Jun 22, 2014

Crowdfunding, Wisconsin style, begins

Excerpted from Wisconsin State Journal

By Judy Newman

It’s only logical that MobCraft Beer, a Madison craft brewery that makes its ales based on a majority vote by customers, would be the first company to sign up to use Wisconsin’s new crowdfunding law.

“The whole premise behind our company being a crowdsourced brewery is that we are very focused on interacting with our customers. How much more can we be connected with our customers than by having them be part-owners in our company?” MobCraft co-founder and president Henry Schwartz said.

The state’s crowdfunding rules took effect June 1, and as of last Friday, MobCraft is the only company, so far, to take advantage of the financing tool.

What the funding mechanism does for companies is to let them raise up to $1 million — or $2 million, if they submit an audit — through a Wisconsin-based crowdfunding portal.

That’s a lot more money than the typical project seeks using informal crowdfunding websites such as Kickstarter or Indiegogo. It’s also substantially less than a company might raise in a very structured and formalized initial public stock offering through the U.S. Securities and Exchange Commission.

For an investor, Wisconsin’s crowdfunding law is a chance for someone who is not super-rich to own a piece of a company with the possibility of getting back more than just, say, a T-shirt, if it succeeds — but, officials hope, without the risk of going broke if the business fails.

“We’re hopeful that Wisconsin entrepreneurs could find new opportunities to raise money and start new businesses,” creating jobs and boosting the economy, said Patricia Struck, administrator of the Department of Financial Institutions’ securities division.

“I think it’s going to be a game changer,” said Zach Brandon, Greater Madison Chamber of Commerce president. “It brings a whole new class of investors” and it also brings funding to businesses that “largely are not going to be technology-based.”

Read the full article.