AARP Using Crowdfunding to Start Your Business

Active Desk Rider invention combines exercise bike and computer work desk.

by Joe Eaton,

Sitting pretty: Jim Martin’s Active Desk team hopes to draw investors through crowdfunding. — Kevin J. Miyazaki/Redux 

Investing in You

Like many entrepreneurs, Jim Martin built his big idea in the garage. Martin, a 55-year-old associate professor of exercise and sport science at the University of Utah in Salt Lake City, fashioned a pedaling workstation from an old recumbent bicycle and some lumber. The bike-desk, he thought, would not only help deskbound workers pump off the pounds, it could also make a great business.

But Martin faced the classic start-up quandary: How to fund it?Building enough desks to launch a business could run $250,000. A traditional lender would be unlikely to stake him that much on anuntried business. Was he willing to cash out his retirement and tap his daughters’ college fund? “I guess I am just too conservative for that,” Martin says.

Instead, he turned to the university’s Technology Commercialization Office, which helps faculty convert research into businesses. It suggested a new tool for raising start-up cash — equity crowdfunding.

Here’s how it works: Fledgling companies launch fundraising campaigns on websites where investors can purchase equity or debt. If the business succeeds, those shares of the company will rise in value and can be sold for a profit. But no money changes hands until the company meets a predetermined funding goal.

Technology & Electronics Discounts for AARP Members — Save on gadgets for home and on the go.

Crowdfunding itself isn’t new. Since 2009 the best-known funding platform, Kickstarter, has raised more than $450 million for projects ranging from amateur satellites to pop albums. But Kickstarter-style projects rely on a tin-cup donation model: Contributors receive perks such as a T-shirt or a mention in a funded film’s credits. Equity crowdfunding turns donors into investors.

And this practice enjoys the bipartisan blessings of Congress: In April 2012 the Jumpstart Our Business Startups (or JOBS) Act paved the way for small companies to offer stock online. The idea was to stoke job creation by making it easier for entrepreneurs to raise money.

It’s still not clear when money will begin changing hands. The Securities and Exchange Commission (SEC) has to release crowdfunding regulations before Web portals can start offering equity. But fans of the model have declared that equity crowdfunding will shake up the investing world. “This is a monumental shift in the way small businesses raise capital,” says Alon Hillel-Tuch, a founder of the crowdfunding website RocketHub, which is considering offering equity. Since word got out about the JOBS Act provision, RocketHub has received hundreds of inquiries a week from businesses, Hillel-Tuch says.

Proponents of equity crowdfunding say it will give the general public a first shot at start-up and small-business investing. Currently, start-ups seeking cash usually rely on venture capitalists and deep-pocketed “angel investors.” Sherwood Neiss, principal of Crowdfund Capital Advisors and coauthor of Crowdfund Investing for Dummies, says the new rules will let smaller mom-and-pop investors in on

more on


Tags: ,


How Crowdfunding Has Changed the Startup GameSingularity HubCrowdfunding has become a multi-billion-dollar industry, funneling millions of dollars into thousands of projects. Technology in particular is one of the leading categories on popular fundraising platforms like Kickstarter an [...]

The GuardianCrowdfunding: the new buzzword for academics needing research moneyThe GuardianArchaeologist Dr David Petts, from Durham University, has also used crowdfunding, raising almost £25,000 to fund a project on Lindisfarne, off the Northumberland coast. The dig, in June, led to [...]

Airbitz, BitPay, and Wefunder leverage bitcoin and new US ...Brave New CoinEquity crowdfunding platform, Wefunder, recently started accepting bitcoin. On the same day, popular bitcoin mobile wallet provider Airbitz announced the ...Wefunder Launches 10 New Regulation Crowdfunding Offe [...]

CNNMoneyDorothy's fading red slippers saved by $300000 in crowdfundingCNNMoneyThe ruby red slippers worn by Judy Garland in the beloved 1939 film "The Wizard of Oz" are set to undergo a major conservation effort following a successful crowdfunding campaign. The Smithson [...]

Raise Money for Personal Bills on Crowdfunding SitesKiplinger Personal FinanceWhile crowdfunding is often associated with business start-ups, many people are finding it a fruitful way to raise money for personal needs. Sites such as YouCaring, GoGetFunding, GoFundMe and GiveForward ha [...]

Crowdfund InsiderReport: Title II Crowdfunding Data on Three Year Anniversary Tops $1.47 BillionCrowdfund InsiderFifty Dollars Money Grant Crowdnetic has published its annual Crowdwatch report on Title II investment crowdfunding as enacted under the JOBS Act of 2012. Title II, or Reg [...]

How The Fix Crowdfunding Act Continues To Help Improve The Success Rates Of Small BusinessesCBS LocalIn July of this year, Republican Patrick McHenry from North Carolina spearheaded two important bills. Both passed through the House in a landslide vote as part of The Fix Crowdfunding [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

City turns to crowd funding to help replace boardwalk over Flint RiverMLive.comFLUSHING, MI -- The city of Flushing has opened a crowdfunding campaign to replace a wooden boardwalk over the Flint River. The goal is to raise $50,000 in 60 days on Patronicity, a crowdfunding website, to [...]

AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

CFB Finance

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |