Capital-starved entrepreneurs eagerly await the dawn of a new capital market called crowdfunding. ActSeed is glad to support the Crowdfund Bootcamp and its mission to prepare us all for the opportunity to tap a major new vein of investor capital.
This new way of funding emerging businesses is shares a name with a donation-based funding model in use today, but is very different than offering a t-shirt or other memento in return for contributing a few dollars to a cause.
On April 5, 2012, the “Jumpstart Our Business Startups Act” or “JOBS Act” became law. A new game in the world of early stage business funding was created. The Act calls for the US Securities and Exchange Commission to now define the rules of this new game. It’s expected that the rules will be defined sometime next year and entrepreneurs will begin pursuing crowdfunding equity investments.
This “new game” is designed to increase participation in the investment process beyond existing restrictions. It’s designed to help flow more capital into the primary engine for economic growth and jobs growth: small businesses.
While the general parameters of this new capital market are defined in the law, the coming specifics from the SEC must curb fraud while encouraging participation.
Numerous crowdfunding web sites are popping up almost daily – all hoping to become a thriving “new millennium stock exchange”. Each site will serve as a mini-exchange, with SEC-compliant rules for what company information an entrepreneur must share with investors and how it must be shared. The rules are supposed to be less onerous on small businesses while still protecting both the capital-seekers and capital-providers. Of the hundreds of aspiring crowdfunding sites, most will likely fail or consolidate with other sites. Crowdfunding will spawn cottage industries of support services and trade advocacy. Insurance companies, law firms, accounting firms, PR firms and trade organizations will specialize in crowdfunding activities.
So, as an entrepreneur trying to figure out what this all means, who the players are and how to prepare your company to raise capital through crowdfunding, where do you start?
We recommend the upcoming Crowdfunding Bootcamp conference, which will be held October 9-11, 2012 in Henderson, Nevada (just outside of Las Vegas). Write the word ‘ticket’ in the promotional code box and they will knock 5% off of the already-reasonable event fee.
The early bird gets the worm. The second mouse gets the cheese. Nobody has a saying for the ones who arrive third or beyond. JOBS Act Crowdfunding is coming soon, and entrepreneurs who know what to do will be the first to benefit.