Hello ,

“We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit.” - Extraordinary Popular Delusions and the Madness of Crowds

Title III of the JOBS Act is finally happening. After three years of development, soon a larger universe of people will be able to invest in private companies. It’s easy to imagine a sudden deluge of interest, but we think that there are already natural entry points for new investors via reward crowdfunding, customer communities and equity crowdfunding platforms. We also think data providers are going to play an important role. We’d urge founders to begin working with these groups as they consider working with new investors.

Reward crowdfunding did two important things for startups: it opened up a new source of capital and offered a new source of social proof (for customers, but also investors). It also helped to establish communities of early adopters. We expect crowdfunding backers to be great candidates for new shareholders. It’s no surprise that Indiegogo has already signaled interest in adding equity crowdfunding.

Online communities have been important contributors to startups through everything from word of mouth to product feedback. We believe community participants are another natural group of new shareholders, because they tend to understand companies and their offerings. They chat with other customers and directly with the company and they can see potential issues around product quality or customer support.

Finally, equity crowdfunding platforms have been preparing for the Title III change. They already allow new investors to look at track records of other investors and to invest with or alongside them. Expect to see more celebrities leverage their visibility into syndicates (Shark Tank’s Barbara Corcoran already has an angel.co syndicate, for example). But also expect third-party performance data to become much more important—celebrity may help, but investors expect performance data in other asset classes. Firms like Mattermark, CB insights and Pitchbook are well positioned to help new investors make sense of both companies and other investors.

Do you plan to take advantage of the new funding rules? Yes, I’d love to learn more

[Urban.Us Update] Startup Introductions – we’ve been steadily updating the process, and have put together a guide on startup candidate introductions.

[Startup Candidate] Opportunity Space – is a new marketplace specifically designed for the largest real estate owners in the world, local governments. Help us review the opportunity.

[Startup Candidate] WeSmartPark – provides a better way to connect people who need a parking space with those who have one. Here is how.

[Insights] How to say “No”  – Tim Ferriss shares why he is taking a break from startup investing. His story of a slow slide into too much “Yes” and not enough “No” may feel familiar. Worth reading again as a reminder about the difficulty and value of saying “No”.

[Insights] Distribution is the new differentiator – it’s no longer enough to have an awesome product.  Jason Calacanis explains why innovations in distribution deserve much more attention.

[Insights] Urban Innovations Report from the World Economic Forum highlights – 10 opportunities to help cities manage urbanization and climate change.

[Startup Update] How Skycatch Automates Construction – a great overview of how Skycatch is moving far beyond flying robots (and the U.S. market) to solve their clients’ real problems.

[Startup Update] Not Another Silly Hoverboard Toy – the Wall Street Journal tests the Onewheel. So does Playboy. And Gear Junkie. All in time for Back To the Future Day.

Oh, yes. There are 51 jobs at 11 Urban.Us portfolio companies!

Best,
Shaun, Stonly and Anthony

P.S. Now you can join us on Slack

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