Pozible shifts focus to China – Industry appeals to the Federal Government to act now on Crowdfunding Reforms

On the 28th of May 2014, the Corporations and Markets Advisory Commission (CAMAC) hands to government its policy opinion on Crowd Sourced Equity Funding (CSEF).

What happens next is likely to be nothing (but possibly interesting).

There are a few options from here.

  • The government takes the policy opinion as writ and starts the process of enacting legislation.  However, given the current horse-trading and issues with the budgetary legislation the government is trying to get through, the swift introduction of new legislation seems unlikely.
  • The government takes the policy opinion as being in the “too hard” basket or “too risky” basket and shelves it.  Essentially meaning nothing will happen.
  • The government takes the policy opinion as out-of-date, lacking industry consultation and therefore concludes that more consultation is required.  The effect being that nothing happens.

So in all likelihood Equity Crowdfunding in Australia will not happen in the next 12 months.

Is this a problem?  Yes.

Why?  Well it’s a problem because we are missing out on the benefits of CSEF.

Australia is missing out on the benefits of releasing small amounts of money from large numbers of citizens to support causes, business, inventions, research and innovation.

At a time when the government has withdrawn money from Science, Innovation and Commercialization through various budget cuts to the CSIRO, IIF, Commercialisation Australia and the likes, having the citizens “fill the gap” makes inherent sense.

As an example, the recent budget has withdrawn many of the match-funding grants for the startup ecosystem.  These grants meant government would help Series A stage startups with match-funding.  That means whenever private funding contributed a dollar, so too would the government via Commercialisation Australia.  Not anymore.

With CSEF legislation likely on ice, there isn’t another viable means of plugging that funding shortfall from within the ecosystem.

This is not good news for the startup ecosystem.  This interview from Jonathon Barouch sums up brilliantly the state of play for the startup ecosystem post budget.

The second issue is the infant crowdfunding intermediaries (the ones that would be market-makers) in Australia are withering, dying or packing up for greener pastures.

The most successful non equity platform from Australia is Pozible with over $20 million in pledges.  Pozible is also the most interesting case study.  They have built and are ready to fire with equity-based crowdfunding platform under a separate brand, but have basically put their plans on ice.

Instead they have continued their rewards-based crowdfunding success by taking on new markets like China.

Yep, you heard it right.

Pozible will be the Kickstarter of China, not Kickstarter.

Much of this is credit to Rick Chen (originally from China) and Co-Founder of Pozible.

The withering intermediaries include the Australian Small Scale Offer Board (ASSOB).  ASSOB claims to be the oldest Equity Crowdfunding platform in the world operating for nearly 12 years under an exemption in the Corporations Act.

They are not small by any means having raised $132m over 12 years via this exemption for companies using their board.   But let’s assume a commission to the intermediary of 5% was in place, that’s still only a run rate of $500k per year. (Ed: Many of the sponsors make their money from consulting and preparing information memos)

The lack of clarity and legislation around CSEF is stopping ASSOB growing to levels approaching that of foreign contemporaries like or Crowdcube in the UK.

The “dying” intermediaries are those that launched with the expectation of CSEF legislation coming quickly, meaning they could benefit from rewards-based crowdfunding and equity-based crowdfunding and along the way pickup bigger deal size and deal flow that would make them sustainable.

The legislation hasn’t come (and probably won’t) and they’re essentially run out of runway.  For example, iPledg, who’s CEO, Bryan Vadas states “iPledg continues to march on with its head above water, yet is denied the opportunity of generating substantial revenue by providing equity crowdfunding for creative, commercial, charitable and community spaces”.

Perhaps the most telling example is Australian crowdfunding platform Sproutback.  Sproutback CEO Brett East says “because of a lack of equity crowdfunding within Australia, we are forced into licensing or selling our technology platform in order to be sustainable.  There is no other viable way at this stage”.

Crowder, and events based crowdfunding platform has also disappeared from the local scene (and online) with key staff now residing in New York.

So there you have it.  The delays, stalls and likely non-action of the government will mean that a promising line-up of intermediaries in Australia are “withering”, “dying” or heading “off to greener pastures”.

When (or if) Australia does engage like the rest of our trading partners in equity-crowdfunding there will be no home grown talent to make it work.

Perhaps this is why Malcolm Turnbull decided on the day that VentureCrowd launched its retail fund (VentureCrowd is operated by an Australian VC firm with access to the best of the Australian startup ecosystem), Malcolm was spruiking on behalf of Israeli equity-crowdfunding platform OurCrowd.

You may gather from this article a level of pessimism about the future of equity-crowdfunding here in Australia.  But the author would like nothing more than to be proven wrong.

All is not lost.  The government could;


  • Act swiftly to engage the willing known intermediaries like ASSOB and Pozible.
  • Enact new legislation (as we hope is suggested by CAMAC) that could remove the current barriers (like the 20/12 rule and non-solicitation rule) and encourage mum-and-dad investors (not just sophisticated investors) to join the crowd.
  • If such legislation were to be enacted, say before the end of this financial year the startup ecosystem would embrace it and it would take some of the sting out of the budget cuts.
  • In turn, this would encourage new intermediaries to establish quickly and drive capital flows from citizens to projects that inherently had the backing of the people from a financial and market sense.


Lets hope we see swift sensible action, but lets plan like there won’t be.

Andrew Ward CEO 3 Minute Angels

Andrew Ward CEO 3 Minute Angels

Andrew Ward is the CEO of 3 Minute AngelsAustralia’s largest massage company and one of my old fellow members of Entrepreneurs Organisation+

Andrew is actively involved in shaping the debate on Crowdfunding and has created a community website to help stimulate discussion and formulate a submission for the Australian Crowdfunding Legislation review.

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6 Steps to Get Your Crowdfunding Campaign to Take Off

Crowdfunding is no longer a fringe concept, it’s a legitimate way to fund your growing business. Whether you’ve developed a service concept, a brand new app, or even an idea for a product you just know will be a hit, launching a crowdfunding campaign is a great way to get the ball rolling.

The question is, how do you garner support for a campaign no one even knows exists?

Here are six steps to getting your crowdfunding campaign to take off.

Start planning for social media way before you launch.

If you’re not already active on social media it’s going to be pretty much impossible to kick off crowdfunding and a social media presence at the same time.

You need to cultivate Facebook and Twitter presences, at the very least, for months before you launch your campaign and it’s smart to set up both business presences as well as personalized, “human” profiles as well.

During the planning phase it’s also smart to investigate other social sites (Instagram, Pinterest, etc.) you might want to us depending on your target market.

Make sure you choose the right platforms.

Freematics - Kickstarter Campaign

Freematics – Kickstarter Campaign

Not only is it important to choose the right social sites to market your campaign, you need to decide where your crowdfunding campaign should live.

There are literally hundreds of active crowdfunding sites, each with their own set of rules and features that appeal to different users.

You’ll want to consider everything from the fee the site charges to the activity it requires to keep your campaign alive.

Consider spending money to make it.

Sometimes it can be genuinely helpful to pay a PR or marketing firm to assist you in your efforts, especially if you want to raise a lot of capital.

It’s also a good idea to spend some cash creating an engaging, aesthetically pleasing campaign: photographs, mock-ups of the product, and even professional-produced videos. People will be more interested in contributing to a cause they think is professionally run and will manage their money well.

Engage, thank, and reward your investors.

Atlas Campaign -

Atlas Campaign –

No one gives money to a crowdfunding campaign without getting something in return whether it’s a t-
shirt or a promise of a fantastic product in the future.

The more you interact with your fans (answering questions, providing follow-up information) as well as thank them both verbally and with free SWAG, the more traction you’re going to get as those fans tell others about their awesome experience.

Viral starts with engagement.

Consistently put out content surrounding your campaign.

The biggest mistake crowdfunders make is to create a fabulous campaign and…let it gather dust. Of course, the initial campaign blast is important but you can’t neglect the rest of the campaign as the first burst of excitement fades.

Consider a blog, a website, magazine interviews, or YouTube videos – anything to ensure people know you are still active, you are making progress and you’re ready to get to work.

Always follow through on your promises.

The worst thing you can do for your campaign is to sabotage yourself by failing to follow through.

Whether it’s a launch date, a ‘thank you’ gift, a prototype or even a charity donation, your campaign is only as good as the level of trust people have in your brand. Once you fail to live up to your promises you’re damaging that brand, sometimes irreversibly.

That’s bad business and it’s something you should to avoid at all cost.

Crowdfunding is a great way to attract small-time investors you otherwise wouldn’t have access to. And it offers more control than traditional money-raising options which is a particular bonus for creative minded startups. Success is in direct correlation to how much time and effort you put in!

