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Funding movement targets small entrepreneurs

Funding movement targets small entrepreneurs

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Published by Crowdsourcing.org

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Published by: Crowdsourcing.org on Jun 12, 2012
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02/03/2013

 
Brian Meece, one of the founders of RocketHub, speaks at the "CrowdFunding MadeSimple" conference at the University of Utah Guest House and Conference Center onFriday, June 1, 2012. (Laura Seitz, Laura Seitz, Deseret News)
SALT LAKE CITY — Utah entrepreneurPhillip Chipping made a name forhimself as the founder of the company now known as ZAGG — best known forits line of protective coverings forconsumer electronic products andhand-held devices under the brandname InvisibleShield.The company's products are sold atretail locations nationwide, including aprime Main Street location at City Creek Center in downtown Salt LakeCity.Chipping sold his interest in thecompany and is working on a new endeavor aimed at improving children's literacy called Knowonder. The project needs $10,000 of initial capital, and Chipping is making a foray into a new funding area to get it started. Welcome to the world of crowdfunding.
By Jasen Lee , Deseret NewsPublished: Monday, June 11 2012 8:16 p.m. MDT
unding movement targets small entrepreneurs | Deseret Newshttp://www.deseretnews.com/article/print/765582462/Funding-movement-targets-small-entrepre...1 of 66/12/2012 1:02 PM
 
Brian Meece, left, and Jed Cohen, founders of RocketHub, speak at the "CrowdFundingMade Simple" conference at the University of Utah Guest House and ConferenceCenter on Friday, June 1, 2012. (Laura Seitz, Laura Seitz, Deseret News)
Crowdfunding — also known ascrowd financing, equity crowdfunding or hyper funding — isan approach to raising capital fornew projects and businesses by soliciting contributions from a largenumber of stakeholders. Financialcontributions are typically made by online investors, sponsors ordonors to fund for-profit ornonprofit initiatives or enterprises."The reason we think our business will work well in that model istwo-fold," Chipping said. "It's apowerful social cause … things thatreally do well are (projects) that really pull people in emotionally."He said when people feel "like they are part of something … with social good," they are more likely to want to donate and offer their support.The key is to offer something in return, something different from the lure of a big payday.Chipping said he would exchange some "perks" or rewards to donors like autographed copies of their books and literacy materials along with some of the original illustrations.He said the money raised would help pay forthe book's illustrator, the print run of thefirst edition and the creation of theinteractive digital app for electronic devices.If the effort is successful, he will be able tocreate a fully illustrated version of the book and develop the digital apps as well."We have limited capital, so anytime we can bring in extra capital to fund the actual
unding movement targets small entrepreneurs | Deseret Newshttp://www.deseretnews.com/article/print/765582462/Funding-movement-targets-small-entrepre...2 of 66/12/2012 1:02 PM
 
Jed Cohen, one of the founders of RocketHub, speaks at the"CrowdFunding Made Simple" conference at the University of Utah GuestHouse and Conference Center on Friday, June 1, 2012. (Laura Seitz, LauraSeitz, Deseret News)Brian Meece, one of the founders of RocketHub, speaks at the"CrowdFunding Made Simple"conference. (Laura Seitz, Laura Seitz,Deseret News)
project, the better," Chipping explained."Basically, (this model) is allowing you topre-sell your product. It allows you to gaugethe success of your product."There are four major types of crowdfundingplatforms — equity-based, lending-based,reward-based and donation-based,according tocrowdsourcing.org, an industry  website. The classifications are based on thefunders' primary motivation for engaging incrowdfunding. Anequity-basedcrowdfundingplatform(CFP) is a model in which investors receive an interest in the venturethey support. Another equity position could include revenue orprofit-sharing arrangements. A lending-based CFP occurs when investors receive fixed periodicincome payments and expect repayment of the original principalinvestment — in stark contrast to equity-based and lending-basedmodels, reward-based and donation-based models are characterized by non-financial motivations for engaging in crowdfunding.Reward-based CFPs allow investors to gain a non-financial benefit inreturn for financial contributions. Non-monetary rewards often takethe form of a token of appreciation or the prepurchasing of productsor services.Donation-based CFPs provideinvestors with a way to donate tocauses that they want to support,
unding movement targets small entrepreneurs | Deseret Newshttp://www.deseretnews.com/article/print/765582462/Funding-movement-targets-small-entrepre...3 of 66/12/2012 1:02 PM

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