There’s a crowd gathering in Las Vegas, and it has nothing to do with showgirls, performing tigers, or the world’s largest pool party. Thanks to a $350 million investment from resident sugar daddy and lead cheerleader Tony Hsieh, the Downtown Project is revitalizing a part of the Sin City that couldn’t be more different from “the Strip.”
One of the bright spots in the revitalization is the rapidly growing entrepreneurial and startup community. The fact that $50 million of the above investment is set aside as the VegasTechFund hasn’t hurt the effort. The Fund is partnering with the Startup Weekend series and Los Angeles-based crowdfunding platform Crowdfunder to host a big shindig this summer: Las Vegas Startup Weekend.
“Las Vegas is one of the most exciting startup communities to be watching right now,” says Startup Weekend CEO Marc Nager. “With the Downtown Project taking hold and encouraging the rest of the ecosystem to really excel, entrepreneurs all around are taking notice of the vibrant startup scene here. It is incredible to see the vision of the Vegas Tech Fund and Crowdfunder coming together, and Startup Weekend is excited to be a big part of it.”
As part of the upcoming event, Crowdfunder will be using its platform to host CROWDSTART LV, a contest where startups can compete for the opportunity to pitch the Vegas Tech Fund. The winner could receive up to $500,000 in investment and favored son status within the community. According to fund partner Andy White, “It’s exceedingly rare that companies get to pitch us directly.”
After competing companies create their fundraising portfolio on Crowdfunder, participants from around the country will rate and vote to determine a winner. Although full blown crowdfunding is not possible yet — given the need for the SEC to finalize regulations — this is the best model yet to combine the social proof and market validation of crowdfunding with raising real cash from real investors.
“We’re looking at this as a great way to prove out the crowdfunding methodology,” says White. “We’ve got to figure out what it takes to get a quality feedback loop from voters and then how does that correlate with opinions of panel of judges.”
Crowdfunder is looking at this contest and a similar CROWDSTART event currently underway in Los Angeles as ways to support crowdfunding and in early stage funding — which CEO Chance Barnett calls “two sides of the same coin.” While his company can’t crowdfund businesses, yet, it’s using these contests as a way for companies to be vetted by communities and for communities to find and connect with those entrepreneurs they want to support.
One of the big litmus tests for Crowdfunder and the plethora of competitors in its space will be this ability to identify and evaluate companies. “Crowdfunding platforms can help crowdfund investors make better investment decisions through signaling, data, and social/identity related information,” says Barnett. “People invest in people as much or more than ideas. That’s why crowdfunder as a platform highlights both people and companies, and in the very near future, ‘communities’ that model real world investment ecosystems.”
The company has big plans for providing founder education and mentorship through original content and partnerships with groups like Startup Weekend and the Downtown Project. “[We’re thinking a lot about] how to create an entrepreneurial environment that helps educate and mentor great founders and get them to focus on the right things, grow, find a customer base, and achieve sustainable revenue streams,” says Barnett.
“We think crowdfunding can be not just be a money source but a smart money source,” says VegasTechFund’s White. “As with anything new, there are still things to be figured out, but we’re really excited about the possibilities.” Unlike several other VCs that I spoke to recently, White said his firm would absolutely be open to funding a company that had raised crowdfunding or even to allocating a portion of an ongoing raise to “retail investors.”
The Vegas Tech Fund has announced six investments to date, one of which came from the Startup Weekend community. Crowdfunder and the Downtown Project hope to host a similar CROWDSTART competition in the near future for local non-startup small businesses.
[Disclosure: Tony Hsieh is an investor in PandoDaily and NSFW Corp.]