Ryan Currie - Bizshark

Ryan Currie – Bizshark

Ryan Currie is a product manager at, with 5 years experience in online marketing and product development. In addition to web related businesses, he also enjoys the latest news and information on emerging technologies and open source projects.


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Five real problems I really think need solving

“Problems are only opportunities in work clothes.”

Henry J. Kaiser US Industrialist   I was talking to a class of University students the other day and they were looking for problems to solve as part of their hardware design subject after a lot of thought this is what I came up with. I believe they are validated and represent real business opportunities.

Prototyping and small volume Manufacturing Machines

English: SMT placement machine Juki KE-2080L a...
English: SMT placement machine Juki KE-2080L at Megger’s Dover site. (Photo credit: Wikipedia)

Hardware is hard and expensive to develop. There are a bunch of reasons around this and it’s usually nothing to do with the cost of the components which are mostly very cheap. Its primarily to do with the lags and lead times involved in building new devices and building prototype circuits and devices and access to the equipment needed to build circuits most of which is located in manufacturing centres in Asian countries.

If you believe as I do that Western economies can start to move their smarter manufacturing back from low cost countries, then the logical extension of this is that we should have the ability to quickly and easily make prototypes and send these into small volume manufacturing locally rather than waste 3-4 weeks trying to get someone overseas to prototype it for you (and then have to do it numerous times until you have a workable product)

Also the cost of putting a consumer electronics product into production is in the millions due to setup costs.

Rapid Prototype and small run manufacturing machines could provide solutions to allow local makers and hardware hackers to experiment and build at low volume to prove out a market before they invest $1000000s in funding a full production run.

I am 75% of the way through a rapid prototype for a wearable device at work and one of the things I can say with some conviction is that the faster you can find errors in your designs and correct and test them the cheaper and faster the overall production will be.

But to find errors you usually have to build, if you have to build you usually have to send it overseas, none of this is easy and can take weeks to months, what if you could build it in your office or garage in an afternoon on a Rapid Prototype Machine.

This would further cut the costs and difficulties of developing hardware.       I know you can make your own single and double layer boards, there are lots of tutorials on the web but its tough to do anything complex on the kitchen table and it is very difficult to get any sort of complexity using etch resist using Toner/Iron/Sandwich maker.

Typically once you are past the breadboard you have to start thinking about Surface Mount components and these are very small and difficult to work with and require special soldering equipment or ovens.

Brisbane based Cartesian Co has created this fantastic Kickstarter Project the EX1 which provides rapid 3d Printing of Circuit Boards using conductive silver nano paint sprayed on like an inkjet.

EX1-3d Circuit Board Printer - Kickstarter

EX1-3d Circuit Board Printer – Kickstarter

The Kickstarter project finishes today and has smashed its target and is a great example of the need for these type of machines

For most of last century a manufacturer and mechanical workshop needed the following

  • Drill press,
  • Lathe,
  • Milling machine,
  • Welder
  • Bandsaw,
  • A massive production line with lots of workers

In this era we need 

  • PCB Fabrication Machine
  • Pick and Place Machine
  • SMD surface mount soldering machine/oven
  • 3D printer (with numerous materials)
  • CNC Router/mill
  • Small Production line full of robots
  • Office full of designers and programmers

Domestic Power Consumption Measurement

solar monitor thingy

solar monitor thingy (Photo credit: djbones)

I recently received a $1500 power bill for the quarter. It seems like a lot, its a big house and has some big water pumps but surely not that much.

One or more of the appliances are consuming a lot of energy it would seem but which one?

So here is the problem I cant tell how much power I use in real time, I can’t tell what devices are using the power.

Neither can anyone else.

No single product seems to be able to tell me where the power is being consumed and how to optimise it.

If you are looking for a huge problem this is definitely huge, every home owner in the Western world is going to continue to be hit with rising power bills far in excess of inflation and are looking for easy ways to reduce this.

Solar Power Storage Systems

English: Solar Power demonstration house A dem...

English: Solar Power demonstration house A demonstration of various forms of solar power technology at the CAT 27588. (Photo credit: Wikipedia)

I want to convert to solar, but apparently its not very economically feasible, the payback is 5 years plus.       In our house and I suspect most houses except retirees, consumption is greatest in the evenings and early mornings and lowest in the day times, which is the exact opposite of solar generation.

And yet almost no one puts in batteries to store the charge generated during the day to power usage during the evening.       Instead they pump their excess power (most of it) it back onto the grid where the power companies pay you peanuts for it and if predictions are true will end up charging you an electricity access fee if you start generating enough power to be self sufficient and don’t need them anymore.

So why hasn’t anyone worked out an energy storage system that balances the generation hours and consumption hours, such a system would make solar so much more effective without changing solar cell technology.  I haven’t found anything except for extremely expensive batteries and not many are being implemented.

If you could harness all of the power every day and store it, the breakeven on Solar would drop dramatically and most users could probably use smaller systems and cover most of their needs. I can tell you that Governments and Power Companies will not like this and will try to cover infrastructure costs by charging for access to the grid even if you are not using power, however in my opinion if you can manage to supply most of your own power, water and if you can substitute solar power for petrol, you will be next decades rich lister.

Defense System against Spying Drones

MQ-1 Predator - Credit

MQ-1 Predator – Credit

Destroying or generally defending against drones from paparazzi or unwanted surveillance will become a must have if you are a celebrity or bizoid, someone will work out how to do this without hurting people and will make a business from products that take down or decoy drones. Some of this may or may not be legal depending on where you live.

Easy system for managing Personal Encryption across all your services

Personal encryption is not easy, its non trivial to get end to end encryption of email, VPN or other services or applications without an IT department.

It is impossible to easily ensure all of your personal data and communications are correctly secured. In the days of NSA mega surveillance or for those living in countries with malevolent Governments this may be a matter of life or death but its exceptionally difficult to get right. Someone who made it easy could charge a premium for this.


What do you think? What problems do you see that are validated problems still not solved? Please leave your comments below.



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Why I don’t like Crowdfunding – Debate – Ian Maxwell, David Drake, Mike Nicholls & Andrew Ward



This article is one of a collection of articles on Crowdsourcing published this week, you can find the others here – Crowdfunding Articles

Ian A. Maxwell is a veteran Technology Entrepreneur and Venture Capitalist. He is currently CEO of BT Imaging, Chair of Instrument Works and Co-Founder of Accordia IP as well as a partner at Zetta Research and an Adjunct Professor at RMIT. He has a PhD in Chemistry and has either founded or worked at Memtec, Allen & Buckeridge, Redfern Photonics, Sydney University Polymer Centre, James Hardie, Viva Blu, Enikos, Wriota, RPO and Instrument Works. You can connect with him on Linkedin

David Drake is a leading equity expert based in New York. He is the founder and chairman of LDJ Capital, a private equity advisory firm and founder of the Soho Loft an events company that produces and sponsors 150+ global events a year on topics such as Crowd Funding, Venture Capital and finance reform.

Mike Nicholls is a Director of a US based Investment Fund, has started and sold businesses and publishes

Andrew “Wardy” Ward is a Sydney based serial entrepreneur who has founded at least 5 businesses including the well-known “3 Minute Angels” and a technology outsourcing business based in the Philippines and is currently preparing a submission to the Corporations and Markets Advisory Committee on changes to the Australian Federal Corporations Act to facilitate Crowd Funding.

This article came about after Ian and Mike were discussing Crowdfunding over a beer, Ian arguing that he didn’t like it and me arguing it was a positive thing albeit with new risks, so we decided to flesh it out and got an International Perspective from David and a local perspective from Wardy.

Risks of Crowdfunding

Ian: There are two broad classes of crowdfunding for tech start-ups:

1.       Product funding prior to product development and/or product release

2.       Micro-equity funding

I am wary of crowd-funding but very interested in it as an experiment. Most modern tech start-ups are working in areas where the ideas are innovative, but not inventive under patent law. This means it is hard, if not impossible, to get patent protection for products. One issue with seeking crowdfunding prior to actually developing and/or releasing a product is that you give away the innovative idea to other entrepreneurs and corporations, who can then run with the same idea.

Mike: This is true, however the vast majority of startups are execution plays not IP plays, very few of the crowdfunded campaigns have created truly inventive products where a patent would be granted (the Kite Mosquito patch is an exception but this was in the Universities years before) . Patents take 3-5 years to be allowed and generally speaking they are not particularly effective as a weapon to defend a small startup.

Ian: I think we are saying the same thing here. The issue with publicizing your product concept before you have produced it is quite a risk, and the risk is that someone else might say ‘thanks for the idea’ and execute the idea better than you can. This is especially the case when you have no patent protection to fall back on, for either protection of product margin or market share, or to hold up your enterprise value in an M&A transaction.

Wardy: Clearly crowdfunding is telling people about your idea pre-money and pre-product.  Yes anyone can then latch on to that idea and then develop it (if they have funds).  But these same copiers will not have a crowd of supporters and if they are funded in a position to latch onto other people’s ideas, they would have copied anyway, so better to go to market with a fan base.

Aside from those startups that have intellectual property which may be patentable, (not that suitable for crowdfunding), in my opinion crowdfunding offers most tech plays an advantage on balance.  Because crowdfunding’s popularity suggests there is abundance of ideas (ideas are possibly a commodity) and it is execution, marketshare, customer base and momentum that matter most to tech plays.  These factors make tech plays that have originated from crowdfunding generally safer / better investments.

Ian: Agreed – many innovations are almost born as commodities – crowdfunding really only exists because so much product development can be outsourced these days, mostly all of it in fact. For example I have just bought a new bicycle seat of Infinity Bike seat off Kickstarter. I would say that if it has any merit that the incumbents will be copying this design very shortly. The bloke who formed the company has totally outsourced production, but he has a very small window of opportunity to develop a sustainable company. Its really a project and it might, just might become a company,

Debt vs Equity

Ian:   I think that crowd-funding for future product development or delivery represents a ‘debt’ owed by the company. This represents a drag on future cash flows and also a restriction of strategic flexibility. There is a good reason why startups traditionally get funded through equity investment prior to product sales, and this is so they can spend all the money they have on accelerating their path to sales and achieving Cashflow positive status. In addition, once having taken cash for products the company is less free to change directions if it finds new competition, technology challenges or better opportunities.

Mike: Agreed, but if you have priced the product properly and the crowdfunds are released to you to complete and produce the product, there is no drag, quite the opposite. If you are launching a crowdfunding campaign without a prototyped product that is nearly ready to make then you have a major problem that could easily come off the rails. I understand Kickstarter has introduced a policy of requiring hardware prototypes to have been built prior to launching a new campaign which makes a lot of sense, Ian as you know better than anyone hardware is hard. A successful Kickstarter gives you your first 1000 or so customers who will most likely be more forgiving than someone buying in a shop.

Wardy: Using pledge-based or rewards-based crowdfunding pre-sold product business do create a ‘debt’, but where legislation is allowing CSEF then it is not a debt – its equity. It has the same economic advantage of direct equity investments by Angels or VC’s, but comes with additional practical benefits like the crowd of advocates.

Mike: I disagree, its a short term liability not equity regardless of the legislation there is no equity being issued (in some cases there is no legal entity, its an individual or a business name), however for all intents crowdfunding provides a very similar risk profile to equity for the startup without having to give up potentially valuable equity and I am fairly certain that most crowdfunding pledgers don’t expect to see their money if the campaign falls over nor is it likely they would ever take winding up action like a large debtor that has not been paid.

I am not aware of any major cases going through the courts in any jurisdiction as yet.  Also there is no upside for the crowdfunder, in fact it is very biased to the entrepreneur but I think this is a good thing, if the product is popular, its a very cheap way to test the market to see if there is appetite without having to launch a business and build a product, factory etc. Content spruikers have been doing this for decades, describe a content product if enough people buy into it, produce the content. There have been many experiments with books as well, Stephen King was giving away the 1st chapter of new books and only completing the book if there was demand.

Wardy: As for crowdfunding making the business less nimble and able to respond to the evident changes required in their business plan – I can see how that could be true.  My personal experience is that with polling and communication to the crowd you can assess the relative benefits of changes to strategy, which makes sense when its rapidly changing landscape such as tech.  If the crowd thinks your change sucks it probably does or conversely if they think it’s a winner they will back that too.

Perhaps this is just my experience, but I have found Angel investors nail down the entrepreneur to a defined business plan that everyone buys into.  The Angels I’ve had (I’ve never attracted VC money) are very reluctant to move (quickly) from the agreed business plan because it changes the management KPI’s and investment boundaries they committed to in the cool rational light of pre-money.  I guess that is Investor specific.

Ian: I would agree that Angels are the lowest in my list of preferred investors. I invest in other people’s companies but only where I can take an active role in the operations of the business. I don’t see this as Angel investing.

Advantages of Crowdfunding


Ian: One of the key benefits of product crowd-funding is its use as a form of marketing to geeks and early adopters when the product development is just about completed. Its a nice way to get your product noticed by a certain sort of person. But promoting a concept too early in it’s development phase is not always such a smart idea as I have mentioned above.

Mike: In the early days of Kickstarter it was about the funding to get something built, now most companies I talk to see it as much a marketing and product launch as raising the funding, in fact many of them often have Angel or VC funding, it has become an extremely effective way of getting a cool product market tested and in many cases where it is newsworthy major press coverage.

Crowdfunding Equity

Ian: I am unsure about micro-equity crowdfunding.  Almost undoubtedly there will be a few winners under  micro-equity crowdfunding schemes but many, many losers. I suspect that the return on investment (ROI) for investors will look like a very skewed Gaussian distribution with a small number of high returns, a handful of medium returns or ‘money back’ for investors, and a long tail of investors that lose all their micro-investments. (sounds like VC except there will be returns J ).

My guess is that this form of asset class will be loss making overall (negative ROI) simply because it is venture capital without the benefits of venture capital selection and mentoring (almost like Australian VC in fact, which has a long term negative ROI). This would mean that any committed investor would, the longer they invest, revert to the mean, i.e. have a loss making position. After a period of time any asset class which are loss-making (adjusted for risk) disappear.

Wardy: Did you say the Australian VC industry (my market) has a long term negative ROI?  If that is true then crowdfunding should surely be used as tool to move this into positive for the VC’s by vetting and de-risking crappy deals so that the only ones they are exposed to is the medium and hot stocks.  There is no reason a VC would come in a later stage and invest in an under-performing crowdfunded entity. Is it also true that the Silicon Valley VC industry has negative ROI, like the Australian one?  Asked in genuine ignorance.

Ian: Australian VC historically has had a negative ROI. Tier 1 Silicon Valley VC is actually above the 20% ROI hurdle, i.e. profitable on economic basis. I have just written an article on the problem in Australian VC, but a quick summary is that the problems are people, fund scale, fund model and deal flow. My feeling is that equity crowd-funding would not solve these issues. But that is a guess only.

Mike: I also think that we have had such a small number of VCs In Australia with such small total funds and numbers of investments that it is statistically non valid, the sample size is too small.

Ian: I don’t know – the data I am looking at has 37 funds between 1985 and 2007, with a mean negative ROI for the lot of them.

David: Yet, we are seeing a lot of crowd funders and online VC structures replicating the single purpose vehicle structure that VCs have used for decades.  OurCrowd, Seedinvest,, and Funders club are the new players and more are coming. Some leading firms realize that there needs to be a lead investor.

Wardy: It’s my view that crowd-funding has a sweet spot between $50k-$100k and approaches limits (regulatory, practical and otherwise over $500k).  This puts them in a different stage of funding to Angels and VC’s who enter on deals above that value.  Equity crowdfunding is thus a feeder to established investment networks/channels.  It sits further up the pipeline.

Mike: I don’t believe we should have purely crowd funded deals. I think we need a hybrid between a professional investor as the lead investor and crowdfunding to make up the volume of the round.

Venture Capital has been pretty broken in Australia for much of the 15 years I have been in around the startup scene. I believe that we will see Super Angels, who otherwise could have been Venture Fund managers, decide to start leading rounds with Crowdfunding taking the rest of the round.

In my opinion the following is an ideal scenario

  • Lead Investor leads $500k round, could be an individual or advisory firm but must put their money where their mouth is.

  • Lead Investor does the due diligence.

  • Crowd Funders follow with $500k-1m.

  • Lead Investor picks up a small capital raising fee for the funds raised

  • Lead Investor is the Director on the board representing the Crowd

  • Lead Investor picks up a similar MER to a VC for managing the Crowds money (this is reasonable in my opinion and is most likely thing to stop crowds being ripped off)

  • Lead Investor gets an extra % of carry for leading the round and sitting on the board.

  • If the lead investor is successful they will have more people willing to back them

This could in fact be a great way for smaller VCs to leverage their funds by allowing Crowdfunders to back them and to still earn income on the management fees.

Increasingly good entrepreneurs who have had successful exits will reject traditional 10 year VC Fund cycles and the pain of raising a fund (especially in Australia where many have failed to raise funding even when backed with Government IIF funds). The flexibility of a crowd model means not having to raise another fund, simply find a great deal, do the due diligence put it up on a crowdfunding platform, do a deal, if you have been successful then the crowd will back your judgment and put their money behind yours. You earn a higher management fee and carry for the work, potentially it could be similar to the management and carry structure of a traditional fund.

