There are at least two distinct funding strategies Social Air can pursue:
- The standard Friends & Family -> Angels -> VC -> IPO path
- Self-funding model based on crowd funding models
These funding strategies need not be mutually exclusive. We will simultaneously pursue angel funding as we execute on our crowd funding program. In effect, we are planning to substitute membership sales in a crowd funding-like fashion for the friends and family round of funding. Only after we have established a membership base and revenues will we really attempt to set a term sheet with experienced angels.
The further we are able to push the expansion of Social Air through self-funding methods the stronger position we will be in when we go to negotiate terms with Angels or VCs. If we actually execute on the SEE launch formula described in Marketing » Marketing Strategy we can launch this business without any outside funding, but rather be 100% funded and owned by Members. However, the Angel/VC approach will be considered as the fallback funding strategy.
Through at least the first three Phased Expansions, Members will purchase memberships and be granted shares of ownership in Social Air along with their membership.
Stage 1:
First twenty Members purchase $5,000 membership plans and are granted 25,000 shares (0.25% ownership) in Social Air stock each as a perk.
Funds Raised: $100,000
Total Stock Granted: 5%
Stage 2:
the next 200 Members purchase average $5,000 Memberships and receive 5,000 shares (0.05% ownership) in Social Air stock as a perk.
Funds Raised: $1,000,000
Stock Granted: 10%
Stage 3:
The next 2,000 Members purchase average $5,000 Memberships and receive 500 shares (0.005%) in Social Air stock as a perk.
Funds Raised: $10,000,000
Stock Granted: 10%
Crowdsourced
This business is at the ‘Friends and Family’ level of funding, meaning there has been little money invested so far and we are seeking a relatively modest amount of funding to get the business in a position to either seek additional funding or start operations. It is my belief that this initial round of funding will be enough to actually begin operations without having to seek a second round of funding. However, seeking angel or venture funding is a contingency that we will consider.
Amount Sought for Phase 1 (Friends and Family Investment Round)
I am seeking an initial investment of $100,000, both in the form of cash investments as well as in-kind ‘sweat equity’. I have already identified a set of co-founders who have the skills needed to get the business to a viable stage who are willing to invest their time in the business in exchange for ownership.
Gary Reiss – Web Developer – $5,000
Gary is an experienced web developer who has built several websites for Dane and has proven himself to be very reliable, efficient and innovative. He was a key developer of the JumpJet.com web application. Gary will help develop the various SocialAir.us web properties.
Nam Hoang – Web Developer – $5,000
Nam is also a professional web developer who has done extensive work for Dane and who was a key developer on the JumpJet.com project. Nam will work with Gary to develop the various SocialAir.us web properties.
Rich Benvin – Online Marketing Consultant – $5,000
Rich is Dane’s former business partner and has been an online marketing professional since 1998. His role in the company will be to promote the service through various online channels, including SEO/SEM, social networks, affiliate programs, co-marketing, and public relations, among others. Rich was employed by JumpJet.com for two months, during which time he became intimately familiar with the planning of this private jet charter company.
Chip Garner – Technical Consultant – $5,000 (pending)
Chip developed the basic trip routing/aggregation engine that is currently used by JumpJet, and has developed a far more sophisticated heuristic aggregation algorithm that has not been implemented by JumpJet. Chip will customize the heuristic aggregation algorithm for SocialAir and assist in the integration with the rest of the system.
Drew Foerster – Creative Director – $5,000 (pending)
Drew is an award-winning creative director for Dufour advertising agency with extensive experience in web interface design. He created the design for the Jumpjet website, and had done extensive interface design work for Dane on past projects.
TBD (Bryan Johnston?) – Aviation Industry expert – $5,000 (pending)
TBD (Patricia Dowling?) – Email Marketing – $5,000 (pending)
TBD (Ana Lucia?) – Social Media – $5,000 (pending)
TBD (Wendy Bacigalupi?) – Public Relations – $5,000 (pending)
TBD (Nagaraj Bhat?) – Videographer/photographer – $5,000 (pending)
Cash Investor(s) – $55,000
In addition to these initial ‘sweat equity’ investors, we are seeking an additional $50,000 in funding to fund the development of the business for the next three months. This amount may come from one to up to five individuals. The minimum investment amount will be $10,000.
Purpose of the Funds
These funds will be allocated as follows:
| Purpose | Cash | Sweat |
| Flight Reserve | $20,000 | |
| Dane – Salary | $20,000 | |
| Web Development | $15,000 | |
| Pay Per Click advertising | $10.000 | |
| Graphic Design & Multimedia | $5,000 | |
| Video and Photography | $5,000 | |
| Web Hosting | $1,000 | |
| Web Services | $1,000 | |
| Social Media | $5,000 | |
| Public Relations | $5,000 | |
| Legal and Administrative | $3,000 | |
| TOTAL COSTS | $55,000 | $45,000 |
Valuation
Based on the business model, business plan, established web application, branding, and assembled team, SocialAir.us is being valued at $10,000,000. Ownership shares in the company are based on this valuation.
Ownership Shares
In exchange for a $5,000 investment in SocialAir.us, Founding Members will receive stock worth 0.5% of the company.
Bonus Incentives
In addition to the miles purchased and the ownership shares granted, Founding Members in Social Air will also receive additional substantial value for their modest investment.
Points Grant
In addition to shares in ownership, founding owners of the business will each be granted 50,000 SocialAir member points, which is equivalent to 50,000 miles in air travel. Based on the SocialAir pricing model, these points will have a value of approximately $25,000 once SocialAir.us is fully operational.
These points are only valid after SocialAir has begun operations with at least 100 paying members, and are subject to all other restrictions of SocialAir points (e.g. they can only be redeemed for flights that have at least five passengers on board). These points will be fully transferable to anyone the owner chooses to gift them to.
Rewards Factor
All Founding Members will be assigned a Bonus Factor of 100, which means that for every mile they fly, they will be granted a full mile in rewards. So effectively the 50,000 miles are a bottomless supply of miles. In other words, all Founding Members will be able to fly free on private jets for life.
Initial Route
Regardless of where the founder lives, their market will be included in the initial set of routes to be flown, so they can begin taking advantage of jet travel as soon as the first set of members come online.
Risk-Free Investment
This Member/Investor model provides a risk-free way to invest in this enterprise.
Members are actually just purchasing miles that have real value. As noted above, 20% of funds raised in the first Stage
Approximately 40% of that money will be set aside in escrow for the express purpose of paying for aircraft leases. The balance will be used to fund the expansion of the business into the next phase.
Thus, the amount spent/invested is actually just paying for services rendered, and therefore there isn’t any investment risk.