It's a made-for-Oregon story: A couple of employees at an award-winning craft brewery decide to take an entrepreneurial leap and open their own brewpub.
But Tim Schmidt and Kyle DeWitt were looking to set up shop in Tecumseh, Michigan, a community of about 8,500 an hour southwest of Detroit. They had $155,000 borrowed from friends and family and the deed to a shuttered restaurant, but no bank would lend the rest of the money they needed to start brewing.
"We were running out of money and running out of time pretty fast," DeWitt said.
Their venture turned out to be a timely one. A year ago, Michigan passed a bill that would let businesses crowdfund startup or expansion costs through small investments from a large number of investors, and Tecumseh Brewing Co. was ready to be a test case.
The rest of the brewery's capital — $175,000 — ended up coming from 21 Michigan investors, most of whom Schmidt and DeWitt had never met.
Despite approval from the U.S. Congress in 2012, federal regulators have been slow to implement nationwide investment-crowdfunding rules. So individual states are filling the vacuum, passing their own laws and rules under what had been a little-used federal exemption.
Oregon, it appears, is next in line. The state Department of Consumer and Business Services has already drafted rules that could be implemented as soon as January.
There is a catch: the so-called intrastate exemption to federal securities law only allows offerings made within a state's borders, so Oregon businesses could only seek investments from Oregon residents.
And with no finalized rules from the SEC, each state is coming up with its own playbook. Fourteen states and the District of Columbia have come up with crowdfunding rules, and no two are the same. More are on the way. Like Oregon, New Mexico is still in the middle of a rulemaking process.
Under the proposed rules in Oregon, businesses could raise up to $250,000, a lower cap than in most states that have adopted crowdfunding rules. Individuals could invest up to $2,500 apiece, even if they aren't "accredited investors" — a regulatory term meaning those who meet certain wealth or income thresholds and are therefore permitted to participate in higher-risk investments.
"You can now accept investment from the 99 percent," said Amy Pearl, a co-founder of Portland business incubator Hatch and a supporter of the Oregon initiative. "This is extremely significant, not only for the raising of capital ... but also it lets investors become actual stakeholders in their own community economy, and potentially make some money."
The Michigan brewers raised $53,000 before a single large investor came forward with the remaining $122,000. The offering closed several weeks early.
Some investments were as small as $250, Dewitt said, and none of the investors live more than 25 miles away. Many attended tasting nights for prospective investors.
"Crowdfunding opened it up to people who were super excited about it, couldn't wait to get the brewery open," he said. "They knew the town, they got to meet us and they knew the brewery concept."
When the brewery opens — in February, if all goes according to plan — 7 percent of its gross sales will be distributed among the investors until they make back one and a half times their investment.
Congress opened the door to equity crowdfunding with the JOBS Act of 2012, which unwound restrictions on the advertising of securities that had been in place since the Great Depression. Lawmakers decided the rules, put in place to protect small investors from losing their savings on bad deals, were out of date — and a hindrance to small businesses.
But the Securities and Exchange Commission has been slow to finalize rules that would implement crowdfunding. It proposed rules in October 2013, but the supposed 90-day comment period has dragged on for more than a year.
The agency declined to comment on the delay, but Chairwoman Mary Jo White told Congress in May that implementing crowdfunding was among the agency's priorities. When it might actually happen, however, remains a mystery to those following the issue.
"We just don't know," said Anya Coverman, deputy director of policy for the North American Securities Administrators Association, a state and provincial regulator's group. "They don't have a deadline on finishing any rulemaking. Where you're seeing the action and the innovation now is at the state level."
The result is a patchwork of rules and laws that vary wildly from place to place. Washington state's crowdfunding law took effect in November and allows companies to raise up to $1 million, though it has yet to be used by a single company.
Oregon's rules are comparatively conservative. Among the states that have rules in place, only Maryland has a lower cap on the amount a business can raise.
Offerings would not be registered with the federal government, and the state's oversight would be limited. That's by design, said David Tatman, administrator of the state's Division of Finance and Corporate Securities.
"Our goal was to try and keep this simple and streamlined, rather than create a more complex process," Tatman said. "We've put the dollar amount where we're not as concerned as we would be otherwise."