David: I have been advising angel networks for over 2 years to embrace crowd funding and become the lead investor of crowd funded campaigns.  The UK has accomplished this with Syndicate Room that has now been operating for over a year. Business angels take a lead investment of at least 25 percent of the raise and crowd funders and other angels can co-invest under the same terms.  They just closed a £590,000 investment.

Ian: It’s clearly early days and what you are describing is the start of an experiment.  Micro-equity crowdfunding looks to me like venture capital with a few positive attributes removed For some its simply a source of cheaper and dumber money. If someone can come up with a mechanism to overcome some of the potential issues, as Mike has suggested (e.g. placing a ‘rating’ on entrepreneurs so the punters are making more informed bets) then maybe things might work out. Having said all that if the whole thing is promoted as a ‘gamble’ managed through the betting shops alongside the horses then maybe it will take off anyway. Compared to investors, gamblers subconsciously do expect to revert to the mean of a negative ROI.

Wardy: Through the lens of a VC there would be two types of deals, good ones and gambles.  But through the eye’s of a CSEF-nut like me there are 2 types of experiences: the ones I have when i interact with other people’s businesses and the experience I have when it’s “my business” (no matter how small your equity stake or voting rights, the experience of “mine” is huge).  Having more people buy in to an idea has a value in “network effect” that mysterious “network effect” must have value otherwise the prices paid for successful tech plays Tumblr, Twitter, Snapchat etc are a ruse.

Ian: I get that – if the primary intention is have fun and be recognised as part of the ‘club’ then I think this model will be a roaring success. I also recall it took a few cycles, 3 or 4, for the current VC model to settle down into something worked. All the negative scenarios had to be understood and then factored out – this is what you see in standard deal docs. It might take a few cycles for crowdfunding to get sorted too.

Crowdfunding vs VC

Ian:    Good VC in Silicon Valley has very special due diligence and supervisory skills. One, a very defined means to select investment based on years of partner specialization in a market segment where they know all the corporations that are buying companies, where they have worked themselves in both corporate and start-up CEO roles. Two, ability to mentor company including finding valued co-investors, new CEO’s and other management, board overview and strategic input, and exit guidance, introductions, and execution. Three, VC’s solve problems with excess capital (in the US).

Mike: Yes this value add is what is expected of the VC, I am not certain this happens in real life.

Ian: I expect to see a lot of  micro-equity crowdfunding pop-up, especially where there are tax incentives for investor/gamblers (as in the UK). Remember it takes ten years or so to assess the value of a new financial asset class, and even longer if there is a macro-economic event (like a GFC) to confuse the results. I honestly hope that a sensible model does emerge for  micro-equity crowdfunding, but you have to remember that there is already too much VC money in the market. Adding micro-equity crowdfunding to the mix will simply depress financial returns for all investors because what doesn’t change is the M&A/listing value of the sum of all the exits – you simply can’t make quality exits by pumping money into the front end creation of start-ups (because quality deals rely on a fixed quantity of quality entrepreneurs). Just for clarification here – across the whole market for start-ups the amount of money going into the sector simply has to be less than the total value of all start-up exits, or else the asset class is loss-making.

Wardy: Is the whole asset class of tech start-ups (incubated, funded and matured the way they are) loss making?

Ian: For the last decade, yes, VC globally has been loss making simply because too much capital was committed to VC early in noughties when LP’s got a little over excited. We are still working through this overhang of excess VC capital and excess availability of new technologies.

Wardy: Also, I’d make the point that the destiny for many crowdfunded business (unlike tech startups) is not to be listed or trade-sold in 3-5 years.  Many crowdfunded ventures will be products of a tangible nature, niche servicing businesses and local businesses that are sourcing equity and customers concurrently.

Ian: None of the key VC characteristics will available for micro-equity crowdfunded deals so one would expect a much lower quality of return on investment. In fact it could be worse than expected since the deals that go to micro-equity crowdfunding might in fact be the deals that are sensibly rejected by VC.  Another by-product of not having VC mentoring is that entrepreneurs will not learn much by failure, and hence the current rule that ‘5 failures of a founder will lead to the sixth success’ will be broken.

Wardy: Might be just me, but if the Australian VC industry has negative ROI, the average Silicon Valley VC has negative ROI and the whole asset class of tech start ups is loss-making, then the business model for finding and funding of these businesses isn’t economic and the VC’s are either not adding the value they believe they are or tech startups is not a good investment with or without crowdfunding playing a role.

Surely Ian can’t be saying VC’s do a good job of vetting, funding and accelerating ventures if my understanding of what he has said (negative ROI for the asset class) is correct?

Ian: Tier 1 VC is good. The overall problems in the sector is that Tier 3 in the US and VC in Australia isn’t anywhere near as good. So one can’t paint the whole asset class with the same brush.

Mike: I agree deal quality and due diligence is a big issue in a crowdfunded deal (as it is in any deal) which is why I think we need a Lead Investor with crowdfunding backing him up.

Ian: Yeah the problem here is that I, for one, as a lead investor don’t want to deal with a bunch of micro-equity crowdfunding punters as co-investors and shareholders. I would prefer to deal with one or a small handful of professional investors that I know and trust.

Mike: What if there was a reward for this which provided a similar financial result for you as running a VC fund (ie carry and management fee) without the pain of trying to raise a fund. It would certainly be more flexible and nimble. At some point this would make financial sense and for you it would lead to leverage you can’t get on your own.

Angellist is running a similar concept called Syndicates

Angellist Syndicates

Angellist Syndicates

Ian: I would have to trial it first before I answer that, or better still watch someone else trial it!

Ian: There may be a disconnect between entrepreneurs and their source of capital. It is human nature to take more care of capital if one knows the individuals representing that capital personally and they are sitting on your board. I expect micro-equity crowdfunded companies to be looser with their fiscal or operational responsibilities.

Wardy: The counter argument is that the crowd minimises the risk of a person being fiscally irresponsible because it is shared with many people if they are.  I’ve known many mates who don’t talk about being ripped off in deals where only a small number of people are players because they feel personally embarrassed at having been swindled.  A crowd thats embarrassed feels rage not shame.  Pity the repeat crowdfunders that are fiscally irresponsible.

Mike: These are reasonable concerns, again having a known lead investor with their own money invested should resolve some of these issues. Also if there is a platform to facilitate the management and corporate Governance of investees companies will be forced by the platform to adhere to the funding rules.

I see a crowdfunding platform which does the following

  • Allows a business to create a fund raising IM (in a standardized template so that they can all be benchmarked)

  • Allows Lead Investors to sponsor a deal (somewhat like a Broker/Underwriter) does for an ASX listing, these would be their mentors and then board directors as well as representing the crowd in critical business matters.

  • Allows comments, questions, ratings by crowdfunders on each deal with funding commitments locked in once committed

  • Perhaps a Lead Investor could have two director seats, one for himself and one for the Crowd

  • The crowd could vote to remove a Lead Investor if they lost confidence (as normal shareholders do now)

  • The platform could have a messaging facility for each company being required to file updates and financials monthly to the investors via the program

  • The platform and the Lead Investor could develop KPIs an investee company and those are reported on in the monthly update

  • All critical business matters which can be delegated to the Lead Investor will be

  • For Critical Business matters that cannot be delegated, the platform can manage the process of calling a meeting.

  • Potentially this could also handle digital proxy voting and digital voting

Wardy: In relation to the CSEF legislation that Australia is considering chief concern is the way intermediaries can provide processes for Issuers that support governance concerns of Investors. This has yet to be tested in Australia, but I would be interested in the UK experience of governance, disclosure, transparency and Investor confidence in deals.  David?

Ian: With many small investors micro-equity crowdfunded companies will have a large administrative burden associated with keeping their investors informed and any process that requires shareholder approval (and there are many of these) will be a logistics nightmare and very expensive. And worse still it will be slow.

Wardy: In most cases the funds and rights of the crowd are pooled to special purpose vehicles that then deal with the crowd-derived investors as a single group.

Mike: I take your point however these can be circumvented by passing a critical business matters provision which the lead investor can exercise for matters such as capital raising, sale of business etc. Again if a crowdfunding platform incorporated a lot of this it would go a long way to solving these issues.

Ian: There are restrictions under corporate law which make many critical business matters subject to shareholder approvals. You can’t get around this at all. And if you try, and the company ever ends up being worth something, you will find yourself in court for ever. Spurious or otherwise, this will happen.

Mike: How about if the platform provided a digitally signed proxy vote?

Ian: One interesting class of finance is Venture Debt. It represents about 10% of start-up funding in the US. This is repayable loan finance to start-ups with high interest. 10% is about the right level since it represents the ceiling of equity to debt levels that mean debt can be repaid with appropriate risk factors and interest rates. Today all venture debt is by managed funds – I think that in the US that  micro-equity crowdfunding could be an alternative and cheaper means to raise Venture Debt. I am sure this benefit wouldn’t passed onto start-ups, but in a competitive market you never know. Cheaper venture debt would be a good thing.


