March 29, 2024

Growing Your Business

Financing

Venture Capital | Self Financing | Commercial Loans | Special Interest Financing | Florida-Based Loan Programs | Crowdfunding | Grants

| 4/21/2016

Crowdfunding

Raising Capital Outside the Box

The growing popularity of crowdfunding as a way to underwrite small business growth was triggered by passage of the federal JOBS (short for Jumpstart Our Business Startups) Act in 2012. In a nutshell, this act allows private companies to solicit investors on the Web and opens the door for anyone to become shareholders.

In October 2015, the SEC officially ruled that non-accredited investors may invest in startups, a privilege once reserved only for accredited investors. The new rules, which take effect in May 2016, also limit the amount of money an issuer can raise through crowdfunding, impose disclosure requirements on issuers and create a regulatory framework for broker-dealers and funding portals that facilitate crowdfunding transactions.

Should you consider investment crowdfunding? Maybe, maybe not. But at the very least, you should investigate the possibility and take a look at sites like AngelList, Crowdfunder, Early Shares and EquityNet for more information.

Good Advice

“Crowdfunding can be an impactful opportunity ... but the required financials, legal documentation, appropriate platform and registration requirements are substantial.  If equity crowdfunding is of interest to you, make sure you conduct the due diligence and get the proper legal advisors before seeking investors.”
— Jim Taylor, Florida SBDC at USF Connect

Grants

Money Not Easily Obtained

Little federal grant money is available to launch for-profit small businesses. However, some businesses engaged in scientific research and development (R&D) may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs if their projects meet federal R&D objectives and have high potential for commercialization. To learn more, visit www.SBIR.gov. Enterprise Florida’s Phase 0 Program may be able to assist your firm in putting together its SBIR/STTR Phase 1 proposal.

Some business grants may be available through state and local programs, nonprofit organizations or other groups. These grants do not necessarily represent “free” money; many require the recipient to match funds or combine the grant with other forms of financing such as a commercial loan. For information about grants available in Florida, visit www.florida.grantwatch.com.

Tags: Florida Small Business, Ways to Grow Your Business

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