. Community - How can we help connect people, build communities and
protect unique cultures? 4. Heath - How can we help individuals lead longer, healthier lives? 5. Opportunity - How can we help people better provide for themselves
and their families? 6. Sustainable food - How can we provide for a growing population in a
sustainable way? 7. Everything else - Sometimes the best ideas don’t fit into any
category at all. 2. How can your social objectives be sustained in a for-profit model? 3. How do we make money? We’ve selected the initial 33 startups for a December 10th launch
through a nomination and application process. Each social venture has
60 days to raise $20,000. 33needs collects 9% of the funding target as
a platform fee. We’re doubling the number of ventures on the platform from months 6-12
and tripling the number of startups from months 12-16. 3. Who is your target user? A 24-year-old graduate student. She’s purposeful, but pragmatic. She’s
not afraid to make mistakes. She’s bored by blah websites and
apathetic companies; she demands authenticity. Born between 1978 and
2000, she’s a Millennial, which include 95 million young people up to
30 years of age — the biggest, most diverse, and best-educated age
group in the history of the nation. 4. How will they pay? Through purchasing “parts” in social ventures on the site. Her
purchase of one, $10 “part” in a particular social venture entitles
her to a % of their revenue, but not equity, for a period of two
years. Before her money is released in stages to the social venture,
it accrues interest in a 33needs escrow account. 5. How is this legal? If the investor’s core motivation is not an expected financial return,
but impact or consumption, the securities laws do not always apply.
Additionally, the “Parts” do not share many of the common elements of
stock. We’ve been working with law professors at the University of Michigan,
the University of Denver, Harvard Law, Pittsburgh Law, and others to
create a structure that satisfies investor, startup, and regulatory
interests. 6. How will you source opportunities to put on the website? To date, 33needs has received 679 applications from startups around
the world. We have a 4-person investment committee comprised of
attorneys and investment professionals that review, interview, and
select companies. Over 11,500 people have registered to begin
investing in them when the site launches. 7. Why will entrepreneurs want to use 33needs vs. other microfinance options? A few reasons. First, most of the companies are raising between
$15,000 - $20,000. The average size of a microfinance loan is $522.8
globally, according to MIX Market, a research group specializing in
microfinance. Secondly, microfinance just isn’t widely available in
developed economies (e.g., US, England, Australia) where 60% of our
companies are based. Thirdly, the web-based and social network
elements (e.g., investment teams, blog widgets, etc.) of 33needs drive
lots of interest in their products and users to their sites. 8. Is there a marketing plan to draw investors to the site? a. Internal Viral Loop 33needs is powered by a viral expansion loop - just by using the site,
it spreads. Here’s why: A startup requesting funds has an incentive to
invite friends, family, colleagues, and like-minded strangers to sign
up, and each new member brings others with him. We estimate a viral
coefficient of 2.0: each person who signs up is worth, on average, two
people. b. Connect w/the Influencers Reach out to the influential blogs and thought leaders. Some have
330,000+ followers on Twitter and hundreds of thousands of
subscribers. A positive mention by one of most influential blogs or
thought leaders creates a heard mentality of positive retweets, other
blog mentions, and positive reviews. More mainstream sites and
magazines, including Inc Magazine, Fast Company, and Entrepreneur
Magazine frequently pick up stories from their content. We’ve done this before: I targeted a few on Twitter, which drove lots
of traffic to a piece I wrote for the Huffington Post. The result?
