Is #Crowdfunding the Cure for Unemployment?

When one hears the word Crowdfunding they might be inclined to think about Kickstarter, an example of a web site that connects financial backers to small business start ups based on a donation.  People who give money to a start up on Kickstarter do not own a piece of that business nor will they receive a return on investment in the same way one can profit from purchasing stock or acting as a venture capitalist.  Well, move over Wall Street & drain the Shark Tank because the game has changed significantly and here is how:

“In 2012, the Jumpstart Our Business Startup (JOBS) Act was signed into law in the United States.  Some of the provisions of this law are still pending, but one of the main outcomes of this law will allow private companies to sell equity shares or revenue sharing to the general public.  As soon as the SEC implements the rules for Title III of the JOBs Act, which is expected to be outlined in 2014, unaccredited investors will be able to obtain equity stakes in companies through online platforms. Unaccredited investors with an annual income or net worth less than $100,000 will only be able to invest the greater of $2,000 or 5% of their net income or net worth in a transaction. Unaccredited investors that have an annual income or net worth greater than $100,000 will be able to invest up to 10% of their annual income or net worth in a transaction. In a 12 month period there is an overall investing cap of $100,000 for accredited investors.” – The Ultimate Crowdfuding 

That update was from 2012.

Hot off the press – the laws did change!

In October of 2013, the SEC commission passed laws allowing for financing from Crowdfunding to be raised from the American public and for the public to become part owners in that business.   This means that every day people can actually own a piece of small businesses and profit from that investment if the business does well.

Crowdfunding sites and platforms have already popped up all across the web to connect every day people to the aspirational dreams of those with small business ideas, documentary films, art, novels, etc.  This means that the digital infrastructure is already in place and scalable to connect every day Americans to the small business start ups but now acting as actual investors!  In fact, one company is setting out to start a reality TV show, presenting small business start ups to the general public to further act as a catalyst for this coming change.

So, what’s the connection to unemployment?

Well, the whole purpose of this law was to fuel our Small Business economy.  As many people have been laid off from major corporations trying to lean or outsource to remain competitive in a toucher economy, there may actually be no better time for them to consider combing their knowledge, skills and dreams to pursue that small business idea they’ve always had.

Aquiring loans from banks might require a solid financial record, including steady income and employment, and those seeking funding from venture capitalists to pursue their dreams may encounter the same criteria.  Any pursuing these avenues and being declined now have an alternative to consider.  Anyone who can tell a compelling story might actually capture the hearts, minds and dollars of every day citizens who can also benefit financially from the successful outcome of the business venture.

This not only opens doors for the currently unemployed with bright business ideas but  also opens doors for a variety of specific skill sets that will become even more in demand.  This also means new opportunities to create a businesses that supports this new industry.

For example, the new law only allows for crowd funding campaigns to advertise through media, and particularly social media, where established communities of people can easily spread the word.  Social media experts have new opportunities to help campaign for these businesses, web developers will be needed for crowd funding portals and web sites and any with a talent to create engaging video or digital content likely to catch attention through social media will likely be in demand. 

But it does not stop there.  Compliance professionals who worked for corporate America may have the know how and capability to support an influx in emerging small businesses.  There could be an upsurge in small business consultants or perhaps previous political campaign managers may be ideal to help run a crowd funding campaign.   Human resources professionals may establish businesses to broker talent for new emerging small businesses.

Possibilities are endless!  

The key point here is that every day people have a new option to invest and one that is much closer to home and their communities.  Crowdfunding has the potential to usher in a bright new future and new sources of employment where everyday people create, support and directly benefit from the businesses they want to see thrive within their own communities.  

The new motto for the unemployed – “Don’t seek a job, start a business!  Get the funding you need from your community and give right back by being the success story know you are!”  

What do you think of crowdfunding? Would you ever participate? 

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Cameron Comstock

Cameron Comstock is a leader with The Hartford who specializes in driving virtual employee engagement and management innovation. He is is an expert at leveraging contemporary communication methodology to drive high levels of collaboration aimed at solving business problems and cultural transformation. Connect with Cameron.


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