There’s a new crowdsourced fundraising platform in town. Launched November 30 in public beta format, ProFounder gives small business owners based in the U.S. the option to raise funds through a public and/or private fundraising round. ProFounder has been running in private beta for the last year, since being launched by Jessica Jackley and Dana Mauriello.
Private Investment Opportunities has entrepreneurs involving friends and family members. After developing their personal fundraising website, entrepreneurs send an invitation by email. Once potential investors pledge amounts totaling the goal amount, all the investors sign term sheets and send funds. Investors get a share of business revenue and also any other incentives offered by the entrepreneur.
Public Investment Opportunities allow entrepreneurs to have access to a larger number of investors – by using social networks, contact groups, or even people who randomly stumble across the ProFounder website. Like with Private Investment Opportunities, the entrepreneur develops a personal fundraising website and once the goal has been reached through investment pledges, the money is collected and term sheets are signed. Investors also get a share of business revenue and other incentives offered by the entrepreneur. The major difference between Private and Public is that entrepreneurs can choose to pay revenues above and beyond the initial payout amounts to a non-profit organization. “For example, if you offer two percent of your revenues to investors over the next five years and within two years, everyone has been fully paid, then the next three years of two percent of your revenues will go to the nonprofit.” -GreatestBlogs
Entrepreneurs must apply to ProFounder and then develop their personal fundraising website and business profile. No money is actually collected from investors until the goal is met. If the goal is not met within the agreed-upon time frame, the fundraising round is ended. If the goal is met, the money is collected and ProFounder takes five percent of each public raise and a flat rate of $1,000 of each private raise.
To learn more, or to check out the public investment opportunities, check out ProFounder.