June 6, 2017

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Funding Options for Entrepreneurs

Venture Capital provides financing to early stage emerging companies with high growth potential in exchange for equity / an ownership stake. The market is flooded with various funding options, so how should an Entrepreneurs approach fund raising? Because Angels and VCs have been around for a while, they naturally have been favored, but since 2014 the Crowdfunding industry has grown from $16 billion to an estimated $34 billion in 2015 and is doubling or more every year, and according to the World Bank estimates, Crowdfunding will have a global market of $96 billion by 2025 - 1.8 times today’s global Venture Capital industry.

Crowdfunding is a practice of funding a project or venture by raising contributions from a large number of people, typically via the Internet. If you are an Entrepreneur looking for funding (seed / angle) to take your idea / product to market, Crowdfunding is a great option – reward or equity. It acts as a proof of concept for an Entrepreneur before they spend their valuable time or approach a VC. On the other extreme, if you are an experienced or serial Entrepreneur looking for capital, Crowdfunding again is a good alternative as long as they can avoid a messy capital table. However, taking a disruptive technology to market is not easy, on that journey Entrepreneurs need more then just financing, which NIN.VC or VCs in general are able to provide:

1. Financing
Money is green everywhere; Crowfunding, NIN.VC, or Venture Capital are all great source of funding, except NIN.VC or Venture Capitalists have skin in the game via their funds, which means they themselves are invested in the fund and indirectly in their investments, so they tend to take more interest in working along side the Entrepreneur. Unlike Crowdfunding portals who charge a minimal fee to Entrepreneurs to upload their business plans on their portals, and leave the due diligence / rest to Investors and Entrepreneurs discretion.

A good Company and Entrepreneur almost always get funded and receive follow up financing from their prior investors. VCs typically tend to do deals in syndicate, which could include various combinations of other VCs or Crowdfunding Portals.  However, a lot of that depends on the Company ownership, deal structure, the situation, and Entrepreneur’s preference.

2. Skin in the game support
If you take the top few billion dollar startups and average the age of those Entrepreneurs at the founding, its less than 30 years when they embarked on the journey of changing their industries. At that stage, an Entrepreneur needs lot more than just financing, for example, domain expertise, PR & marketing, recruiting, an exit strategy, and NIN.VC or VC’s in general are able to provide them all that with the help of our network of partners; which may not be the case with Crowdfunding platforms.

3. Exit Strategy
Once any investment is made, the Investor starts thinking about an exit. How and when will they see a return on their investment? Private companies generally attain an exit via an IPO or M&A transaction. NIN.VC or VCs in general have the knowledge and expertise to guide the Entrepreneur through that process, which is the kind of support Crowdfunding portals again might not be provide.

We are now living in exiting times and on the verge of a financial revolution, where not only the funding sources are changing, Entrepreneurs now have options with exits as well. With Loyal3, Click IPO, etc., Entrepreneurs can opt to go retail vs. solely relying on traditional Investment Banks or Institutions when it comes to an IPO.

NIN.VC is also a unique and first of its kind attempt to bring Venture Capital retail, it allows people the freedom to directly invest in a fund with an amount of their choice, which leads to a better financial reward system. NIN.VC provides diversification; we take board seat on all our investments and lend the necessary support that an Entrepreneur needs to build a business, like they would get at a traditional Venture Capital fund. And are also in a position to gauge and be a part of the valuation process when it comes to addressing dilution and follow up financing rounds. However, the most IMPORTANT part that investors cares about is the ability to direct invest and enjoy direct returns, which is not the case with a traditional Venture Capital fund.

NIN.VC has the best of both worlds. We’re a hybrid between a traditional Venture Capital fund and a Crowdfunding portal. Another feature that is unique to NIN.VC is transparency. Investors can attend our monthly calls, check our Facebook, Twitter, LinkedIn, NIN Ventures TV, etc. for more recent activities at NIN.VC. Learn more about how NIN.VC is different / better from an Investor’s perspective in Alternative Crowdfundingwith NIN.VC and Future of Venture Capital: Crowdfunding.

About Crowdfunding and NIN.VC:
Crowdfunding is spread across several types of funding models including rewards, donation, equity, and debt / lending. The two most popular types of Crowdfunding methods are Reward and Equity. For rewards based Crowdfunding, Entrepreneurs pre-sell a product or service to launch a business, and some times even in return for gifts or thank you notes. For equity Crowdfunding, the backer receives share of a company, usually in exchange of the money pledged. For NIN Ventures (or NIN.VC), it would be limited partner interest in the NIN Ventures Technology (QP) Fund. To learn more about various Crowdfunding models, read Crowdfunding Matrix

NIN Ventures Technology (QP) Fund is currently available to "accredited" individuals / firms for a minimum amount of $100,000 using multiple investment options like self-directed IRAs, defined benefit plan, digital currencies (E.g. Bitcoin, Litecoin, Dogecoin), or a regular checking / savings account. NIN Ventures invests in series A & B rounds of 3D printing, the 4th industrial revolution, cloud computing, education software, and other disruptive technology companies.
* An accredited investor is an individual with an income of more than $200,000 per year, or a joint income of $300,000, in each of the last two years and expect to reasonably maintain the same level of income OR have a net worth exceeding $1 million, either individually or jointly with his or her spouse, excluding the primary residence. For an Entity, any trust, with total assets in excess of $5 million qualifies.


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