Each day more opportunities are arising for new and technologically advanced ways for startups to raise capital. Unlike the world of the past these investment opportunities are no longer only available to VC’s, Angels and Bankers alone. Now entrepreneurs can access the crowd, in fact the entire world for funding on crowdfunding websites. And soon we will all be able to acquire equity in those companies as well.
On April 5th 2012 when president Obama signed Title lll into law (the Crowdfunding bill) it changed the startup game for ever.
No longer are Startups and small business owners forced to depend solely upon those sources for capital to launch or expand products, services and innovation that our society really needs. Now, the general public also gets a say in whether or not such dreams materialize.
By using crowdfunding, innovators and entrepreneurs can now pre-market their ideas to supportive people who want to see these products and ideas come to life. Once the final rules are established and made public by the SEC we will all be able to have a chance at owning a piece of those new companies as well.
For example, Oculus Rift which is a virtual reality device, raised $2.4 million on Kickstarter from 9,522 backers who contributed money receiving a variety of different perks. But one thing those backers didn’t get was any stock, a real piece of the action which was pretty amazing when just two years later Facebook bought the company for $2 billion dollars. Imagine what could have happened to those backers if Title lll were available to that company as another way to raise capital.
It was just two years ago when home-automation company SmartThings also began life as a Kickstarter project. With an initial goal of $250,000, it raised $1,209,423 from 5,694 backers. The company then raised an additional $15.5 million in venture capital, including a $12.5 million Series A round of funding.
On Aug 14th of this year Samsung scooped up SmartThings for a reported $200 million dollars. Imagine what could have happened to all those backers if Title lll were available to those companies as another way to raise capital, and they had used it? Thousands of average Americans who have never had a chance at these kinds of investments could have seen unimaginable returns.
Well this will all be a reality soon, but it will only be valuable to all of us if we educate both entrepreneurs on the requirements and they get started on the work to be compliant with the new laws. We also need to teach entrepreneurs how to build enough targeted social capital for a successful campaign.
People need to know that it’s hard work to be successful at crowdfunding but if you’re willing to learn (and get prepared ahead of time), you can make incredible things happen with the right knowledge and tools.
You and your business will need to attract followers, fans and positive awareness. This is not an “If you build it they will come” type scenario, but more like “If a tree falls in the forest and no one hears it, did it make a sound?” In this sense, you’ll need to make a lot of carefully calibrated noises in the presence of many receptive people.
At the same time we need to spread awareness of this new opportunity to 100’s of millions of Americans that they should make searching out quality Deal flow for an investment a part of their daily /weekly online routine just like they do when checking Facebook, Twitter, Instagram etc. Someday crowdfunding will become part of our DNA in the same way.
However, since there is cap of $1,000,000 every 12 months on the amount each company can raise using Tittle lll, there could be a stampede of investors trying to get in on the best quality deals with the greatest possibility to provide a happy exit , and or the ability to bring the social impact and change to our cities and towns we need even more.
To tackle the task of educating both groups we are very excited to be working with UP Global to invite the Startup community to the 3rd Annual Global Crowdfunding Convention and Bootcamp in Las Vegas on Oct 23rd-25th #GCCB2014 to help with providing such education.
Since the signing of the Jobs Act on April 5th, 2012, demand for information and clarity on issuer compliance rules has skyrocketed. Entrepreneurs and startups lawyers, accountants and educators, mentors, government officials all professionals need to know what steps they should be taking now to successfully help launch a compliant ready crowdfund investing campaign and build a crowd of enthusiastic investors.
This three day convention now in its third year is the perfect place to get quick answers and usable information to help get started now.
With crowdfunding still in its infancy, it’s critical that entrepreneurs know who & where to turn to for answers in this emerging industry. At this time they may not even be aware of the urgency or what will be required by them once it’s legal to use this new offering to raise capital, so the education process needs to start now no matter how they want to participate and benefit from as this new multi-billion dollar industry continues to grow.
Entrepreneurs trying to make sense of what equity (and all types of) crowdfunding is all about can confidently find answers by attending #GCCB2014 knowing it’s a trusted source, acknowledged & supported by industry leaders and experts who have been heavily involved in setting the stage for this new method from the start.