Note: the event location was moved to Centennial Hall, 200 S. Cascade Ave.
A panel of Colorado Springs entrepreneurs and legal experts will discuss the pros and cons of the latest trend in startups: crowdfunding.
The office of U.S. Sen. Michael Bennet is hosting a series of crowdfunding seminars across the state for Colorado small and start-up business owners looking to raise early-stage capital.
In Colorado Springs, Bennet is partnering with Startup Colorado Springs and Epicentral to host the crowdfunding seminar at 5:30 p.m. Aug. 1 at Epicentral, 409 N. Tejon Street, to explain how the latest trend in crowdfunding works. The meeting had originally been scheduled for July, but was postponed due to the Waldo Canyon fire.
The recently approved JOBS Act, signed by President Obama in April, is meant to jump-start business startups by allowing small businesses to use the Internet to raise up to $1 million from small-dollar investors, known as “crowdfunding.”
Crowdfunding has become popular in recent years for art and technology projects with successful crowdfunding sites such as Kickstarter.com, which launched in 2008 and now nearly half of all the projects on the site have been fully funded to the tune of millions in public pledges.
There are many opposing views on crowdfunding for startups. Some local entrepreneurs say the law gives budding entrepreneurs new sources of funding and gives investors new avenues by which to invest.
Others warn the idea may have not been completely thought out.
“The potential for litigation in this area is breathtakingly huge,” said Ric Denton, Colorado Springs Technology Incubator CEO.
Denton will be among eight panelists at the upcoming forum. One issue revolves around startups mixing crowdfunding money with accredited investors, as defined by the U.S. Securities and Exchange Commission. There may be legal issues of trying to mix two types of investors, he said.
“There are a few law firms in town who are gun shy if they see a list of non-accredited investors together with accredited because of the potential challenges,” Denton said.
The JOBS Act is meant to promote American entrepreneurship and innovation while maintaining important protections for American investors, according to the prepared statement from the White House press secretary.
Under the new legislation, crowdfunding must occur through platforms that are registered with a self-regulatory organization and regulated by the SEC. In addition, investors’ annual combined investments in crowdfunded securities will be limited based on an income and net worth test.
The legislation removes some of the previous legal and financial barriers and allows entrepreneurs to be more aggressive about seeking funding. It gives the entrepreneur more flexibility and formalizes the process.
The Colorado Springs crowdfunding seminar includes local panelists: Paul Lizer, CEO of Devium, which used crowdfunding; Jeff Thomas, founder of Invertual; Ben Sparks, attorney; Justin Vause, Accion, a mico-lending institution; Robin Roberts, president of Pikes Peak National Bank; John Street, entrepreneur; and Ric Denton, Colorado Springs Technology Incubator.