The US Senate has just passed a bill that would legalize “crowdfunding” for small businesses. The CROWDFUND Act, an amendment to the JOBS Act bundle that was approved 73 to 26, lowers barriers for investment in companies that haven’t yet gone public. That means that new companies — ideally, the next Google or Facebook — could be funded by small donations from the general public, either through a licensed broker or an accredited portal. In response to concerns that this would make it easier to defraud investors, the Act was amended to include stronger protections and oversight.

In some ways, what the bill would legalize is projects similar to Kickstarter, where a large group of contributors fund an idea. In this case, however, the backers would also get an ownership stake in the company. A companion bill, the Entrepreneur Access to Capital Act, was passed recently by the House of Representatives. The CROWDFUND Act will need to be reconciled to match this bill, then signed by Obama, who has indicated that he will approve it.

Why the Crowdfunding Bill is Good for Start-ups

New legislation that could free up start-ups to fundraise online is gaining steam. Here’s how it could disrupt traditional capital formation.

“Republicans and Democrats may finally agree on something: Small business owners and entrepreneurs need better and more plentiful opportunities to gain access to capital, grow their businesses, and create more jobs.

Last month, the House voted 407 to 17 to pass passed the Entrepreneur Access to Capital Act,which seeks to makes it easier for small businesses and entrepreneurs to raise capital through crowdfunding. The new bill would let let small companies sell up to $2 million in equity online. Investors would be allowed to put in as much as $10,000 or 10 percent of their annual income—whichever is less.

In addition to the overwhelming bipartisan support the bill received in the House, the President supports it as well. In a September 8 address to a Joint Session of Congress on jobs and the economy, the President urged Congress to remove the red-tape—and SEC restrictions—that make it difficult, if not illegal, for entrepreneurs to raise funds in public.

“This bill will make it easier for entrepreneurs to raise capital and create jobs,” the White House noted in a statement. “The Administration looks forward to continuing to work with the Congress to craft legislation that facilitates capital formation and job growth and provides appropriate investor protections.”

Senator Scott Brown of Massachusetts, a vocal Republican supporter of crowdfunding, addressed the Senate Banking Committee last week, urging members to consider crowdfunding as a viable method for entrepreneurs raise funds. He described crowdfunding as “the grease that keeps the gears in the American economy churning.”

Current online investment platforms—such as Kickstarter and Indiegogo—allow people to offer funds for projects, though they do not offer true equity in return. Sites like Microventures do offer equity, but to invest you must be an angel investor. Right now, there’s no legal way for unaccredited people to invest in companies for equity.

“Imagine that,” Brown said. “The next Steve Jobs being held back by rules from the age of the typewriter. When are we going to give the tools and resources to our job creators?  [Crowdfunding] is an innovative way to look outside the box and get up with the times to open up capital markets to new businesses and existing small businesses. It has the potential to be a powerful venture capital model.”

Although much large-scale crowdfunding still illegal in the United States, there are several crowdfuning firms overseas already connecting investors with entrepreneurs. Symbid, a Netherlands-based crowdfunding firm, enables entrepreneurs to secure funding from €20,000 up to €2.5 million. Crowdcube, which is based in the U.K., offers a similar service, but with no investment maximum. Entrepreneurs go online, write their pitch, and offer two numbers: the target—which is the total amount of money they wish to raise and invest in the business—and the equity offered.

Critics to the bill argue that devious entrepreneurs will have open range to set up phony companies and lull neophyte investors into dropping them cash. And because there’s potential for thousands of daily transactions, there would be little oversight. Brown, though, believes the benefits outweigh any risks.

“Americans are allowed to gamble unlimited amounts at casinos, and can send donations to charities halfway around the world with one tap of a trackpad,” wroteBrown in a recent Wired editorial. “Yet, we are legally prevented from making even modest investments in job-creating small businesses.”

Carl Esposti, the founder of Crowdsourcing.org, points out another argument: that the investment risks involved are actually lower, since there will be many investors doing due diligence on the investment.  Therefore, he says, if 150 or 200 people decide to vote on an entity, the aggregate of the risk assessment might indicate that that entity is not such a bad bet.

“There’s an interesting dynamic on whether it actually creates a natural calibration of risk-reward,” Esposti says. “From that perspective, it has some really interesting potential.” “ 

Congratulations to John Scheiman of Motion L.E.D. Inc., for the best One Page and winner of a of a new iPad! 

We hope to see you all again at our next event, on April 10th, on Funding.

A special thanks to all who participated last night, it was a great success! 

Remember to sign up for our 3 remaining events 

March 15, One Page Business Plan ; April 10, Funding Pitch ; May 17, Business Plans Competition.

Learn how to do a Great Elevator Pitch

What do you say when someone at a party asks you what you do?  Your response is your ‘elevator pitch’.  Everyone has one.  You hear them all the time. At a party, you want the person you’re talking with to want to know more.  In a business setting, you want an order or an investment or at least an invitation to continue speaking.

You may have heard of the MIT Elevator pitch contest or seen ‘Dragon’s Den’ on TV.  If so, you have an idea of what an elevator pitch is all about.  Everyone should be able to describe their business in a minute or less.  Having a great elevator pitch is a different story.  It involves creativity, practice and a focus on the audience.  Sound simple?  Well it may be harder than you think to have a great elevator pitch.

