Entrepreneurs, consultants and potential investors Friday explained and dissected crowdfunding, a means for small-business owners to raise early-stage capital through social media and online.
Sen. Michael Bennet and the Colorado Technology Association led the seminar in a packed conference room at the University of Colorado Denver.
Bennet and other senators included the crowdfunding provision in the JOBS Act, which was signed into law by President Barack Obama in April. JOBS (Jumpstart our Business Startups) makes it legal for startups to raise money in small chunks from a large number of non-accredited investors, reducing the regulatory burden.
The Securities and Exchange Commission has until Dec. 31 to write new rules and regulations for this type of equity investing.
Crowdfunding — mostly through the website Kickstarter — has previously been used in the film and music industry.
"According to crowdsourcing.org, in 2011 approximately 450 crowdfunding platforms worldwide raised nearly $1.5 billion," Bennet said. "The same report projected that the funds raised through crowdfunding will nearly double this year — and that's even before this legislation goes into effect.
"I believe this is going to be incredibly important for Colorado's entrepreneurial community and small businesses ... that are struggling to obtain access to capital."
A similar seminar took place Thursday in Boulder, and more are scheduled.
"We will marshal all of this input and take it with us to the SEC, where the good people there will have the benefit of listening to your voices for once," Bennet said.
Panelists, who took questions from the audience, included Dave Eichoness, co-founder and chief executive of Tagwhat, a Colorado-based mobile encyclopedia; Steve Katsaros, founder and CEO of Nokero, which manufactures a solar light bulb; Jonathan Beninson, president and CEO of FirstFunder, a crowdfunding platform; and Noah Pittard, special counsel for Cooley LLP, a law firm.
"Regardless of the money amounts, having this tool in my arsenal will be incredibly valuable," Eichoness said.
Pittard called crowdfunding "a really cool way to engage with people who think their business is awesome."
Katsaros, asked why investment bankers have been critical of crowdfunding and have predicted that investors will lose all their money, said: "People don't like change. These are small investments, they're capped and they make sense."
John Mossman: 303-954-1479 or firstname.lastname@example.org