September 20, 2022
In our recent webinar series held in August 2022, our guest speaker Barry O’Reilly, co-founder of Nobody Studios, gave his insights on a one-of-a-kind way to secure funds for a startup studio: equity crowdfunding.
Make sure to follow us on LinkedIn and join our LinkedIn group to not miss the next webinar sessions. If you want to watch the full conversation, make sure to watch the recording of the webinar. The recordings of previous sessions are available within StudioHub premium membership packages. But now, let’s dive right in …
Equity crowdfunding is an established way for startups to find investors. Despite its appeal, at StudioHub we are not aware of any Startup Studio that has used it as an avenue to fund its venture—until now!
Nobody Studio is a high velocity venture studio based near Los Angeles, California. Within the next few weeks, Nobody Studios will be the first to leverage this unique fundraising model, and we’re excited to see its impact on the startup studio model.
We want to create a discussion about this new approach: what do you think are its advantages and downsides? Would you also like to try it in your studio? In the meantime, in the next paragraph, you can read how Barry explained the reasoning behind the choice taken at Nobody Studio.
Barry O’Reilly: «The idea of crowdfunding stems from the JOBS Act, signed into law by President Obama in the United States. It opened up the option of equity crowdfunding to raise capital for businesses. Interestingly, not many venture studios have gone down this path. We haven't been able to find anyone who's ever done this before, so, to our knowledge, we're going to be the first venture studio to use this mechanism. The idea behind equity crowdfunding is it allows retail investors to own and invest in early-stage companies.
In the US, if you want to be an Angel investor, you have to be an accredited investor with a net worth of over $1,000,000 and an average salary of over $300,000 for several years. So it's a small community of people that are even allowed to invest in early-stage startups. And even then, a lot of this comes down to access: what networks are you in, the people you know, getting the opportunity to see the early-stage businesses. It's a closed system like a lot of venture capital.
Added to that is the concentration of deals offered by VCs to companies based in California you can see how limited the opportunities for both investors and founders can be.
We believe the world has fundamentally changed and accelerated through COVID. We have a fully distributed business. I live in Manila, our Chief Nobody lives in Orange County, we have our marketing and capital leaders in New York and engineers in the UK, Italy, Israel—every continent but Africa where we’ll be launching soon! If we went to a VC three years ago and talked about how our business worked, they'd say a company like that could never exist. But yet here we are today, we're shaking up the way businesses can be built.
We want people to have opportunities to be part of the venture building ecosystem and start to create a mechanism where anyone, whether you're a nurse or a teacher, can start investing in early-stage companies and back the future in which they believe.
Our studio is named Nobody for a reason: we want to allow everybody to be somebody, whether they are nobody or not. And that's the real power of what we're trying to offer by exploring this opportunity of equity crowdfunding: anyone would be able to own a piece of the studio that we're creating.
That's a fundamental shift in innovation and in how venture building is done because they become part of our community, but also in how ownership in the company is done. And in the first instance, that's how we will fund along with Angel investments which we've been doing to fund the company to date.
A portion of our company will be equity crowdfunded, allowing anyone to be part of that system. Anyone who invests in nobody studios will also be able to invest in any company when we build on external capital. And there's nothing to say that as we get great at doing equity crowdfunding for the studio we wouldn't start to offer that mechanism for some of our ventures as well.
And that's the appealing part of this. It starts to disrupt the current venture building and funding ecosystem. And we sort of start to bring that innovation to the market where anybody can be a venture investor and builder: I think that's going to be pretty fascinating. »
Barry is an entrepreneur, business advisor and author who has pioneered the intersection of business model innovation, product development, organizational design, and culture transformation.
Barry is author of two international bestsellers, Unlearn: Let Go of Past Success to Achieve Extraordinary Results, and Lean Enterprise: How High Performance Organizations Innovate at Scale—part of the Eric Ries series, and a HBR must read for CEOs and business leaders. He writes for The Economist, and is faculty at Singularity University.