Crowdfunding: A Tipping Point?
The Jump-Start Our Business Start-Ups (JOBS) bill signed by Obama last week promises a fundamental shift in how entrepreneurs access vital early-stage investment capital. Crowdfunding, the activity of raising small amounts of investment capital from individuals through regulated web sites, is one of the most compelling advancements in the bill.
Raising capital directly from the public is already a well-established approach: Direct Public Offerings (DPOs) offer a way to avoid substantial broker representation fees in accessing capital and have been used to great effect by companies such as Ben & Jerry’s in their early days, and even using the Internet as with Spring Street Brewery here in New York City in 1999. More recently, organizations such as Kickstarter have become very successful using a project-based crowdfunding model, and with other ventures such as WeFunder emerging on the back of the recent bill the marketplace is without question on the cusp of substantial change. The tech venture capital scene definitely recognizes the opportunity and is reacting quickly to determine how the funding landscape could evolve.
The bill is, however, not without its critics. One very valid area of concern is around safeguards and protections for investors given the reduced disclosure requirements for the companies. Social media is touted as one solution to this potential issue, but it remains to be seen how effective that will be in practice.
All that aside, this is a phenomenal step in the right direction for early-stage social entrepreneurs who find the current investment marketplace a very difficult and challenging source of capital. The chance to engage the interested members of the public who recognize the value of social ventures and raise that critical growth capital is long overdue. Echoing Green and our Fellows are looking forward hugely to participating in and shaping this next era of early-stage financing.
Making Money While Making a Difference
Video: John Walker discusses impact investing
Digging Deeper Into Impact Investing
Echoing Green Live
May 22, 2013 at 10:06 AM
Fellows in Brief, May 2013
May 22, 2013 at 06:37 PM
echoinggreen: @fruitmmonster lol!
May 18, 2013 at 02:33 PM
How do I apply for a grant?
May 22, 2013 at 04:00 PM
From The New York Times to President Barack Obama to the World Economic Forum, s...