It’s not alchemy. It’s not having a money tree. It’s crowdfunding – the latest means for entrepreneurs or anyone with an idea or project to get funding. Tom Russo and Ken Cook had as their guest this week on Open for Business Bob Metzler, an attorney and Principal with Cohn, Birnbaum & Shea in Hartford. Bob has looked long and hard at crowdfunding, what it entails, and what the roadblocks for it might be.
Simply put, crowdfunding solicits “contributions” over the web. Using a portal such as kickstarter.com, you list your project, how much money you want, and ask for it. For a company called Pebble Watch it was a “home run”. They wanted $100,000 to develop and launch their new “programmable face” watch. Using crowdfunding they now have $10,266,845. And for all of that money Pebble Watch gives up no equity. They give individual contributors just watches (in some cases lots of watches).
And the equity question is where the problems start. The investment industry talked to the SEC and they talked to Congress and now everyone has their hand in the mix. Legislation is flying about and exactly how things will turn out is yet to be determined. Tune into Open for Business as Tom Russo, Ken Cook and Bob Metzler explore all of it, and provide you the most informed and up to date information.