StartupValley: Platform Strategy in Equity Crowdfunding
(7 pages of text)
In 2012, after the U.S. government passed the Jumpstart Our Business Startups (JOBS) Act, the founder of Hudson Integrated, a website development company, decided to launch StartupValley, an equity crowdfunding company focused on the Title III provisions of the JOBS Act. These provisions allowed companies to solicit equity investments directly from small investors by using an intermediary registered with the U.S. Securities and Exchange Commission, consisting of either a broker–dealer or an approved funding portal. However, three years passed before all Title III regulations were finalized, and more than six months later, they came into effect. During that time, the market became crowded with both start-ups and established companies. In 2016, when the Title III provisions finally went into effect, the entrepreneur faced two key challenges. How should he position StartupValley for success in this new industry? And how should he balance his own time and resources between his existing web development business and the new venture?
This case is suitable for an MBA or advanced undergraduate course in entrepreneurship or strategic management. The case covers business strategy (specifically, platform strategy), the entrepreneurial process, corporate strategy (specifically, diversification), and the equity crowdfunding industry. After completion of this case, students will be able to
- apply the key concepts of platform strategy in the context of fierce competition in an emerging industry;
- provide an understanding of effectual reasoning in the entrepreneurial process by following a serial entrepreneur’s thinking regarding a new venture; and
- manage the balance between a new entrepreneurial venture and an existing company that provides a critical source of revenue and cash flow.
Information, Media & Telecommunications
United States, Small, 2016
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