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TheFunded.com and the Founder Institute founder Adeo Ressi tells us that the Convertible Equity vehicle provides a fast, cheap and flexible way for angel investors to invest money in a startup, that converts to equity at the time of a future round. The point, he says, is to avoid time-consuming valuation negotiations and allowing a variable amount of capital to be raised.

Basically, Convertible Equity removes the repayment at maturity and interest provisions of Convertible Debt. Additionally, Convertible Equity is “equity” that may have a lower capital gains tax benefit for investors, since it is likely classified as “qualified small business stock”.

Live in the future, then build what's missing.

They grew out of things their founders built because there seemed a gap in the world.

Today our largest marketplaces are for website templates as well as Adobe After Effects templates. When you go to the movies and see cool trailers, you are probably watching something that was made in Adobe After Effects. We also have background music marketplaces which is often used in advertising. The marketplaces are very much an exchange. We branched out from Flash into several design marketplaces.

chicken-and-egg

Our approach was to do a grassroots marketing campaign. We started with content we created ourselves, and we commissioned a little bit of content ourselves. Based on that content, we went over to other sites and started chatting with people to get them to check us out.

It took us six months to build the site. The first night we sold $10. I was disappointed at the time, but looking back I am impressed that we sold something our first day.

We had a lot more people who had joined the site as members but did not transact. There is a group of active users and passive users, and it is interesting to look at that ratio

In 2007 we did a lot to grow our customer base. Some of it was organic growth. The thing about a marketplace model is that buyers stimulate the seller economy, which stimulates authors which in turn stimulates buyers. We also engaged in grassroots marketing, and we tried social media. We started talking about running competitions.

For me the biggest challenge is that you are just getting your first visitors. I would go out and comment on other blogs and comment in forums to try and get people to visit my blog. When it came time to launch a new blog, we would harness traffic from the first blog to promote the second.

Digg during its second week of existence. That was a potent source of traffic back in the day. We have concentrated a lot of social media ever since. To do well in social media you have to build up a genuine profile. You have to get on sites and interact on sites as a real contributing user. You need to establish a network and feed in content. We did a lot of that.

We joined Twitter fairly early on. We built up profiles for the company as well as ourselves. I tried to think of Twitter using a 90/10 rule, meaning 10% might be something involving Envato and 90% of the time I wanted to be engaging followers with engaging content based on the topic itself.

We think a lot of great real relationships are being built through the platform, something that we always hoped would happen, and now we’re actually seeing it happen.

You get to choose directly where your money goes.

I think other people are starting to have the same feeling that they want to have more autonomy about their community or about the businesses they support or just about most things.

evolve into best practices and common leadership – this will accelerate the crowdfunding phenomena towards the $1 trillion market we predict it to be by 2020.  The investor democratization and customer communication involvement crowdfunding allows will trigger widespread corporate implementation by Q4, 2013.

mainly angels at this point – are in for the long haul

and not necessarily for a return on capital.

Establish common language.

Ask a handful of people in various ranks and roles to share five adjectives they'd use to describe the company and two aspects of the business that are unique or valuable. Look for themes or especially strong responses, and synthesize them into a clearly defined description

That clarity leads to a real and relatable persona that helps you build a loyal customer base. "The brands that have been most successful in the social space have humanized their business"