Devin D. Thorpe:  Championing Social Good

Get ready!  Here it comes!  Crowdfunding Will Explode in 2013!

To read the entire article, click here to visit my blog at Forbes.com.

Yes, that headline has three exclamation points.  I took some out.

The world of entrepreneurial finance is changing rapidly; we are at a tipping point that will make what seems like a vibrant part of our global economy today seem small in one year’s hindsight. 

Whether you are a service provider, social entrepreneur, angel investor, venture capitalist, or one of the millions of people ready to become a small-scale start up financier, it is time to pay attention.

Estimates for annual crowdfunding transactions go as high as $500 billion annually compared to 2011’s $1.5 billion (anticipated to be $3 billion in 2012).  If crowdfunding even begins to approach that scale, it will completely change the landscape for start-up financing.

Jason Best and Sherwood Neiss helped lead the successful effort to get crowdfunding approved in the JOBS Act passed earlier this year.   Niess explained that the folks as the SEC described themselves as “a reactive and not a proactive organization.”  The SEC explained that they needed direction from Congress before they could do anything about crowdfunding equity.  “We delivered an act of Congress.  They weren’t expecting that.”

The Act gives rulemaking authority to the SEC and FINRA; Best and Neiss are now meeting regularly with regulators to help define the shape of these rules—which could determine the success or failure of the Act.  

According to Neiss, regulators approach novelty with a focus on preventing fraud—it’s what they deal with every day.  They aren’t in the business of creating jobs—even though that is the legislation’s intent.

To read the entire article, click here to visit my blog at Forbes.com.

If you hang around me much, you’ll hear start talking about crowdfunding. This is a new name for something that has been around for a long time, raising money. But make no mistake, this isn’t your father’s fundraising.

Using the power of social networks and crowdfunding sites like Rockethub, IndieGoGo, StartSomeGood, Fundly and others, social entrepreneurs and nonprofits can create funding campaigns and raise money more efficiently than ever in the past.

Some readers will recall that I used StartSomeGood to raise some money for publishing Your Mark On The World last spring. You graciously provided the money required to get the words of my book from my computer to market. Thank you!

In exchange, those who helped with my campaign received copies of the book (autographed for the larger donors) and acknowledgement in the book, along with a plug for your favorite cause. 

This kind of crowdfunding is commonly known as reward- or perk-based crowdfunding. The organization doing the fundraising offers rewards to the donors.

Last Spring, at the same time I was running my campaign, Congress passed the JOBS Act and the President signed it. The new law allows companies to raise equity or debt through approved crowdfunding portals. So, instead of organizations offering rewards, they will offer ownership in the organization or promissory notes.

The law gives the SEC and FINRA the responsibility to regulate this new model for securities offerings. Now we are just waiting for the rules. It appears likely that the final rules will be issued in time for securities-based crowdfunding to begin in 2013.

Most people in the crowdfunding community believe that this will replace the old-style friends and family rounds of financing and angel rounds as well. Instead, friends, family and angels will all participate in crowdfunding rounds. Much of the leg work involved will remain the same, but the public platform should create the ability for many more people to raise money for their new businesses, including social ventures.

It is hard to convey the scale of the change here, but since 1933, the U.S. Government has not allowed any type of public offering of securities for start up businesses. Equity crowdfunding represents a historic change that most people still don’t understand. But you will!

If you’ve had experience with crowdfunding, please share in the comments!

On March 22, 2013, Utah will experience the biggest crowdfunding event in its history. 

The Community Foundation of Utah is sponsoring the event in an effort to raise an unprecedented amount of money in a single day. Fraser Nelson, Executive Director of the Community Foundation of Utah, said:

“Similar events in states from Colorado to Florida have raised tens of millions of dollars and involved hundreds of thousands of people. The Park City Foundation raised $595,642 in 24 hours on November 16 for Summit County nonprofits.”

Love UT Give UT is looking to partner with companies in Utah to encourage their employees and customers to participate in this day of giving.

Nelson notes, “Companies like Energy Solutions, Questar, DropShip, MarketStar, Avalon Health Care, Orange Soda and IntegraCore are using this event as a way to position their company as an innovative industry and philanthropic leader.”

Finally, Nelson says:

The Foundation will take care of everything, your employees will be able to support the causes that matter to them, and your company will receive great recognition in the business and nonprofit community

Corporate participation does not require a commitment of substantial time or resources. Visit the Community Foundation of Utah website to learn more or contact Frazer Nelson at 801-559-3005.

If you are not connected to a business that can support Love UT Give UT, you can help by “liking” their Facebook page.

This morning, we held the first Crowdfunding Workshop for Social Entrepreneurs. It was a great success, with participation from as far away as Zambia! 

The live, private video chat format provided for excellent interaction and an opportunity for the workshop to be genuinely consultative. 

We’ve scheduled five more workshops. We’ll run the series at no charge this time, but when we repeat the series there will be a modest fee for participation.

If you’d like to join us for the next one—even if you missed the first session—be sure to register here to receive the information on how to participate.

The next session will be Friday, March 1, 2013 at noon EST.

On Friday, we had our second crowdfunding workshop. For the workshops, we use Google+ Hangouts that allow for everyone in the group to see and hear the others and to participate fully in the discussion.

These fully interactive sessions are informative for everyone as we get access to the insights and experience of every member of the workshop, not just the benefit of my study and experience.

If you would like to participate in a future workshop, register here.

On March 22, 2013, the Community Foundation of Utah will hold its first Love UT Give UT 24 hours of giving—a massively coordinated one-day crowdfunding campaign. If the people of Utah rally around the effort, well more than $1 million could be raised to support Utah’s nonprofits. 

About 400 nonprofit organizations have registered to participate in the event, so Utahns will have their choice of causes, from AAA Fair Credit to the Utah Zoological Society. 

Yesterday, I wrote in my Forbes blog about Minnesota’s record setting giving day last November when they raised over $16 million in a single day. Minnesota is a much larger state and had ten times the number of participating non-profits, but their experience suggests that Utah should expect to raise much more than $1 million next Friday.

Today, you can visit the site: loveutgiveut.org. On the site, you can browse the nonprofits that have registered and identify those that interest you most. 

Generous donors have already arranged $200,000 in matching grants so your money can go even further.

Together, Utahns, we can make a difference—a truly remarkable difference—right here in our own community on March 22, 2013.

Let’s do some good.

Devin D. Thorpe

Crowdfunding is a vital part of the future for social entrepreneurship, ranging from start-up social ventures to long-established nonprofits seeking to innovate. 

The internet, especially using platforms like Fundly, Razoo, Causes and StartSomeGood, allows social entrepreneurs to access capital they never could before. 

Implementation of the JOBS Act later this year will accelerate what is already an incredibly rapidly growing arena, with the legalization of investment crowdfunding. This will bring an order of magnitude greater scale to crowdfunding immediately and could lead to a two order of magnitude scale difference, taking crowdfunding from a robust $3 billion per year in 2012 to an incredible $300 billion over the next decade.

Entrepreneur Sydney Armani in Palo Alto has organized a conference there on April 4th and 5th to introduce Silicon Valley to crowdfunding. There will be a great slate of speakers and I am honored to be among them.

If you are interested in crowdfunding for your social enterprise, I encourage you to attend this event.