The businesses would also be required to make detailed disclosures to potential investors, as well as periodic updates throughout the life of the investment.
But the program does away with restrictions that for decades were thought to provide protection to unsophisticated investors, and some say it goes too far.
Alex Pawlowski spent 35 years as a banker and now works in economic development in southern Oregon. He saw capital for small business dry up in the recession, so he knows there's a need.
But he's also seen entrepreneurs struggle with even basic financial documents. And he's watched businesses collapse quickly.
"The first business that fails, there's going to be fingerpointing," Pawlowski said. "People are going to say, 'Who approved this?' 'Who looked at this plan?' I think that's where you're going to see things unravel."
Posted from: http://www.oregonlive.com/business/index.ssf/2014/12/crowdfunding_states_oregon_investment.html
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People have turned to crowdfunding to raise money for everything from potato salad to personal submarines. But one entrepreneur is banking on crowdfunding in a new market: real estate.
"We are the e-trade of real estate investing," said William Skelley. Skelley co-founded start-up iFunding, a real estate crowdfunding platform connecting investors with developers.
Watch Skelley model his big idea to a "Power Pitch" panel with real estate broker Ryan Serhant of "Million Dollar Listing New York," Dolly Lenz, real estate super broker, and Alicia Syrett, CEO of Pantegrion Capital. Will Skelly close the deal with this panel, or will they see his venture as a fixer upper? CrowdFunding Marketing and advertising
Skelley used to run a boutique investment bank that endorsed commercial projects like hospitality properties and condos. He later joined Rose Park Advisors, a hedge fund, which invested in CircleUp.
"[CircleUp] is now the largest crowdfunding angel investing platform in the U.S., with a recent $7 million cash investment from Google and Union Square Ventures. I realized the same potential for innovation is applicable to real estate," Skelley told CNBC.
Closing the deal
IFunding works as the link between real estate developers and investors. Accredited investors can use the platform for free and "shop" for real estate opportunities.
"Investors can contribute as little as $5,000 to participate in an investment property of their choice," the founder told CNBC.
Investment opportunities on the platform include a single family home in Wisconsin, new developments in Texas and a high-rise development in Lower Manhattan.
The start-up even offers two investment options: lending money for a real estate project at a specific interest rate paid by the project's developer, or purchasing equity in the real estate projects.
IFunding also offers users a mobile app available on iOS and Android devices, which the founders say is the first mobile app for real estate crowdfunding.
Rendering of an iFunding project.
During the segment, Serhant asked, "What benchmarks or requirements does iFunding have for people who want to become investors."
Skelley explained that accredited investors as defined by the SEC must make an income of $200,000 or more from the past two years, or have $1 million in liquid assets not including a primary residence.
According to the IbisWorld market research report, the global real estate market grew to $6 trillion as of November.
The real estate crowdfunding space is crowded. IFunding's competitors include: Realty Mogul, Patch of Land, Fundrise, Real Crowd and Realtyshares.
"Many of us think there's room for several to become leaders," Skelley told CNBC. He also said he believes iFunding's emphasis on equity is unique.
According to the founder, the iFunding platform has raised almost $30 million for 27 real estate projects from Brooklyn, New York, to Austin, Texas.
Skelley and his co-founder, Sohin Shah, forecast $500,000 in revenue by the end of 2014, and project to be profitable by the end of 2015.
The founders bootstrapped the start-up with $600,000. And before seeking venture capital the start-up is crowdfunding an additional $2 million via crowdfunder.com. Its fundraising began in early December and in three days, it raised over $1 million.
Headquartered in midtown Manhattan, iFunding has 12 employees with around 5,000 accredited investors signed up to date.
During the Power Pitch, viewers were asked to vote whether they were IN or Out on iFunding, and 72% were IN. Watch the video to see if the Power Pitch panel agrees!
Rather than going cap in hand to a banker, those with a fledgling business can resort to crowdfunding – going straight to investors – and customers – for the money, often at cheaper rates.
Sites such as Seedrs in the UK and Lending Club in the US bring lenders and borrowers together, while others facilitate early business equity investment.
