99designs » Leading Designer Marketplace for Logo Designs and More…

99designs.com

Is a great example of a marketplace bringing talent and ventures together in a fun and highly rewarding way for both.

If you want to design a logo, business card, web site, etc, you simply create a contest, set a prize and let the 30,681 (as of today) registered artists have a go at it.

Tax benefit of talent-funding - Candians only please

As a side benefit to participating in a new venture as a talent capitalist, there are tax incentives.

In Canada you can make up to 750k$ (lifetime limit) in capital gains TAX FREE if the following conditions apply:

- You invested in a small business
- Business is based in Canada
- You have kept the shares for 24 months or more
- A bunch of other accounting conditions to which most start-ups comply

In other words if you have 5% of a venture and the company sells for 1M$ 2 years after you got the shares. Your 50K$ is tax free.

Certain conditions apply.

See: TaxTips.ca - Small Business - Capital gains deduction

When the idea is too small for VCs

Robert Ochtel writes a great articel about which companies are good VC targets:
Venture Capital – It’s Not “Welfare” for Start-up Companies

Hi conclusions are great and most of them apply to any venture of any size. Mainly:

1) Look at the business from the investor point of view and not from the founders prespective
2) Acquire customers early and often
3) Focus on clients rather than technologies or processes

He makes another point that some companies that will reach a plateau of say 5M$ revenue after 5 years are great lifestyle companies for their founders and not a good venture capital investment.

One of the main reason is that executing a deal is a costly endeavour both from the due diligence and legal and maintenance perspective.

We believe that small injections of talent-funds do not require as much overhead, because of a number of reasons:

1) Investment is less, so the risk of making a mistake is less
2) The talent will discover a lot about the realities of the business while working and can pull back early
3) Since multiple poeple are investing small amounts wisdom of crowd mechanisms will evolve as opposed to big bang approch of traditional VCs.

Call us at liquidcapitalism at google dot com.

Traditional Venture Capital is shrinking. Who will fund the new idea?

TechPulse 360 reports that the number of VC firms is rapidly shrinking:

Venture Capital Industry To Shrink Further, Sonsini Predicts

Combine this with a general lack of credit in the market and higher unemployment.

In other words traditional capital is lacking or refusing to participate in the economy. Talent is being wasted as old companies are losing market share and new ones are not being funded.

Clearly this is a great time to think about talent-funding, both from the venture and talent owner point of view.

Call us at liquidcapitalism at gmail dot com :)

Everybody is a capitalist

When Adam Smith wrote the Wealth of Nations in 1776, the industrial revolution had just started. He described a world where butcher, baker and brewer were the engines of production. Individuals were in control of their destiny to a large extent as they had liberated themselves from the feudal control over their livelihood, and have not yet experienced the concentration of means of production at the height of the industrial revolution.

Of course this where Karl Marx comes in. In 1867 Das Kapital is published and it describes a much different world where the worker is back to serf-status and the industrialist controls all the means of production.

Our world today is a mixture of both realities, but as we move more and more to become knowledge societies (at least in the west), workers have again a lot of control over the means of production.

In other words workers are becoming capitalists; in a much deeper way than them having an investment in a fund or a house.

Workers are capitalists because they own the most valuable asset in the modern economy: their talent, ideas, and drive to create.

The employee/firm relation is an arrangement that has worked well in the past, as workers rent their talent for a fixed price. The outcome is that workers do not share in the upside of venture success but are protected from the downside.

A new arrangement is growing stronger with time and that is the consultant/firm relation where the rent is for very short periods of time, thus allowing the firm to get the appropriate talent required at the right time.

The drawback of the consultant/firm relation is that the worker is basically at the opposite end of the firm, basically his interests are to charge the highest price for the least work, and to expand his tenure as much as possible. The firm of course has the opposite interest.

We feel that the worker should look at his talent-capital like a capitalist. He should rent some to provide a security net that allows him to operate without major harm to himself and his family. He should also invest some in higher risk ventures where he is joining in the upside and downside.

The new advances in technology and the demand for knowledge workers creates a new environment where it is possible for workers to invest their talent at a lesser risk than previously:

• They can join multiple ventures and thus mitigate his risk
• They can select from a large variety of ventures to choose the ones they believe in and that have the appropriate risk level
• They can combine a full-time or part-time paid work with talent-investment
• The modern knowledge workers are much more savvy than before and are capable of making smart risk decisions

In summary, even if we want to have to keep our day jobs in many cases, we should all invest a portion of our talent capital like capitalists and not like 19th century miners.

Liquid Mechanics

I will describe briefly how we foresee the creation of a talent-funded firm in practical terms.

Step 1 - Idea

If you have an idea you can simply submit it to us, we will sign a non-disclosure agreement like any venture firm.

Step 2 - Define needs

You will then decide what are the talents and funds you need to take your venture to the next step.

Step 3 - Talent hunting

If somebody likes your idea and has the right credentials they can request more info. You will then revue his profile and decide if you want to share details of your venture with them.

Step 4- Cut the deal

If there is an agreement between what they have to deliver in work and how much you are ready to give them in equity, they become equity holders and start working on the venture.

Step 3 - Execution

As the work is done the equity is given to the workers. The schedule of the equity/work exchange will be agreed by the two parties to avoid any disappointments and to allow for exit strategies at any point.

We will help you create agreements that are simple, functional and protect as much as possible all parties.

Back to Step 1 - More ideas

Now that you finished this phase of your venture, you will need a different set of talents and fresh funds to move to the next step.

Become a Liquid Capitalist

Liquid Capitalism itself will be a talent-funded company.

We are looking for the following talent:

• Graphic and web designer
  
• Software developer ideally with Ruby on Rails expertise
  
• Finance wiz, with experience in funding early start-up
  
• Legal expert with knowledge in intellectual property rights and corporate law
  

If you like the concept and you want to be an early founder of this venture, please send us.

All the work will be conducted online and will be on-demand on a part time basis.