I have to confess, I’ve never believed in the camping by the White House — trying to make the proverbial “Instead of cursing the darkness, light a candle” as my personal (perhaps idealistic) motto. Ultimately, just like many other entrepreneurs frustrated with a broken financial system that somehow got detached from society’s needs and those who aspire to support them, I’ve converted myself into acrowdfunding educator and evangelist.
But if you are not interested in politics, it doesn’t mean politics are not interested in you. I was recently honored to be invited to the White House which hosted the “Champions of Change” event — this time with a “focus on entrepreneurs who exemplify the promise of crowdfunding to fuel the growth of startups, small businesses, and innovative projects across the Nation” as the White House press release revealed (for the full text and Champions’ bios please click here). Among distinguished guests there was the Crowdfund Intermediary Regulatory Advocates (CFIRA), a leading crowdfunding organization that works closely with the Securities & Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) on setting up new industry standards.
A highly encouraging tone was set right in the beginning by Tom Kalil, Deputy Director forTechnology and Innovation for the White House Office of Science and Technology Policy. He defined crowdfunding as an “inherently democratizing force for innovation and entrepreneurship” and acknowledged that “a new generation of crowdfunding platforms are on a horizon” (meaning investment-based crowdfunding platforms based on JOBS Act). Further revelations from the twelve Champions of Change – selected by the White House entrepreneurs-crowdfunders who sparkled unrivaled passion, intelligence and humbleness, made me conclude with the following points.
Crowdfunding is a true indicator of what the community needs are. I could not help but wonder if government officials are taking notes too. To me, each of the twelve Champions who revealed their stories, was a clear representation of what the community’s current needs are – and where the federal government money might be shifted to. For example, the initiative of Adam Chase who launched the global crowdfunding platformWatsi where people in need can fund medical care, was a clear evidence that our healthcare system is still in crisis. Marcin Jakubowski, Ph.D., who started a Kickstarter campaign for the development of the Global Village Construction Set (GVCS) and Peter Platzer who crowdfunded a space exploration and education company, are both a living proof that science has been under-financed and under-utilized for years. The solar education projectthat has been crowdfunded by Michele Clark, made me realize again that we have to leave oil before oil leaves us. In short, all of the projects were clearly in a “social entrepreneurship” realm but alas clearly not fundable by the existing VCs or banks.
I am, therefore I crowdfund. For any small businesses, the two most widely used sources are owner investment and bank credit. I was not surprised to hear that practically all of the crowdfunding Champions have turned to the crowdfunding as a last (or only) chance to get seed money. Aurora Anaya-Cerda revealed that it took her “almost 4 years of being rejected by every single bank you can think of”. After launching a 40-day crowdfunding campaign on Indiegogo (I actually bumped into Slava Rubin, the Indiegogo’s founder, later at the Conference Center), she was finally able to open abookstore that now is the only in New York featuring art and writing by Latino writers. Another celebrated crowdfunding Champion, Premal Shah, president and co-founder of legendary Kiva.org (that recently crossed one million’s entrepreneur that received funds), stressed that 7 out of 10 businesses that apply for a loan today are being rejected. Now Kiva.org raises more than $2.5 million in crowdfunded loans from a global community each week. Kiva’s Repayment rate is 99.01%.
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