Originally, the idea was to have a prepared set of statements about who you are, why you are relevant, and why you should get the business (or money in the case of fundraising), that could be delivered in the time the elevator went from reception to the meeting room floor.  Now, we use these pitches everywhere, from cocktail parties, to sales pitches, to fundraising.

BizTech wants you to be great.  We will first give you an opportunity to design your pitch and practice and then present the pitch to judges.  At the practice session you will learn:

• Pitch Goals
  • Get them to want to know more
  • Get them to give you the money
  • Get them to give you the order
  • Plant an ‘idea virus’
• Pitch Elements
  • Introduction
  • Who you are
  • Who you serve
  • Why you are important
  • What you want
• Delivery Techniques
  • Opener
  • Memorable phrase
  • The Ask

 A week later we will host a contest for the best elevator pitch judged by investors, economic developers, and entrepreneurs.  The winners get cash prizes and free rent at BizTech.

Please join us on February 16^th at noon at BizTech for the practice session and a week later on February 23^rd at 6pm at BizTech for the contest.  It is not often you get a chance to earn $1000 in a minute!

“When you think about new jobs in the future,” he said, “think three things: mobile, social and cloud. These three trends – namely, everything going mobile, social media as an integral part of your daily life and cloud computing – will become employment drivers later in this decade. Job creation follows a pattern that begins with investment and, if you ask venture investors today where they are putting their money, they will mostly name these trends. That investment leads to company creation.”

Though many of those companies will fail, Tauss said, a few will survive to become the big employment opportunities of the future.

Tauss said no one dreamed of Web advertising in 1998, the year Google was formed. And, “no one would have dreamed eight years ago that companies like Disney and ESPN would employ hundreds of people just focused on their social media presence, but they do.

“As social media expands, so will the jobs. We haven’t even scratched the surface of social media uses for everyday small businesses. Just like the Web, where you need Web designers, site administrators and Web sales people, we will need social media designers, administrators and people to sell those products and services.”

For the whole article: http://blog.al.com/huntsville-times-business/2012/02/huntsville_officials_look_to_p.html

RULES:  Entity does not have to be a formed company but cannot have received more than $50k in funding from any source. No props or power point presentations are allowed and The CEO or Founder must pitch.

Contact: Gary Tauss
BizTech
Phone 256 704 6000
www.biztech.org

515 Sparkman Drive
Huntsville, AL 35763
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Press Release

BizTech Announces 2012 Programs

Year of the Entrepreneur

Fifteen years ago, BizTech opened for clients.  Since then we have met with hundreds of entrepreneurs, incubated more than 50 companies, seen many grow and graduate on to thriving businesses, seen some shut down, and some move away.  We have moved locations, changed staff and directors, and even changed our business model.  The constant, however, has been the entrepreneurs themselves.  Almost every day we hear a new idea from someone who thinks they just might have a business.  Never once has someone walked in with a perfect plan.  It is only through talking with customers, investors, potential employees, partners, and even competitors that the entrepreneur learns what will work.  This year we want to have as many of those interactions happen as we can possibly promote.

To encourage and celebrate those brave souls who follow their dreams, we are making 2012 our year of the entrepreneur.  To encourage new businesses we are hosting 5 separate events which focus on a different critical aspect of getting a company off the ground.  First, on January 26^th at 6pm, we are hosting a discussion of what it takes to be an entrepreneur and if the time is right for you.  Some people are born to be entrepreneurs and the time is always right.  Some people can be entrepreneurs when their life circumstances make it the right time (like you just go laid off and don’t have a great idea where the next job is coming from).  Some people will just be frustrated and unhappy at any time if they become an entrepreneur.  We will be hearing from several successful entrepreneurs on how they did it as well as discussing some of the key personal traits entrepreneurs seem to have.  It probably will not surprise you that patience is not one of those traits.  Finally, we will award the most promising idea as chosen by the participants with 2 free months at BizTech to further develop the business.

Each month through May we will follow up with another seminar or contest focused around something you have to have to get a business going.  On February 23rd, we will do our always popular one minute elevator pitch contest where the top presenter wins cash.  On March 15th, we will host a seminar on how to flesh out an idea into a business (they are different things) and award the best one page plan with an IPAD.  On April 10th, we will be helping you put together your investor presentation.  Everyone needs money and you need a great presentation to get some.  Finally, on May 17th, we will have our business plan competition where the winners get cash prizes and present their plans to local funders.

We will repeat these events again in the second half of the year, culminating with the winners from each of the events competing for “BizTech Entrepreneur of the Year” in December.

Call Today and Register (No Cost) : 256-704-6000

Jan. 26, 2012, 6pm: Are You Ready to be an Entrepreneur?

Feb. 16, 2012, 12pm: Elevator Pitch Practice

Feb 23, 2012, 6pm: Elevator Pitch Contest

March 15, 2012, 6pm: Your Business Plan on One Page

April 10, 2012, 6pm: Funding Pitch

May 17, 2012, 6pm: Business Plan Templates

All Workshops are located in the Main Conference Room of BizTech.