RAINE MAGAZINE Volume 20 | Innovate

BUSINESS | TRENDS
Innovative Financing with Funding Wonder
At a recent venture funding event put on by Funding Post, Editor in Chief,
Nova Lorraine met a truly innovative entrepreneur with a desire to help
thousands and hopefully millions of small business owners receive funding.
The gentleman was Michael Mildenberger, co-founder of Funding Wonder,
a new social lending concept.
Michael discussed his dissatisfaction with the staggering number
of entrepreneurs that fail in their business, not because they don’t have a
great idea but simply because they run out of cash. He and his co-founders,
Sebastian Storfner and Alan McGlade are determined to reverse this trend
with Funding Wonder. Funding Wonder is a novel way for founders to
receive capital to grow their business. It eliminates the worry of mounds of
paperwork as well as unrealistic guidelines that prevent so many talented
and enthusiastic entrepreneurs from getting the funding they truly deserve.
Michael took a few moments to shed light on how he and his cofounders
will help fuel a new generation of entrepreneurs!
RAINE: Where did the idea of Funding Wonder come from?
MILDENBERGER: The idea started three years ago. Three of our founders
are partners in an M&A firm called CFP Americas and we were thinking
about raising a fund. In our research we came across the concept of raising
money for investments from regular people (non-professional investors)
“the crowd.” The power of this new crowd-funding model intrigued
and inspired us to the point that we decided to found the company
Funding Wonder in May 2013. We also learned during the course of our
research that the debt market is a much bigger market than the equity
market. Meaning that the market of loans to small and medium size
businesses (SMBs) was 20 times bigger than the Venture Capital Market
last year. ( $600 billion SMB Loans, $30 billion VC Equity Investments)
RAINE: What are the benefits of choosing Funding Wonder over a traditional
bank?
MILDENBERGER: First of all, since the financial crisis of 2008 many
community and regional banks disappeared and larger banks hardly issue
loans smaller than $200,000. Therefore, access to capital from traditional
banks dried up. As a result small and medium businesses (SMBs) have to
go thru a lengthy process full of paperwork and often still do not get their
loan approved. For example 80% of the small businesses in Florida could
not get financing in the last 6 months. With Funding Wonder, SMBs can
get a loan faster, easier and with a higher probability than with traditional
banks.
RAINE: How do you differ from other competitors in the crowd financing
space?
MILDENBERGER: Our focus is different. Most other crowd-funding
companies target crowd based equity investments in start-up companies
or have donation based models like Kickstarter. Our focus is bringing
investors together who want to lend money to existing small businesses
with a good financial track record who are looking for a loan of $20k-$150k.
In addition our goal is to be more than just a financial site but to build a
lending community. We believe that major factor of our success will be
the stickiness of our site. In other words, it is important to provide small
businesses with more than just money, but with tools, which help them to
manage their business in a more efficient way.
RAINE: Who is Funding Wonder’s target demographic and market size?
MILDENBERGER: Our target is the $600 billion SMB Loan Market & nonaccredited
investors.
RAINE: How would you forecast your growth over the next 3 years?
MILDENBERGER: We believe our platform will transact over $1 billion in
loan volume in 3 years
RAINE: What has the response been like from the small business
community?
MILDENBERGER: Extremely good. Most of the small businesses have had
an extremely hard time receiving financing and not because they are bad
businesses but because traditional sources do not want to lend them the
amounts they are asking for.
RAINE: What challenges have you had to overcome concerning your nontraditional
means of investing and borrowing?
MILDENBERGER: The biggest challenge is to overcome regulatory hurdles.
Based on the JOBS ACT the US government agency SEC is going thru the
process of implementing a regulatory framework, which will make it a lot
easier for crowd-funding companies like us to operate.
RAINE: Do you see crowd financing as the future of small business loans?
MILDENBERGER: Yes. We believe that crowd financing will become the
preferred model for small businesses to obtain loans in the future. Crowd
Financing will become the way people invest in the growth of the community
they live in. It will not be dictated anymore by the banks, which business in
your neighborhood will be financed and which one not, but by the people
who know and interact with these businesses on a regular basis.
RAINE: What requirements do you have to meet to become an investor?
MILDENBERGER: Currently who have to be an accredited investor. In
order to qualify as an accredited investor you have to have a certain level
of income and net wealth. Only about 5% of the US population fulfill the
required qualification. This means the US government does not allow
95% of our people to participate in directly investing in new or existing
businesses thru crowd-funding platforms
RAINE: How will the US government’s new legislature regarding crowd
funding affect Funding Wonder and other sites such as Kickstarter and
Indiegogo?
MILDENBERGER: Amongst industry insiders it is believed that the Jobs
Act based new legislature will take effect sometime this year. This would
clear the way for the 95% of non-accredited investor to finally participate.
Kickstarter and Indiegogo already include
non-accredited investors as people do not
invest directly in companies, but donate
money and get some kind of product or
service from the companies in return. We
could imagine that these donation based
companies might change their business
model toward direct investments. Funding
Wonder’s concept, business model and
technology was designed from day one
towards non-accredited investors and
loans for existing creditworthy small
businesses, which is a very different
approach than most of any of the existing
crowd-funding platforms have today.
RAINE: How can people get involved in
reaching out to their local legislature in
bringing crowd financing to their area.
MILDENBERGER: In order to ensure
and speed up the process of the SEC as
well as of government authorities in your
home state, we suggest you contact
your elected officials. So call and e-mail
your Congressmen, Senators, State
Representatives and Governor and let
them know that you support any crowdfunding
and crowd-financing initiative in
order bring growth and more jobs to our
local communities.
RAINE: How can an entrepreneur position
themselves for successful funding through
your platform?
MILDENBERGER: There are several things
which make a crowd funding campaign
more successful like including a wellmade
video, which explains your business.
Once a business is approved through our
platform, our team will help and guide
them thru the process of how to make their
funding a success.
Co-founders pictured from top to bottom
Co-founder Alan McGlade, co-founder
Michael Mildenberger, co founder Giovanni
Soleti
Images Courtesy of Funding Wonder
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