Crowdfund Newbie: MBE + Crowdfunding = Access to Capital

MBE + Crowdfunding = Access to Capital
By Ambrose Moses, III
OhioMBE – May 15, 2014

Black entrepreneurs represent a fast-growing segment of business owners. From 2002 to 2007, the number of black-owned businesses increased by about 60% to nearly 2 million, more than triple the national rate of 18%, according to figures from the U.S. Census Bureau.

Despite these numbers, access to capital remains an issue. A study by the Kauffman Foundation found that white-owned businesses have on average more than $80,000 of startup capital, while black-owned businesses have less than $30,000.

I hear you thinking out loud, “Yada. Yada. Yada. So, tell us something new.”

I submit to you that there is something new developing and that many MBEs and DBEs would do well to take advantage of the opportunity.  MBE and DBE businesses should begin today learning, exploring, and positioning their businesses to participate in “crowdfunding”.

On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act (“JOBS Act”) to stimulate growth by helping smaller and emerging growth companies access capital.

President Obama called the JOBS Act a “game changer”, in part, because the law also authorizes the use of crowdfunding, in which a small business can sell up $1 million worth of unregistered stock every 12 months to an unlimited number of family, friends, and general public investors.

This opportunity for access to capital for many startup and emerging MBE and DBE businesses has the potential to enable them to hire necessary employees and contractors; to acquire needed inventory, equipment, and supplies; to increase their capacity to produce and provide their goods and services to the market; and to allow them to develop and implement effective marketing plans.  In essence, this access to capital through crowdfunding will change the game.

However, MBE and DBE businesses must be prepared.  The JOBS Act requires strict compliance with the SEC’s and states’rules and regulations.

Contact OBDC at www.OhioBDC.com to get assistance in setting up and marketing a crowdfund campaign.

 

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