Crowdfunding 101: Capitalizing on Unaccredited Investors

Global Social and Sustainable Enterprise MBA Program

Global Social and Sustainable Enterprise MBA Program

June 18, 2012: Stories From the Field. Guest post by Rachael, Jill, and Leo, co-founders of Adventure Forward, a student-run social venture pursuing solutions in the start-up funding space via crowdfunding, which is the act of collectively raising enough money to further your cause.  Adventure Forward is spending this summer learning about the current and future funding options for entrepreneurs as part of the Global Social & Sustainable Enterprise MBA program at CSU.

Greetings from Adventure Forward!  Our “summer practicum” began well before spring semester even ended, so for the past several weeks we have been hard at work tackling start-up financing.  We partnered with the Rocky Mountain Innosphere (RMI), and have been assembling a collection of funding options available to ventures in their incubator – and have learned lots along the way.

Unfortunately, the current financing solution for many entrepreneurs involves maxing out personal credit cards, growing too slowly to outrun competition, or even mortgaging one’s home. Some quick Google searching, and we were turned on to the JOBS Act of 2012 (you can download the whole Act here) recently signed into law by President Obama.  Essentially the law states that starting in early 2013, small, private ventures will be able to solicit unaccredited investors (those with a net worth < $1M or annual income <$100K) to purchase equity.  We thought this was the coolest thing since the Securities Acts of 1933 and ‘34, which created the SEC*!  It is a big deal for entrepreneurs to be able to access smaller scale investors because it was previously illegal, which ruled out a large source of potential funding for those start-ups.

Team Adventure Forward at a Crowdfunding Conference in Salt Lake City

Team Adventure Forward at a Crowdfunding Conference in Salt Lake City, during their summer practicum for the field work portion of the Global Social & Sustainable Enterprise MBA at Colorado State University.

Bringing our newfound knowledge to RMI, we discovered that just about everyone had already heard about it, but what the JOBS Act means for entrepreneurs and investors remains to be seen until regulations are verified next year.  Nonetheless, there is a lot of great energy in this space right now.  We were able to attend the first Crowdfunding Conference in our region two weeks ago in Salt Lake City.  Everyone from entrepreneurs, to MBA students, to securities lawyers, to the architects of the JOBS Act gathered to share the latest knowledge and build a cohesive network to ensure this law is taken full advantage of.  Throughout the rest of the summer, our team will be doing community education about crowdfunding, collecting data on potential “unaccredited” investors, and making the data available to RMI ventures so they can capitalize on their best options for growth, whether that be via donations, equity, or debt.

In the meantime, other options abound for those seeking to capitalize on the “crowd.”  For those interested in learning more about this space, crowdsourcing.org is a great place to start, and stay tuned – the summer’s just getting started!

*SEC is the US Securities and Exchange Commission.

This entry was posted in Impact Investing and Startup Financing, Stories from the Field. Bookmark the permalink.

4 Responses to Crowdfunding 101: Capitalizing on Unaccredited Investors

  1. J says:

    It will be interesting to see the variances in valuation between accredited and non accredited investors. My guess is that raising money from ‘fools’ will prove to make better biz sense than going the traditonal route.

  2. jshaw411 says:

    Very good article.

  3. Pingback: What Gets an Entrepreneurship Geek Going? | Make a Difference

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