The amount lent by such peer-to-peer sites was almost $3bn in 2013, up from around $100m in 2007. The estimated number of sites has grown from 1,100 to 2,700 in the last year.
Since it was set up in 2006, the Australian Small Scale Offerings Board (see illustration) has raised A$138m (US$128m) for more than 200 businesses. It will provide up to $5m per transaction but all companies seeking finance must have their books reviewed by a qualified accountant.
While the internet has enabled transactions, it is only one of the drivers of this rapid growth, says Richard Swart, director of research on crowdfunding at the University of Berkeley, California.
Prof Swart says the financial crisis was the biggest cause. Banks were restricting lending just as people became accustomed to online financial transactions.
“Access to bank lending for small businesses collapsed around the world. There also seems to be a general distrust among the millennial generation of anything institutional. They trust the power of other humans to make decisions.”
A slew of TV programmes featuring angel investors such as Dragons’ Den and Shark Tank have also helped to demystify entrepreneurship and give younger people new role models.
Finally, there was an older generation who suffered the loss of a job and a sharp reduction in their stock market-linked savings plans. People over 50 are the fastest-growing age group starting businesses in many developed countries.
“A lot of the growth is not driven by innovation but necessity,” says Prof Swart.
Venture capital firms are investing hundreds of millions as they see the potential to build fast-growing, high margin global businesses.
More countries are permitting crowdfunding and enabling cross-border business.
Canada, New Zealand and France have all revised laws this year to facilitate it. Korea saw $150m in lending last year.
Even the US is also lagging behind, with more onerous restrictions on business fundraising via crowdfunding than on stock exchanges.
Many regulators are searching for a way to protect consumers from failures. The industry is young and there have been a few high-profile failures but most sites offer no protection against default.
Many platforms run secondary markets but others do not, leaving investors with a stake in the business they are unable to sell for several years.
If regulators forced the new platforms to operate the same risk controls as banks it could eradicate some of their competitive edge.
Nevertheless, the efficiency of the software-driven websites, issuing consumer loans within minutes and business ones within days, means banks are as likely to join forces with sites rather than compete.
Prof Swart says the typical SME loan was processed for around 40 per cent of the cost of a bank loan.
The biggest bar to growth remains ignorance. Nicola Horlick, a former fund manager for Morgan Grenfell who earned the nickname “Supermum” for combining life in the City with six children, in May launched Money & Co, a crowdfunding business, in the UK.
Money & Co commissioned a survey that claimed UK SMEs had an annual unmet need for finance of £4.3bn. The study, conducted by research agency Populus, asked senior management at 300 SMEs about their last loan application, comparing it with the average sum awarded. The difference, extrapolated across the UK’s 404,175 SMEs, was £4.3bn.
While half of respondents agreed that bank bureaucracy was a deterrent when applying for a loan, 72 per cent would still approach one first for a business loan.
Only 4 per cent would consider crowdfunding as an initial means to secure finance, while 5 per cent would first approach an angel investor and 11 per cent would try government funds.
But while crowdfunding still only accounts for around 1 per cent of global start-up funding, there may, however, be wisdom in crowds. Prof Swart says that preliminary data suggests that companies with such funding do better than others. Around 70 per cent of firms were still in business after five years, reversing the usual statistic that 70 per cent fail in five years.
“We need more data to know for sure, but it seems like crowds select better businesses,” he says.
Kickstarter's biggest hits - why crowdfunding now sets the trends - Artists, filmmakers and technologists
Artists, filmmakers and technologists can bypass the moneymen to raise millions for their projects, from Spike Lee and Ouya to Veronica Mars and Broken Age
An attendee wears an Oculus Rift HD virtual-reality head-mounted display at the Intel booth at the 2014 International CES on Jan. 9, 2014, in Las VegasRobyn Beck—AFP/Getty Images
Facebook is set to purchase Oculus VR, the virtual-reality-headset company best known for its Oculus Rift gaming device, in a $2 billion deal announced Tuesday that is expected to close in the second quarter of this year
Facebook will acquire virtual-reality technology company Oculus VR for $2 billion, the social-networking giant announced Tuesday. Oculus makes the Oculus Rift, a virtual-reality headset originally funded on Kickstarter.
“Oculus has the potential to be the most social platform ever,” he said. ‘“Imagine sharing not just moments with your friends online, but entire experiences and adventures.”
In a post on his Facebook profile page, Zuckerberg presented such scenarios as sitting courtside at a sports event, studying with a group of students or consulting face-to-face with a doctor as potential uses for virtual reality.
The acquisition amount is a huge sum for a company that has yet to release a consumer-facing product. The Oculus Rift made its public debut at the 2012 Electronic Entertainment Expo, the video-game industry’s largest trade show. That summer the company launched a wildly successful Kickstarter campaign in which it eclipsed its $250,000 funding goal nearly 10 times over. Interest in the device has risen steadily since then, with the company raising more than $90 million in venture funding over the past two years. As many as 75,000 people have ordered developer kits in order to test the device and begin making software for it. And owners of the device can already use an Oculus Rift to play PC games, enter the world of Game of Thrones or even visit a supermarket. However, the company has not yet released a version of its headset for sale to the general public. Zuckerberg did not provide a timetable for when that might happen.
For now, the Oculus team’s focus will remain on gaming. Facebook chief financial officer David Ebersman told investors that the $2 billion valuation of the company was based on gaming opportunities alone, and it’s not a lonely field: Sony revealed its own virtual-reality headset last week and Microsoft has recently expressed interest in the technology.
The acquisition comes just weeks after Facebook announced it would purchase the messaging service WhatsApp for $19 billion. Zuckerberg noted that he didn’t expect Facebook’s buying spree to continue, but that the company would open its wallet for companies that it thinks offer a unique value opportunity. “There are not that many companies that are building core technologies that can be the next major computing platform,” he said of Oculus.
Facebook does not yet have a business model for Oculus, but revenues won’t center around selling Oculus Rift headsets. Zuckerberg said he could envision people visiting virtual worlds where they can buy goods and are served advertisements.
The huge purchase shows that every major tech player is making a big bet on wearable devices. Google is continuing to develop its Google Glass hardware and just announced a version of its Android operating system tailored for smart watches. Samsung already has a line of smart watches. With Oculus, Facebook is making a remarkably bold bet that people in the future will want to be fully immersed in technology.
“We feel like we should be looking ahead and thinking about what the next platforms are going to be,” Zuckerberg said. “We think vision is going to be the next really big platform.
Posted From : http://time.com/author/victor-luckerson/
Victor Luckerson is a reporter-producer for the Money and Business sections of Time.com. He was the editor-in-chief of the University of Alabama’s daily newspaper, The Crimson White, for two years and spent a summer interning at Sports Illustrated. Having spent his first 22 years in Alabama, he continues to carry The South in his heart.
Yes, You should Relaunch because;
1. By now you know most original ideas are not a complete idea and you need to share it as soon as you can in order to get hunches and other good ideas to complete yours. ( http://youtu.be/H4m7ltEhLgk )
2. Learning from the history allows us to improve. CrowdFunding allows us to "fail", "innovate" and succeed faster. The 1st picture may remind you, your recent Crowd Funding campaign. You can also get help from Crowd Funding mentors. (http://www.CrowdFundingFrameWorks.com or http://www.CrowdFundingMentors.com)
3. Learning from the history, it shows us, we can change our design, get validation, raise boostapping fund & build a better wireframe or Prototype. (http://www.Originalinvestors.com)
4. Learning from the history, it shows us we can test and get validation before we launch and try, try again.(http://www.CrowdFundingElearning.com)
5. Learning from the history, it shows us, Project and any Crowd Funding are only possible and successful when you build your team. CrowdFunding is a team work. (http://www.CrowdFundingMentors.com)
6. Learning from the history, it shows, we can make history. Dream impossible and build the possible with collaborations. You can be significant. Yes, You should Relaunch.(http://www.CrowdFundingReLaunch.com)
7. Build your Crowd followers before you relaunch. Solicit all your acquaintances, friends and families, 1st. If you can't raise some funding from your inner circle. You may want to reevaluate your CrowdFunding efforts. (http://www.CrowdFundingBillBoard.com)
However the majority of your investors and backers lives in the cloud (internet). Build your social media communications channels, your CrowdFunding website (virtual home with Pre order button), your Blog, your press releases and Newsletters and keep the crowd engaged.
