A recent “crowd-funding†seminar was held in Los Angeles, sponsored by The Soho Loft and the Now Street Journal.
The two-day workshop featured several companies that specialize in raising money, using the Internet as a tool, for startup companies.
Right now, crowd-funding is used by non-profits and creative endeavors to raise seed money. Contributors simply make a donation and that’s that. “Kickstarter†is perhaps the best-known crowd-funding site, but there are more and more all the time (Google “crowd funding†).
For bigger companies that sell shares to accredited investors (high net worth, high annual income), there are sites that help to facilitate connections between the two parties. “Indiegogo,†“RocketHub†and “GrowVC†are but three examples, but there are many more.
These intermediary companies build the online platform and generally take a small cut of all proceeds raised.
But for a small startup company wanting to use social media tools to sell company shares in small amounts to small investors, this avenue isn’t yet open to them. But that will change soon: Recently, President Obama signed the JOBS Act, which included a provision for crowd-funding.
The SEC is currently reviewing the new law, which was passed with bipartisan support, for the purpose of installing protections for investors.
Gene Massey is a local pioneer in the crowd-funding space, particularly as it applies to funding the production of movies. He has offices in Westwood and is known to meet with local entrepreneurs at the Coral Tree Café here in Brentwood. Massey spoke at the recent SoHoLoft conference. See www.mediashares.com.
For more information about crowd-funding, go to:
www.NowStreetJournal.com