Tuesday, March 12, 2013

Crowdfunding: Poised to Take the Step from Contributor to Investor

Posted By on Tue, Mar 12, 2013 at 3:30 PM


For some time now, Boise Weekly has been following the story of The JOBS Act, a bill Congress passed to overhaul Securities and Exchange Commission regulations put in place after the Great Depression to help curb corruption in the investment industry.

A key component of the bill eases restrictions on small investments to companies, the idea being that Internet technology and the concept of crowdfunding could be used for small businesses to get access to capital in ways other than banks.

After passing the bill, Congress handed it over to the SEC to write the new rules.

One of the bill's biggest boosters has been waiting in the wings at SXSW: EarlyShares.com.

The company had a booth on the trade floor to discuss its business model and the upcoming soft launch of its entertainment division sometime next month.

"Average people will be able not just to crowdfund movies, but to become investors in them," said public relations officer Cristina Hermida. "That way if the movie is financially successful, they'll be able to get money for it, instead of just perks."

For the entertainment division, Hermida said EarlyShares.com has partnered with 5x5 Media to help vet projects, a process she described as similar to the review period businesses go through when applying for bank loans.

Hermida said that even though the SEC has yet to finish writing the new rules, EarlyShares.com can move forward with its Entertainment Division because it is dealing primarily with a core group of investors at the outset, not the general public.

When the public will be able to get in on the crowdfunding movie biz depends entirely on the SEC.

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