Primer on crowdfunding for small businesses. The startup or small business faces daunting challenges in attracting funding. Simply, startup funding isn’t simple. The Jumpstart Our Business Startups Act of 2012 (the JOBS Act) added another arrow in the quiver of those looking for funding sources for their startup or small business. Crowdfunding has been around for a while, but the JOBS Act added an entirely new dimension to crowdfunding. This blog post discusses innovations recently introduced to allow the small business to attract investment through crowdfunding. The new crowdfunding rules are “designed to assist smaller companies with capital formation and provide investors with additional protections.” Crowdfunding may not be for every small business, but you should at least familiarize yourself with the contours of the JOBS Act crowdfunding and decide whether it is an avenue that your small business may want to pursue.
If you ask entrepreneurs what are their major challenges in getting a new business off the ground, the three most common responses are money, money, money. There are indeed other major challenges but the primary concern of most new businesses is how to attract startup funding. Whether the entrepreneur is opening a small service business or introducing a new product onto the market, the challenge of funding looms large. When these small business owners face a major hurdle in attracting funding to support their new businesses, either as they are starting out or as they try to grow the business, they have at least three options: funding their business with their personal reserves; taking out a loan; attracting investors. This Rosten Law blog briefly discusses each of these options.