Final Words

Andrew Ward: I’ve found the above fascinating. I’ve drunk the “kool aid” (I’m a convert to CSEF) as it were and think that CSEF is a great economic activity because it creates real businesses (often with markets ready to sell and refer), it un-taps investment classes and far from being a gamble reduces risks of investment.

This discussion is focused on tech rather than product businesses and definitely more than local infrastructure projects where I believe the sweet spot for CSEF is.

There appears to be no science to picking winners and exits are few and disproportionate when they come.  Voyeuristically watching tech plays and the funding avenues at a entrepreneurs disposal is akin to Survivor.  When those entrepreneurs have a high profile its like watching Celebrity Survivor.

If I understood all of the above comments from Ian correctly, this game of Survivor is being played for negative ROI!

If CSEF isn’t embraced by the tech community as a source of good deals and later recognised as a great start to businesses going from “idea to operational”, then I’d be surprised.

However, CSEF is not just a tech play, its about small business, niche business, local business and the experience of “my business”.  Crowdfunding businesses not tech start ups is the future for crowdfunding.

The internet, social media and collaboration pieces merely enabled the human or social desire of people to do with their money something of meaning that has instant and delayed gratification in it for them.  Hence why crowdfunding will sustain and why so many platforms are springing up.

Investing in crowdfunding platforms is a gamble for instance because of the thousands that have popped up there will be only a few in a couple of years time.  If I were a VC looking at platforms to invest in, then I’d be nervous if their core marketing plan didn’t have clearly stated focus to help create real revenue generating business from day 1, like those that sell tangible products or those in the community space (local economics) where the same business model would be rolled out across many geographies.  In essence where people would locally crowdfund and locally consume the services provided by that crowdfunded business.

Taking that dimension of tech plays – high rate of failure and applying it to the high rate of platforms that will fail in the next 24 months is not a fair comparison to how crowdfunding will perform as an investment class over the next 10 years.  Being a bit uppity, I’d say CSEF has as much reason to be buoyant about its future in the real world investment space than has the tech space.  The tech space though I think needs to have a good hard look at itself.  So much talent, energy and creativity going to waste.  Such a weird sales funnel, subject to Zapfs law, Moores law and eroding financial models.  Tech investments are a gamble for VC’s.

So back to how can crowdfunding help tech investors?

Well, in my world I see crowdfunding being pre-seed and seed investment (usually $50k-$100k). The very top of the sales funnel.  Crowdfunding sorts the wheat from the chaff.

Usually that money is pre Angel rounds and definitely pre VC.  Its where Friends Fools and Family operate if the entrepreneur is lucky.

By definition if a deal has been successful at gathering a crowd of investors it now has advocates for customers and that de-risks these now seed-funded ventures when compared with seed-funded ideas that may be pre-revenue and yet to have a database of customers or advocates.

The crowd weeds out ideas that just aren’t that good and delivers a better quality idea.

But the process also weeds out bad entrepreneurs, they have to make a compelling pitch for a start that convinces people they can execute this good idea (at least to the next stage).  They are (country specific) vetted and unable to commit fraud or disclosure breeches  – which reduces DD costs for Angel or VC funders.  And you have real time evidence of their ability to continue to manage their crowd of investors and show you how they will manage your money and expectations.  Finally there is social pressure to perform above and beyond with increased shareholders.  Far from being nameless and faceless these shareholders are a community able and willing to talk and so the entrepreneur is going to be “on game”

The risk of enterprise is smaller with crowdfunding being there at the birth of an idea as it becomes real.  The risk of entrepreneur is also diminished.

There was mention of the concern about shareholder numbers.  But my understanding is that most tech ventures that are crowdfunded don’t take the crowd directly onto their shareholder register and these class of shareholders (the crowd) are pooled for the purpose of keeping the share register friendly for Angel and VC investment down the track.

If that pooled group of shareholders are represented at board level or not would be a decision on a deal by deal basis.  But the risk of that representative being a moron is not higher than the risk of an entrepreneur thats had to put his uncle on the books when his uncle gave him his first $50k-$100k seed funding.

Angels and VC’s can then further improve their odds of backing winners by having lead Angels and syndication alongside the crowd.  That seems to give investors in the tech space greater confidence.


Ian: What I have learnt from this discussion is that crowdfunding in one scenario might be a funnel for VC, but that it might be more useful for the funding of small niche companies that might never need or want VC funding. These companies are pretty much about great design and they use off the shelf technology & service providers to both design and build their products. If the models for crowd-funding are focused on these latter types of companies then the whole thing makes a lot more sense. The role of crowd-funding is then to help turn projects into SME’s, by the use of financial commitment (to the company or their products) of the pre-converted. Surely the internet, if it has done anything for us, has enabled small companies that are totally ‘outsourced’ to efficiently compete with the large global incumbents and, if so, maybe crowdfunding is their natural source of seed capital.


Mike: The one comment (and this is for you Malcolm Turnbull) I think Australia is too much of a nanny state to provide a functioning Crowdfunding regime. (except if you are in WA, then its ok to sink tens of millions of dollars into Mining Exploration Non Limited’s that sink and get re-listed as Tech companies)

Over the last 10 years Australian politics has become increasingly focused on taking responsibility for every dimension of society and incessant rule-making.

I think we will have trouble with this as a country, I believe we will struggle to pass legislation which provides a real crowdfunding framework and I think the Government will try to enforce some form of adherence to the Financial Services Licensing regime and I think the end result will be a watered down sophisticated investor regime where only accredited advisors can help companies get crowdfunded by a small pool of investors.

In my opinion Equity Crowdfunding will probably have to happen in some other country like Singapore that is trying to encourage startups and other means to promote growth companies.

It is my prediction that Singapore is going to become the Silicon Valley of Asia, the programs being offered by Singapore’s Economic Development Bureau are miles ahead of Australia in creating a climate that encourages startups and large tech companies to move to Singapore, they also offer a very easy visa program for your family, submit a valid business plan and they will allow you to enter and leave the country as needed for as long as the business is valid. Frankly they also have a very attractive tax regime and apparently are offering very attractive financial incentives to relocate or startup a business there.

If Australia wants to be competitive on a global basis, they should look to beat Singapore.


As always we encourage your comments. Tell us what you think of Equity and Project Crowdfunding in the comments section below



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The Emerging Trend in Entertainment: Crowdfunding

Adam & Zack Braff - Credit

Adam & Zack Braff – Credit

Look at Scrubs star Zach Braff who, after appealing to his fans to support his indie film “Wish I Was Here,” raised more than $2 million in less than 30 days on crowdfunding site Kickstarter.

When its TV network canceled the show “Veronica Mars,” creator Rob Thomas wrote a film script to continue the series. Warner Bros. passed on the project—so Thomas and star Kristen Bell took to crowdfunding and raised $5.7 million in 30 days.
Crowdfunding in Entertainment

Online crowdfunding can be traced back to 1997, when UK band Marillion asked fans to donate $60,000 for its US tour over the internet—in effect pioneering crowdfunding.


“Wish I Was Here” Wins

The passionate support of Zach Braff’s fans is what actually enabled him to raise the bar, getting about $8 million in additional funding, not just domestically but also from international sources like Cannes financiers. Although the inclusion of international investors brought criticisms from his fans, Braff explained that the funds they brought will enable him to fulfill his plans for the movie.

While Braff is engaging and funny on his Kickstarter video campaign, he gets serious with one of his posts on his Kickstarter page.

“I’m sorry for the hoopla,” he wrote. “I’m sorry if your friends think you’ve been duped. But you haven’t been. This is real. Crowdsourcing films is here to stay.”

Veronica Mars - Credit

Veronica Mars – Credit

Victory for “Veronica Mars”

The Veronica Mars Movie Project ran from March 13 to April 12, 2013, with a goal of $2 million. It was such a smashing success that it set Kickstarter records for:

All-time highest-funded project in the film category.

Fastest project to reach its goal ($2 million in 12 hours)

All-time highest number of backers (91,585, who raised $5,702,153).

Picture Courtesy of Digital Spy

Jennifer Lawrence – Picture Courtesy of Digital Spy

Silver Linings Playbook, released in 2012, was also financed through crowdfunding—and proved to be both a critical and commercial success. It received nominations from the Academy and Golden Globe Awards, among others, and star Jennifer Lawrence won Best Actress. It was also a blockbuster hit, taking in more than $235 million—11 times its budget.

No Guarantees

Not every crowdfunding project is a winner, though, as former Sabrina the Teenage Witch, Melissa Joan Hart, found out the hard way last week. After asking her fans to “help prove to people that I’m more than just Clarissa or Sabrina,” she had to cancel her month-old Kickstarter campaign to raise $2 million when she came up $1.95 million short.

