Q&A: Crowdfunding

by John Rake

Q: How can crowdfunding help my business? 

A: Crowdfunding is a method of raising capital through a large number of small contributions from the general public using the internet. Currently, entrepreneurs use crowdfunding platforms like Kickstarter.com to raise funds for a new business or product by offering rewards in exchange for donations, rather than offering ownership in the business. As early as 2013, businesses may use crowdfunding to offer direct investment opportunities. The CROWDFUND Act (passed in April 2012 and subject to forthcoming regulations from the SEC), will allow businesses to raise up to $1 million from a large number of ordinary investors over a 12-month period. Interested entrepreneurs should consult with a knowledgeable business attorney on how to capitalize on the CROWDFUND Act and crowdfunding in general.

 

Originally published in the Portland Business Journal.