CrowdFunding is like riding a bicycle:
You don't fall off unless you stop pedaling.
Get help, build your team, your crowd and try again until you are
called a genius!
These are the products and services we created to help you in your CrowdFunding project and its campaign.
If you’ve been on the lookout for funding for a startup project in the last few years, you’ve likely explored crowdfunding – or, more specifically Kickstarter. But there’s a growing number of websites dedicated to finding funds for a creative and entrepreneurial projects, with Kickstarter in the lead. However, not all crowdfunding sites are created equal. Here’s the breakdown on which may be the right one for you.
In a sentence: Kickstarter has become synonymous for crowdfunding, as the most popular site to find funding for creative projects.
Cost: 5% of funds raised, with an all-or-nothing model that builds urgency but leads to the loss of all funds if the goal isn’t met, plus 3-5% transaction fees
Limitations: approval process, limited to creative projects, only allows projects based in the US and UK
Sample Project: Tripsaver: The Ultimate Travel Budgeting App
In a sentence: This flexible crowd-funding site serves as an open and accessible option for campaigns worldwide.
Cost: On the all-or-nothing plan, 4% of the funds of successful projects go to Indiegogo. On the flexible funding plan, Indiegogo charges 4% if you reach your goal, 9% if you do not reach your goal. Transaction fees are an additional 3%.
Pros: No application process, available in every country, diverse spread of projects
Limitations: More expensive if you don’t reach your goal, but without the urgency of the all-or-nothing plan
Sample Project: Ovo: The First Autoplay Online Video Player and App
In a sentence: This crowdfunding website offers a unique type of visibility through a recent partnership with A&E Project Start Up.
Cost: 4% for completed campaign or 8% for partial campaign, with 4% transaction fees.
Pros: Easy to navigate interface, Success School offers tools for building better projects and businesses
Limitations: Step down in terms of traffic from Kickstarter and Indiegogo
Sample Project: Genome Library
In a sentence: This website is dedicated to raising money for anything from personal causes to nonprofits to entrepreneurial projects.
Cost: 5% for completed or incomplete campaign plus 2.2% +$.030 transaction fees
Pros: Deep social network integration to connect to people in your network, cheap and convenient transaction fees with funds going directly to your PayPal, can be used to fund anything, anywhere
Limitations: More difficult to connect with other entrepreneurers and investors, with less than 5% of projects falling into the category of entrepreneur/creative
Sample Project: Caring for Chris
In a sentence: This London based fund-raising site can be used to raise money for anything from paying for pet’s medical bills to creating a short film.
Cost: 3.5% with a keep-what-you-raised model, plus 2.9% transaction fee
Pros: Can be used for public or private projects, anyone can post a project, easy to use
posted from :http://www.forbes.com/sites/katetaylor/2013/08/06/6-top-crowdfunding-websites-which-one-is-right-for-your-project/#!
In a few words what do you think has been the biggest social media lessons of 2013?
I agree with Jessica, Like SEO , we are learning, experimenting and changing. We keep what it works and send the rest of the graveyard ( Google business model).
The challenge is that most of the solutions we find is objectionable by the expert. For example for Video, web and social media SEO . We are on 1st page of Google around 6 times world wide ( I.e . Keyphase " Crowd Funding Mentors" and 25+ other key phases ) , We also receives over 100+ followers, friends and Pluses per day in average.
We have asked for validation and improvement from "The experts" and they do not like what we do. ( Actually one of them send me an Amazon book called Social Media Bulls@#:" ) .
We keep analytic and also measure its magnetization (Sales solves all the pains), then we believe Social Media works since we are measuring its ROI through our work deploying Google fabric, branding, promoting us and our clients and use of Crowd Funding concept ( $ocial Capital ) . For a sample click onhttp://goo.gl/3bEkHx Criticism and validation are welcome , we are stronger in our broken parts :)
CrowdFunding help , CrowdFunding assistance and CrowdFunding Promotion promotemycrowdfunding to build your crowd
The best is for you to contact us directly at 949-442-6666 ext 103 or Contactus@CrowdFundingplanning.co
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