The Future of Crowdfunding

The power of the fan base has never been tapped with “the ask,” as musician Amanda Palmer succinctly notes in her Ted talks. So on April 30, 2012, she launched a campaign on Kickstarter where fans can download her music for as little as $1. In a month, she raised $1.1 million from 24,000 backers.

Crowdfunding is just that: It’s extending the ask, subtly or not so subtly, and having fans respond. It’s all done online; the asking is free, and the reach is global. The sites take their cut (5%-15%) only after you get your money.

Where historically fans have only been asked to buy a ticket for a show, now they can play a creative role themselves, financing and marketing the films and the stars they believe in. This is the ask at work, empowering your fan base.

But you must build a very strong connection with your fans (like Braff did), or your ask will not be noted (like what happened to Hart).

Producers and directors this year will be resurrecting failed TV shows for the large screen, and crowdfunding is one powerful tool when you need to ask for help. And best of all, you don’t have to give up one single share of stock or profit.

What do you think your “ask” could be, or should be?

About the Author:

David Drake - CEO - LDJ Capital - Credit

David Drake – CEO – LDJ Capital – Credit

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity firm, and The Soho Loft, a global event-driven financial media company helping firms and funds advertise for investors. He is running the Real Estate Investing and Leading Crowdfunding Conference in NYC on Nov 14, 2013. Listen to him speak together with Keynotes Dennis Irvin of Rockefeller Group and Barry Sternlicht of Starwood Capital. Check out: You can reach him directly at [email protected]

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Internet of Things – Big List of Companies, Products, Devices and Software by Sector

I have recently spent a lot of time researching the companies and products in the Internet of Things (IoT) space and decided to list all of these out into a post to make it easy to see who is doing what. It’s a work in progress, it’s not complete (will never be) so please be patient as I add additional resources and information. The original inspiration for this came from a Techcrunch infographic by Matt Turck managing director of FirstMark Capital but it was lacking URLs or any useful descriptions or photos about the companies. It has since been supplemented by about 100 other companies that I have found while looking at the landscape. If you have an interesting new product or startup or we haven’t found you yet,  please Tweet me @mikenicholls88 or tell us your story here and we will add it to the list, if it looks interesting we may even publish a separate article on it.


Hardware Platforms

Arguably the device that launched a 1000 startups. Arduino is an open-source electronics prototyping computing platform based on flexible, easy-to-use hardware and software. It’s intended for artists, designers, hobbyists and anyone interested in creating interactive objects or environments. Available in numerous different sizes shapes and even flexible or fabric based computing devices and hundreds of software programs called Sketches allows you to experiment with controlling devices and chips by downloading the sketch to your Arduino which is hooked up to your sensor, device, robot, UAV or other device to be controlled.

Arduino- Models 2
Arduino Models 2

Intel Galileo



The Intel® Galileo board is a microcontroller board based on the Intel® Quark SoC X1000 application processor, a 32-bit Intel® Pentium® brand system on a chip (SoC). It is the first board based on Intel® architecture designed to be hardware and software pin-compatible with shields designed for the Arduino Uno* R3.

This platform provides the ease of Intel architecture development through support for the Microsoft Windows*, Mac OS*, and Linux* host operating systems. It also brings the simplicity of the Arduino integrated development environment (IDE) software.


Raspberry-Pi Rasberry-Pi The Raspberry Pi is a credit-card sized computer that plugs into your TV and a keyboard. It’s a capable little PC which can be used for many of the things that your desktop PC does, like spreadsheets, word-processing and games. It also plays high-definition video. We want to see it being used by kids all over the world to learn programming.The idea behind a tiny and cheap computer for kids came in 2006, when Eben Upton, Rob Mullins, Jack Lang and Alan Mycroft, based at the University of Cambridge’s Computer Laboratory, became concerned about the year-on-year decline in the numbers and skills levels of the A Level students applying to read Computer Science. Rasberry Pi cost between $25-35


Gadgeteer This is Microsoft’s attempt at the smart devices and internet of things space. Microsoft .NET Gadgeteer is an open-source toolkit for building small electronic devices using the .NET Micro Framework and Visual Studio (including Express editions). Gadgeteer combines the advantages of object-oriented programming, solderless assembly of electronics with a kit of peripherals, and support for quick form-factor construction using computer-aided design. gadgeteer_logo

Gadgeteer modules - Credit Microsoft
Gadgeteer modules – Credit Microsoft
Gadgeteer - Rover 5 Tank Chassis - Credit - Microsoft
Gadgeteer – Rover 5 Tank Chassis – Credit – Microsoft


beagle_logo_hdr BeagleBone Black is a $45 MSRP community-supported development platform for developers and hobbyists. Boot Linux in under 10 seconds and get started on development in less than 5 minutes with just a single USB cable.

Beaglebone - Credit
Beaglebone – Credit




Electric Imp The imp is a powerful, yet tiny, hardware module that runs the imp OS. Our operating system provides the foundation to build advanced features and services for your devices, and it works with the imp Cloud to provide seamless and secure connectivity of your devices to software, third party services and external servers.

Electric Imp
Electric Imp

Hardware Variations and Accessories

Earthmake Touchscreen LCD for Arduino platform


Seeeduino Film

Seeeduino Film
Seeeduino Film

Seeeduino Film is a Arduino chipset mounted on a Flexible circuit, it is only a few mm thick and around 20mm wide by 70mm long, having used these ourselves I can tell you it is tiny and so light and very flexible, chips notwithstanding.

 Communications Hardware


TST Sistemas

TST -IOT Device TSmarT supporting ethernet, wifi, zigbee and  nfc or rfid?

TST – IOT Device TSmarT supporting ethernet, wifi, zigbee and nfc or rfid?

TST is a high-tech start-up founded in 2007 with private capital as a spin-off from Network Planning & Mobile Communications Lab at the University of Cantabria. They have recently announced an IOT Device called TSmarT which supports ethernet, wifi, zigbee and nfc or rfid all in the same device.

Software Platforms and Frameworks



Riot - Internet of Things Platform RIOT is an open source software platform that bridges the gap between operating systems for WSNs and full fledged operating systems currently running on Internet hosts. RIOT provides a uniform programming interface across a wide range of devices, allowing multi-threading with standard POSIX API with very small memory footprint, starting from 1,5kB RAM and 5kB ROM (without network stack). By design it provides energy efficiency, reliability, and real-time capabilities, based on a modular, microkernel architecture. RIOT implements a microkernel architecture. In addition, RIOT add native support for C/C++ and provides a TCP/IP network stack. RIOT_network_architecture_dark_preview Advantages of the RIOT architecture thus include: (i) high reliability and (ii) a developer-friendly API. The modular microkernel architecture of RIOT makes it robust against bugs in single components. Failures in the device driver or the file system, for example, will not harm the whole system. RIOT allows developers to create as many threads as needed and distributed systems can be easily implemented by using the kernel message API. The amount of threads is only limited by the available memory and stack size for each thread, while the computational and memory overhead is minimal. RIOT supports current Internet standards, such as 6LoWPAN, IPv6, RPL, TCP, and UDP.


Carriots We are a spanish startup offering a Platform as a Sercice for IoT projects. Powerful rules engine (Groovy scripting), data storage and project management. And its free up to 10 devices, enough to build your first IoT project.


Connect all kind of devices to Carriots to gather data and build applications for them


Use our HTTP RESTful API to push and pull XML or JSON encoded data


Take full control of your machines using the 2 way communication protocols.


Carriots let you define your rules in your apps. Your connected objects become smart


 I particularly like the Beer Flowmeter


Developer Portal for Internet-of-Things, looks like a beta service.



Build your device by connecting sensors and actuators.
Register the device with Lithouse and collect a deviceKey.
Download Lithouse client libraries for your platforms (Arduino, Raspberry Pi etc.) and initialize with thedeviceKey.

And, you will be able to access the device through our RESTful APIs.


Node.js dark Node.js is a platform built on Chrome’s JavaScript runtime for easily building fast, scalable network applications. Node.js uses an event-driven, non-blocking I/O model that makes it lightweight and efficient, perfect for data-intensive real-time applications that run across distributed devices.



Sensinode was recently acquired by ARM. Sensinode provides end-to-end software products that bring IP and web services to the end node, combining highly optimized embedded client software with a scalable management and web application platform. Sensinode’s software brings web services to the most demanding enterprise applications in the Internet of Things.

