Because traffic is Money

Most of us who run websites do so because we want to learn about something and share what we have learned. It’s also a really easy way to communicate with like-minded people. It can sometimes even be profitable. Steve Pavlina, who runs the aptly named blog, claims he makes nearly $2000 $200 a day on his site. Claim Schmaim you say? Well, there’s a 7000+ word essay that explains how he does it. He doesn’t give away all of his secrets of course, or any of his stats to prove it, but it’s an interesting read.

Most importantly, he goes over the different methods that he uses to optimize his site for the different revenue streams along with different ways to bring in more traffic. Because traffic is money.

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Ebay/Craigslist VC venue

I posted a couple of days ago about how I would like to see a VC venue that is similar in structure to Ebay or Craigslist where potential Investors and Entrepreneurs can go to post their startups and invest in said startups(Post 1, Post 2). Jeff Nolan said it couldn’t be done easily. There are too many regulations involved. And he may be right.

However, I found a new(to me) site earlier today. The site is Oddly enough, I found it through my adsense ads on my site. Talk about relevant ads! I took a quick look at it and it is in essence, what I was trying to explain. The one down side? It’s a pay site. In order to make any contacts with investors or entrepreneurs there is a minimum $14.95/month fee. And that only allows for 5 contacts a day. Not sure what exactly constitutes a contact. Entrepreneurs that wish to post a funding request are charged a $29.95 fee for a month listing. Take a look around it. Maybe it can be done afterall and maybe it could be done as a ad revenue supported site? I still see my vision as a free/minimal fee site, but is pretty close to the gist.

Update: Jeff Nolan was kind enough to point out that the terms of service declares the GoBigNetwork to be a “rolodex” and messaging system. Which is how they get around the SEC and other regulations.

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Angelic Venture Capital

Chris Allen wrote an excellent post at Life with Alacrity that he dubbed “On Being an Angel“. It’s a very good post. Of course it doesn’t hurt that he mentions this site. Who says we bloggers don’t have egos? 😉

The post acts as a primer for the differences between Venture Capital and Angel Investing:

All types of venture investment — seed, angel, venture, and institutional alike — carry with it great risks and great rewards. But before we can reinvent venture capital and related venture funding methods like angel capital, we need to understand how it works.

He’s been an Angel Investor for 9 years according to his post and he obviously knows a little about what he’s talking about. It’s definetely worth the read if you ever wanted to learn a little about Venture Capital and Angel Investing. He also has a couple excellent little tidbits at the end as advice for Angel Investors, Venture Capitalists, and Entrepreneurs. Do yourself the favor and read the whole thing through at least once if you have ever had dreams of becoming any of the above.

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More on the future of VC

My previous post about the future of VC caught a few eyes, one of which was Jeff Nolan of Venture Chronicles. Jeff and I have been trading comments back and forth on my original post and I’ve not only learned a few new things, but feel that maybe I should flesh out my VC idea a little in an effort to eliminate some confusion and deliniate the boundaries of the idea. I feel that it is important to mention here that I have no experience in the VC field and I am fairly unfamiliar with investment law. I do think that this is a viable model and with the proper guidance from lawyers, could work. So here are some basic parts:

  • The site would not be subject to investment law or the investment law side of it would be worked out. The reasoning behind this is that if operated along the lines of the Ebay model, it would actually only be facilitating the transaction, not participating in it.
  • There would have to be some sort of regulation as to how the money is transfered.  We don’t want to see people sending someone $1000 for a startup that never reaches full funding and not getting their money back.  My thoughts on this is to have some sort of escrow account for the money that wouldn’t be accessed until the full funding amount was reached.
  • There would have to be a lot of transparency.  As an investor, I’m not gonna just invest in something without seeing some of the financials.  Perhaps a non-disclosure in the membership aggreement for the site?  Or perhaps just a non-disclosure at the financial level on a per startup basis?

I envision this becoming something that VC firms as well as private individuals would visit when looking for a more non-traditional way to invest their money.  I think it goes without saying that the risk would be a lot higher than your average CD or money market account, but the potential returns could make up for that.

I also envision this being not solely for the big startups.  I think it would be amazing to be able to search for the company that is looking for $100,000 to start up a mom and pop store somewhere right alongside the company that is looking for $5,000,000 to start the next Amazon.  Too many of the smaller startups are left to fend for themselves with the SBA and financial institutions because most VC’s won’t touch something that small because the profits are relative to the investment.  An investment of $100,000 may return 20% but an investment of $5,000,000 that returns 3% or less still ends up with more dollars flowing back to the VC.  Most private investors like myself would be extremely happy to earn 20% on our money and don’t have the funds to throw $5,000,000 around.

Anybody out there with experience with the legal side of this that would like to leave comments?  I’m interested to see if I am really just blowing smoke or if this could have legs.

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