Crowdfunding with Liberty and Justice for ALL

[alert color=blue title=”What is Crowdfunding?” align=center]#Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a business venture. Crowdfunding is a multi-billion dollar industry that makes use of the easy accessibility of vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors. Crowdfunding will increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists. [/alert]

According to a report by economist Robert W. Fairlie, minority small businesses are less likely to receive small business loans than non-minority firms and are more likely to receive lower loan amounts than non-minority firms. In addition to loan amounts, minorities are more likely to receive higher interest rates even with credit profiles that are equal to those of non-minority borrowers. Lending discrimination suits against many major lenders in many cases present evidence that show patterns of discriminatory lending practices against minority applicants.

When we look at the lack of capital access and observe some of the banking practices, the apparent reality is that the banking institutions have failed to properly address the needs of minority entrepreneurs and small business owners.

In this same report Fairlie’s research suggests, “If minority-owned firms would have reached economic parity in 2002, these firms would have employed over 16.1 million workers and grossed over $2.5 trillion in receipts.” The lack of access to capital is not only inhibiting the potential of minority small businesses, it is also limiting the potential of our economy as a whole.

Small businesses are a viable function of our communities’ character. Living places that we frequent and interact with because of the personal and local significance they have in our lives. Growing up in a family business I witnessed first hand how my family worked through the process of building and expanding their business. Operating within a historically African American community in Los Angeles, my mother’s approach was community oriented as a majority of our customers, investors and community supporters were community members. For everything that she put into supporting the community, there was a return that came in the form of a sale, referral or marketing message that supported the business in a variety of ways.

Source: Huff Post – Salim Mhunzi

Currently, small businesses are not allowed to raise funds from unaccredited investors. Title III of the JOBS act will enable companies to raise money from unaccredited investors. Title III is still pending, but is expected to pass in mid-2014. When Title III passes, which will allow unaccredited investors to invest, there will be limitations on how much a company can raise from unaccredited investors. It is expected that companies will be limited to a $1M maximum. However, companies will be able to do a concurrent raise from accredited investors. So, if you’re looking for $3M, you could raise $1M from unaccredited investors and $2M from accredited investors.

Among all companies that concluded successful rewards, equity, or debt campaigns, quarterly revenues increased by an average of 24 percent post crowdfunding (not including amounts raised by crowdfunding).

Of particular note: For equity-based campaigns, we saw a shocking increase of 351 percent quarterly revenue increase.

The results indicate that crowdfunding positively impacts sales, and those that run equity-based campaigns see the greatest quarterly increase.

Recent updates in the world of #Crowdfunding2014