- nanoservice.pngNanoStack » NanoStack™ 2.0 is our advanced 6LoWPAN protocol stack software product for 2.4 GHz and Sub-GHz radios.
- nanoservice.pngNanoRouter » The NanoRouter™ 2.0 software acts as a 6LoWPAN network edge router, and enables routing between 6LoWPAN and IPv4 / IPv6 networks.
NanoService » The NanoService™ solution provides end-to-end web services using leading CoAP and Embedded Web technology, including the backend web application environment, graphical reference apps and a device libraries. IFTTT is a service that lets you create powerful connections with one simple statement: If this then that.  Each statement is called a recipe. Channels are the building blocks of an IFTTT statement. The various channels could be Facebook, Evernote, Email and Weather; Youtube, Dropbox, or Linkedin. For example a sample recipe for IFTTT will be : IF [New Favourite Video On Youtube] THEN [Share On Facebook] You can also create your own recipes by registering on the IFTTT website.

ifttt If this then that



ThingWorx – M2M Application Platform Thingworx makes it easy to build machine to machine and Internet of Things applications.


ioBridge - Connect things

ioBridge makes it easy for professionals and enthusiasts to connect almost anything to the internet and monitor and control it via their smart phone or web app using our general purpose web gateways.

IO-204 Web Gateway Evaluation Kit

IO-204 Web Gateway Evaluation Kit

IO-201 Wi-Fi Web Gateway

IO-201 Wi-Fi Web Gateway

IO-204 Temperature Sensor Kit

IO-204 Temperature Sensor Kit

IO-204 Temperature and Humidity Sensor Kit

IO-204 Temperature and Humidity Sensor Kit

IO-204 Web Gateway

IO-204 Web Gateway

Gamma PRO Web Gateway and Wireless Endpoint Kit

Gamma PRO Web Gateway and Wireless Endpoint Kit

Buglabs Bug Labs Buglabs developed Swarm which is a cloud-based “Internet of Things” development platform that let’s you easily add new services to your product.  Whether it’s a simple sensor device or a complex industrial system, Swarm provides everything necessary to get valuable new online product services up and running quickly. Swarm

Arrayent The Arrayent Connect Platform enables you to connect your low-cost products to value-added smartphone and web applications with unprecedented low-cost and simplicity. platform

Open Source Platforms


Alljoyn is @Qualcomm open source development platform for the Internet of Everything.

Alljoyn connected home - Credit
Alljoyn connected home – Credit provides a framework to code solutions focused on SmartTV, Automotive, Connected Home and Smart Audio

  • Device Information & Configuration – allows the device to broadcast information such as device type, manufacturer and serial numbers; also allows the user to assign a name and password to the device
  • Onboarding – allows headless and other simple devices to be easily connected via an intermediary to the user’s network
  • Notifications – so products can broadcast and receive basic communications easily (text, image/video, audio)
  • Control Panel – enables a device like a smartphone or tablet to control another product via a graphical interface
  • Audio – so any device with audio can stream it to any set of Alljoyn-enabled speakers, audio receivers and other audio playback devices

Thingspeak Thingspeak_logo An Open Application Platform to designed to enable meaningful connections between things and people.

Nimbits Nimbits is a collection of software for recording time series data to the cloud.

Spark Core Spark WiFi for Everything A tiny Wi-Fi development board that makes it easy to create internet-connected hardware. The Core is all you need to get started; power it over USB and in minutes you’ll be controlling LEDs, switches and motors and collecting data from sensors over the internet!

Xively Xively Public Cloud Xively provides the platform, tools, services and partners that simplify and accelerate the creation of compelling connected offerings. With Xively, you’re free to focus on innovation instead of infrastructure.

Supermechanical TWINE BASIC Twine helps you detect small problems before they become big problems. Get notified of changes in temperature, vibration, orientation and more, even when you’re not home. Get an alert when your pipes freeze, the AC breaks, or the garage door is left open. An external sensor port lets you add features later, such as a moisture sensormagnetic switch, or breakout board. Cloud Shield CLOUD SHIELD Stack Cloud Shield on your Arduino, connect it to Twine, and get email, texting, calling, and more in a jiffy. With Cloud Shield, you can add the ability to trigger any Twine output from your Arduino sketch with three lines of code, so you can focus on your idea and not debugging networking code. It has two capacitive pads for easy input with your fingers or conductive objects, and an LED to let you know when it’s been triggered. Moisture Sensor MOISTURE SENSOR Add a moisture sensor to your Twine, and you’ll be able to detect the presence of water even when you’re not at home. You can get a text message or email as soon as your basement floods or your water heater leaks, and prevent costly damage to your home. Breakout Board Breakout Board Connect the Twine breakout board to your Twine’s external sensor port and instantly get the ability to measure anything with your own digital input (analog coming soon). Each breakout board has a unique ID so your sensor’s name and settings are remembered for the next time you plug it in. It has holes for mounting and easy-to-use terminals for signal, 3.3V power and ground. Magnetic Switch MAGNETIC SWITCH Did you leave a window open? Did someone just open the door? Detect things moving even when you’re not at home. Add a magnetic switch to your Twine, and you can get a text message or email when a door is open or when the mail has been delivered. Have peace of mind when you’re away from home.

External Temperature Sensor

External Temperature Sensor Is your freezer on the fritz? Add an external temperature sensor to your Twine to monitor the temperature in your refrigerator, freezer, or anywhere else you don’t want to stick your Twine due to a hostile environment or a spotty wireless connection.


Twine Screenshot

Big Data

Apache Spark Apache Spark is an open source cluster computing system that aims to make data analytics fast — both fast to run and fast to write. Spark was initially developed for two applications where placing data in memory helps: iterative algorithms, which are common in machine learning, and interactive data mining. In both cases, Spark can run up to 100x faster than Hadoop MapReduce. Spark: Lightning-Fast Cluster Computing

 Tableau Software Tableau-Logo If you start to gather sensor data, pretty soon it gets massive. Imagine keeping someones heart rate, temperature, blood pressure, location, time and any events. Just for one person that is a full time stream, x1,000,000 and it gets massive, trying to use that data to produce meaningful information is challenging. Tableau Server is a business intelligence application that provides browser-based analytics anyone can use. It’s a rapid-fire alternative to the slow pace of traditional business intelligence software.

Tableau Software
Tableau Software a behavioral analytics platform that turns mobile data into health insights Ginger-io Anapsis is a research platform and marketplace for scientific and statistical computing BigEvidence is developing software that improves the way medical providers evaluate and apply medical evidence CancerIQ is harnessing big data to accelerate personalized cancer care FlatIron Health is a business and clinical intelligence platform for cancer care providers Huneo has a health data infrastructure that forms a comprehensive system to monitor human health and provide access to real-time and historical data collected from patients


Robotics, UAV, MAV and other Vehicles

3D Robotics BitCraze makers of the Crazyflie miniature Quadcopter smaller than your hand, capable of being equipped with long range RF.

crazyflie NanSatisfi Sells time for experimental purposes on the Ardusat public Satellite

Ardusat - Credit
Ardusat – Credit

Adafruit Backyard Brains Dash Robotics

Enabling Networks

Wearable Computing



Edisse Edisse is a company I met whilst mentoring at the student incubator at Sydney University. They have prototyped a wearable sensor for real time tracking, fall detection and alerting. Basically it combines a GPS, mobile data, sms and an accelerometer to detect unusual movements ie a fall and then report this to an 3rd party such as the adult children or other carer. The idea is that anywhere in the world a carer can get an alert that their loved one has fallen over and exactly where it has happened.

Edisse Fall Detection Watch & App
Edisse Fall Detection Watch & App

Withings Withings-logo Health monitoring hardware and software, includes a set of internet/app enabled scales, a blood pressure device and app and a baby monitor.

Withings Blood Pressure Monitor
Withings Blood Pressure Monitor


Withings Baby Monitor
Withings Baby Monitor Proteus Digital Health makes a ingestible biomedical sensor, a wearable, peel-and-stick patch, and a companion smartphone app


Evil Mad Science ExploreLabs LittleBits   MakeyMakey Printrbot

Family Lifestyle Leisure Pets Toys Music Gardening Home Improvement



This is a pretty cool device that can attach to just about any smartphone or tablet device due to adjustable playing pads that can move in and out to suit the device. seems pretty good value too at $69 Phonejoy-logo

Phonejoy Smartphone Gaming Device

Phonejoy Smartphone Gaming Device

Home Automation



Ninjablock Australian home control and automation platform. The free Ninja Blocks platform simplifies the process of building web & mobile apps that talk to hardware. Each Ninjablock has both a beaglebone and a Arduino running the system. You can also buy motion sensors, temperature and humidity, window and door contact sensors and also program other sensors into the platform.

Moores Cloud LED Smart lighting system by @mpesce and @kcarruthers. The first product they have produced is initially positioned as the worlds smartest Christmas lights but talking to Kate I can see a big future for programmable LED lighting systems. 50 LED strings are controlled by an embedded computer with Smart Phone apps to drive it. They originally ran a kickstarter which got an amazing $275,000 but fell short of the $750,000 target, however they still managed to get the product built and have sold all bar a few of the first batch., the last few are available here

Moores Cloud - Credit
Moores Cloud – Credit

Energy Efficiency

wattvision-logo This is a pretty cool solution to a problem which I am very frustrated by.

