Ahhh, the Internet. Billed as the single-most unifying force in the world today. Undoubtedly, it has garnered a well-deserved reputation for bringing people with common interests together.
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First, it was online dating. Then it was chat rooms and forums. And then peer-to-peer networks blossomed to allow members to share movies, music, and many other digital goods.
Entrepreneurs have effectively utilized cyberspace to their benefit as well. The trend began when buyers and sellers were brought together by sites like eBay. Then employers and jobseekers met and formed long-term relationships through Monster, CareerBuilder, and similar portals. Craigslist became the one-stop shop for goods, services, contractors, and many other wares. Now, even microlending is helping small businesspeople around the world get funding in small chunks through sites like Kiva.
And now we come to the latest entry on the entrepreneurial Web timeline, where we meet Dan Shifrin. He is the man who arguably has changed small business funding as we know it. That's because Shifrin has invented a way to bring potential franchisees and investors together.
Shifrin runs a public site called GroupedUp and another site called FranEquity which is privately-branded for individual franchisors (including Boston Pizza, Cartridge World, and Lawn Doctor) which run their own microsites. But they both operate on the same principle. Potential investors create a profile which includes where they are located, what type of business they want to own, and how much they can invest. Meanwhile, potential franchisees fill out a similar profile describing their current or proposed venture and how much additional funds are needed.
The software on Shifrin's sites find matches among these two groups. Once an equity level of about 40% to 50% is reached, the site sets up an online meeting with all the players. If they all decide to become partners, the site directs them to sources for lawyers, corporation formation, and more. Then if they all sign a franchise agreement together, Shifrin's company gets a 1.5% stake in the contracted equity as well as a portion of the franchise fee.
Shifrin is no stranger to the business world. His resume includes a stint as an executive at ZipCar, the rent-by-the-hour car rental company; and his successful formation of AutoWraps, the outfit that wraps advertisements on vehicles. But even with his pedigree, Shifrin was rejected for a loan to buy a franchise in 2009. So he decided to channel his energies into getting people like him introduced to individuals and companies who were willing to invest in potential franchisees.
Shifrin dismisses the notion that "total strangers" cannot be effective business partners. He points out that franchisors and franchisees are usually strangers when partnerships are formed in the traditional way. Shifrin insists that solid business relationships begin with clear, comprehensive contracts and agreements about company vision and exit strategies. And he's confident that GroupedUp and FranEquity can simplify the process by which franchisees and investors meet, hash out business plans, and sign partnership deals.
Understandably, Shifrin is a bit biased when he says he hopes that the return to an atmosphere of looser lending practices is a slow one. But even when that occurs, Shifrin believes that his business model will still thrive because it represents another method by which people can launch businesses, create jobs, and stimulate the economy.
So when Dan Shifrin was turned down for funding from the banking system, he didn't complain – he just changed the system. In the process, he revolutionized the way that numerous future entrepreneurs receive capital, open their businesses, and pursue their dreams.