Regulations of CrowdFunding
Early stage entrepreneurs face long odds when seeking funding from angels or VCs. In the past year, there has been increasing interest in new methods of online financing and "crowdfundng" as a means to bridge the funding gap.
What is crowdfunding? It's a means of raising capital through numerous small donors from the public, often online, rather than working privately to raise large amounts from a small number of wealthy donors. ENET's networking meeting on April 17 will explore crowd funding from two separate approaches.
The first approach to crowdfinding is donation or “rewards based”. It utilizes recently developed websites that raise money online. These include Kickstarter, Indiegogo and RocketHub. From these online platforms, companies, artists and entrepreneurs seek online donations or sale of pre-release products, generally offering rewards for donations but no debt or equity. Such fundraising campaigns have the added benefit of helping to build a fan base, customer base, and demand for the participant's product or service. In May 2012, the Pebble E-Paper Watch set a crowdfunding record, raising over $10 million on Kickstarter.
The second approach to crowdfunding is “securities based”. This approach was authorized in the U.S. by the Jumpstart Our Business Startups Act (the JOBS Act) signed into law by President Obama in April 2012. The law would allow entrepreneurs to raise up to $1 million from small investors through registered broker dealers or newly authorized "investor portals". The contributors would receive either equity or debt securities for their investments, with the money refundable if the fundraising target is not met. However, this second approach, widely used in Europe, is not yet legal in the U.S. and awaits regulations from the SEC which are not expected until the 3rd or 4th quarter of this year.
Research firm Massolution estimates the crowdfunding industry worldwide (equity + donation + lending + reward crowdfunding) grew from $1.5 billion in 2011 to $2.8 billion in 2012.
Our ENET panel features two veterans of successful Kickstarter campaigns including the author of "A Kickstarter's Guide to Kickstarter", with both speakers walking the audience through the benefits, perils, process, and tips to succeed in a rewards-based crowdfunding campaign. The third speaker is the cofounder and COO of RocketHub, another major platform for rewards based crowdfunding, which has plans to be a portal for securites based crowd funding when it becomes legal. He has authored two whitepapers on securities based crowd funding, which you can access at the top of this page under "Presentations".
All three speakers will address the audience. Then we will break into two groups for Q&A, one focused on rewards based crowdfunding and the other securities based crowdfunding. It will be a great night to learn, network and enjoy some snacks. We hope to see you at the Foley Hoag Boston Conference Center in the Boston Seaport/Innovation District on April 17!.
These have received acclaim from both the SEC and FINRA, and are posted at the top of this page under "Presentations"
Jed’s professional career began (at the age of eight) when he took to the stage as an actor and singer. During his twenty-year career as a performer, Jed toured both nationally and internationally as a boy soprano, made his Broadway debut (at the age of fifteen) in the Tony Award winning musical The Secret Garden, and is featured as “Rod McCallister” in the hit movies Home Alone and Home Alone II: Lost in New York. Jed is a graduate of Harvard University where he earned his degree in Astronomy & Astrophysics.