Wattvision-Meter Sensor

Wattvision Meter Sensor

Wattvision Mobile App Screenshots

Wattvision Mobile App Screenshots

Wattvision provides a Smart Meter without having to install a smart meter. It measures real time usage of power and transmits it to a slick mobile and web application. It doesnt go all the way to solving the problem of measuring what each individual device and light does but it appears to be one of the best solutions available. The app provides a great aggregate view with fantastic platform to visualise what is happening in real time with your power consumption.


Y-cam Security solution including a range of indoor and outdoor semi pro and professional Wireless Security cameras, Cloud Monitoring Software and a Baby monitor The cameras support up to 1080HD and some are available with Wireless, Ethernet with power over Ethernet.

Y-Cam Bullet1080
Y-Cam Bullet1080
BabyPing_Monitor New Interfaces





Smart Buildings

Industrial Internet Instrumentworks-logo This company is in stealth mode so there are no photos but I have actually seen the new probe electronics and it looks like a great advancement on a market that is using 50 year old technology. Instrument Works is developing a platform for wireless sensors for portable laboratory instruments. By embedding Bluetooth smart technology into analytical probes such as those for the measurement of pH, conductivity, temperature, dissolved oxygen and turbidity, we are able to connect these sensors directly to smart devices such as iPhones, iPods and iPads. This allows us to leverage these devices superior computational and graphical capabilities, including location and internet connectivity, compared to the existing proprietary products on the market. The lower cost of these smart devices compared to regular analytical style instruments will also benefit users. Greentech

3d Printing

MakerGear Makes a lot of 3D printing gear for other manufacturers and makers/hardware hackers who want to build their own 3D Printers.

MakerGear 3D Printer
MakerGear 3D Printer


Pirate 3D Buccaneer
Pirate 3D Buccaneer – Credit

DOOD Foldarap Printrbot

Building Blocks

Connection Protocols

A single #IoT system with ethernet#wifi#zigbee and #nfc or #rfid? Soon the new #TSmarT line will hit the road!

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@Kickstarter now launching in Australia and New Zealand

Kickstarter now in Australian and New Zealand

Kickstarter now in Australian and New Zealand – Credit is now accepting projects in Australia and New Zealand .

People can start building their projects from 14th October with the official launch on 13th November.

Arguably is the company that has helped launch more new hardware and creative arts businesses than any company in the history and in my opinion it is mandatory for testing new business concepts and products, it is one of the cheapest and most effective forms of testing your product and getting your first customers, especially for hardware products.

Just as with every other project on Kickstarter, backers can pledge to support Australia and New Zealand-based projects from all around the world.

Australian projects will be listed in Australian dollars (AUD), and New Zealand-based projects will be listed in New Zealand dollars (NZD). If you are pledging from outside Australia or New Zealand, you will see the approximate conversion to US dollars before you complete your pledge.

The mechanics of Kickstarter (all-or-nothing funding, rewards, etc.) are identical for all projects. When pledging, however, backers of Australia- and New Zealand-based projects will enter their payment information directly on Kickstarter rather than through Amazon Payments. All pledges will be processed securely through a third-party payments processor.

For Australia-based projects:

  • Pledges less than $10 AUD are charged 5% + $0.05 AUD
  • Pledges of $10 AUD or greater are charged 3% + $0.20 AUD

  For New Zealand-based projects: 

  • Pledges less than $10 NZD are charged 5% + $0.05 NZD
  • Pledges of $10 NZD or greater are charged 3% + $0.20 NZD

If a project is not successfully funded, there are no fees.

You can sign up to launch events in Melbourne on October 27thBrisbane on October 28thSydney on October 31 and November 1; and Auckland on November 5.

10 Ways to Kickstart your Startup – Part 4 – Bootstrapping – Convince your first customers to finance your startup

Startup financing cycle

Startup financing cycle (Photo credit: Wikipedia)

Many people don’t think its possible to get a customer to fund your business, but it really is, especially where you have a product or service that is not a commodity.

Recently when mentoring a startup I suggested this and they were shocked, they didn’t believe it was possible, however some months later they had managed to get one of their new business customer to accept the idea of paying upfront for the still to be completed product (and the revenue arrived before the fundraising they were holding out for).

Many entrepreneurs are stuck hoping and wishing they can raise capital, truth of the matter is it can take 3-12 months to raise your first round (or never), customer revenue on the other hand could only be a few weeks away.


If you are solving a difficult problem and you can convince a few customers you have a compelling new solution (albeit with some rough edges) there is every likelihood that you can convince them to pay up front or pay to develop additional features that meet their needs (which hopefully just happen to be in your roadmap).

This concept is missing from the Startup Financing Cycle graph above and there is every chance that tapping your customers for finance will get you through the Valley of Death or at the very least reduce the amount of capital you need to raise and allow you to retain more equity.


Given you can only grow a business as quickly as you can turn cash (I will go into more depth on how to accelerate your funding later in the 10 Ways to Kickstart your Startup series) bringing revenue forward by getting customers to pay upfront is much more common than you might believe.


Kickstarter is the modern consumer incarnation of this method but it has happened for as long as companies have existed, Kickstarter has just found a mostly frictionless method to facilitate this on a global scale and connect non businesses or would be startups and consumers.



When I started my first business I would insist on payment in advance, we turned over $4m in our first full financial year so I simply didn’t have the cash to fund this and there was no other way for me to do business.


Surprisingly very few people actually rejected this, especially when you explained to them that you were growing so quickly this is the only way you could fund the growth. You have to be ready to be a bit embarrassed about this, but you have to suck it up as it may be the only way for you to succeed.

I am not anti Venture Capital, quite the opposite, however I tell most Startups I meet that their ability to retain their equity is a function of how much pain they are willing to put up with and they are better off turning to VC when they are growing so quickly they can’t fund the working capital required to support the growth, which is a fantastic position to be in.

So a few suggestions on how to do this (primarily for the business market)

  • If you are selling a new technology or type of product, explain to the customer exactly what stage you are at, show them the product, tell them what the risks are and what your plan is, assuming you meet their previously unmet needs and they trust you and they can see the product is going to work for them, ask them for a deposit or get them to place and pay for an order. If the tech guy tells the purchasing and finance guy this is the only way to get the problem solved then often they will simply pay you, it’s amazing to see this turn up in your bank account.
  • If you are selling an existing product and its a large order (above your financing capacity) ask the customer what you can do to make the deal more attractive, for example is there an extra service you could throw in if he can pay upfront, something that might save their team a lot of time but might not take your team much time, or can you coordinate a late night or weekend install/upgrade?
  • If you are selling a service ask for a commencement fee.
  • If a customer has a particular need, tell them you are happy to build it to their requirements if they can fund NRE (Non Recurring Engineering) costs. Ideally the feature you develop will be part of your roadmap and you have managed to get the customer to help fund your development costs.
  • In large roll-outs, get customers to pre-purchase and pay for large orders and release it from your stock as they need it. It’s pretty easy to convince them you will keep it ready for them and they don’t have to worry about delays, you get paid both for the cost of the product and your profit (if you are working with a distributor, place an order on the stock and get it secured but ask them to only part ship for you, that way you only pay as you use it, but you have the customers cash, I will give an example of a sophisticated version of this below with Dells supply chain)


English: Dell Logo

English: Dell Logo (Photo credit: Wikipedia)

One of the best corporate examples of this is Dell. Dell gets paid in advance for the majority of their orders.

When you place an order you pay upfront via the Website (which everyone thinks is normal) but they don’t supply the product for another 7-21 days.

When you place your order they usually don’t even own the parts that they will use to build your product yet.

Here is how it works

  • You place your order
  • You pay upfront
  • The order is sent to the factory
  • The suppliers are required to be within 50km of Dells assembly plants and have their parts and trucks ready to go.
  • Dell orders the parts to make the batch of product they are scheduling that day
  • The supplier trucks are all lined up on one side or outside the plant.
  • When the truck rolls across the plants threshold, Dell now owns the product (note, most companies are invoiced when a shipment leaves the supplier warehouse, not Dell, suppliers don’t get to invoice until it hits their assembly line).
  • They assemble the PC and ship it to you
  • They pay their suppliers in normal commercial terms of >60 days (according to an analysis of their accounts their average debtor days could be as much as 80 days

So if you can convince your customers to follow some or all off the above methods there is every chance you can get your startup off the ground and be doing business without seeking external funding. Good luck

As always I welcome questions and comments, leave a message below and I will respond

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