1,443 retweets, 45 Facebook shares, and one of the most popular posts
in February. Here’s a link to that post: http://huff.to/aSQXS8 The community is larger and more interconnected than one would think. c. Storm the campus Through 50 events across the country in the next few months, we’ll
have an opportunity to talk with students about investing in good and
starting their own venture on 33needs. Additionally, we’re signing up
33needs clubs and investment teams to spread the message. I’m speaking
with UPENN students on 11/12 about what we’re up to. d. Email Marketing (from our growing list) / AdWords / Meetup Groups / SEO Additional materials? Another pitch, although a bit more informal: http://bit.ly/bplrsJ
Beta (test site): http://alpha33needs.heroku.com/
“How it Works” presentation: http://bit.ly/9nKBOh
Josh’s bio: http://huff.to/d9ZRUL 49 Having the 679 applications and 11,500 pre-signed-up investors
shows great traction. Could you elaborate how 33needs received those
679 applications, and once the website is up and running, what is the
mechanism for generating a sustainable stream of high-quality
investment applications? Will you have people on the ground, partner
with organizations, solicit solely through the website? We’ve received approximately 50% of the applications from entrepreneurs
excited to start their own ventures at 33needs events on social
entrepreneurship; most recently here: http://bit.ly/bqbaD0. I’ll be
speaking with business and economics students at the University of
Maryland next week. Most of the events are organized by two eager students leaders. We ask
the student leaders, in exchange for speaking with their groups, to
aggressively spread the word to their friends, other student leaders,
and organizations on campus. They get knowledge and connections; we
get student-fueled virality. The other 50% come from a combination of directly reaching out to
start-ups and interest from articles and tweets (and retweets). For
example, my op-ed in the Philly Inquirer last week
(http://bit.ly/d5H8mx) led to lots of partnership inquires and
start-ups interested in listing. See attached screen shots for an
example of a start-up expressing interest and tweets from three
influencers, including New York Times best-selling author, Dan Pink
(who has over 97,000 twitter followers). Once we’re up and running, we’ll continue to employ our strategy of
speaking, writing, and reaching out to the influencers, which will
lead to applications solely through the site. Additionally, we’re
exploring partnerships with universities (e.g., Cornell and the Rhode
Island School of Design) and organizations (e.g., Fast Forward Fund,
Philadelphia Education Fund, United Nations Development Program, and
Village Capital) to establish a pipeline of high-quality investment
applications external to the site. 10. If not microfinance, who are your competitors for providing capital
to this type of entrepreneur? How does 33needs’ cost of capital to an
entrepreneur (% of amount raised to 33needs + revenue share to
investors) compare to the competition? Our competitors range from more traditional sources (e.g., friends and
family) to web-driven models (e.g., kickstarter.com). According to
feedback from hundreds of conversations with entrepreneurs, our core
competitors, in order of relevance, are: 1. Capital from friends and
family; 2. Crowdfunding models, including kickstarter.com,
indiegogo.com, and prosper.com; 3. Credit card debt; and 4. Grants and
fellowships from the world of social enterprise, led by
startingbloc.org and others on this resource list we compiled:
http://bit.ly/91Ql5n. Our platform allows investors (aka, everyone) to fund ventures and
generate returns based on the venture’s revenue, rather than via debt
or equity. For some, it’s a more flexible, entrepreneur-friendly way
to fund growth. Attached chart compares 33needs’ cost of capital (and
other metrics) with some common alternatives. 11. What is the mechanism 33needs will use to monitor investments,
verify revenues, collect investor returns, etc.? At scale, have you
estimated what the cost structure for this will look like on a per
investment basis? Each venture is required to submit quarterly statements to 33needs
that, at minimum, pass through a compilation stage of review. Investor
returns are calculated and debited monthly via ACH and pushed into
each investor’s 33needs portfolio. We’re exploring mobile transfer
options, too. Our developers are designing the web application to do most of the
work automatically, somewhat similar to how etrade.com or
sharebuilder.com automate their investment processes. At scale, we’re
estimating a cost of approximately $2 per venture. 12. Have you lined up any commitments from “influencers” to tweet/blog
about the launch of 33needs? Some have, but we usually just send out a brief email asking for their
help. I employed the same strategy to bring lots of attention to my
op-ed in the Philadelphia Inquirer last week (http://bit.ly/d5H8mx). A
sample of influencer tweets is attached. 13. What are your financial projections? You can check out our income statement summary, sales projections, and
operating expenses here: http://bit.ly/9ruzoh. 14. Can you share a little more about your background and your team’s
background? Josh Tetrick, CEO and Founder
Recent bio: http://bit.ly/bqbaD0 Speaking clip (demonstrating ability to inspire):
http://bit.ly/94Asug Speaking clip (demonstrating tenacity, creativity):
http://bit.ly/cwO7M9 Speaking clip (mindset on starting things):
http://bit.ly/bIkkLV Michael Wallander, Legal
Bio: http://bit.ly/bayXuj Tony Huynh, Developer
Linkedin profile: http://linkd.in/bMXMdw Jill Hundenski, Marketing
Linkedin profile: http://linkd.in/cgQhis
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