Crowdfunding - We're on to Something Big for Artists

When Adva Mobile undertook our Crowdfunding exercise, we knew we were testing a new idea. Raising money for a project by convincing a large group of friends, family, business partners and even total strangers to contribute a small amount of money wasn't a totally new idea, however past successful efforts were oriented towards cultural, philanthropic or creative projects. Crowdfunding for a commercial project was indeed testing a new idea.

Now we have the Crowdfunding Bill, part of the Jump-Start Our Business Start-Ups, or JOBS Act, through Congress and signed by the President. For those of you who haven’t been following the JOBS Act, it is a bill that will make it easier for startups and small businesses to raise funds, especially through online Crowdfunding.

The Crowdfunding exercise we underwent using IndieGoGo (like KickStarter) differs from those contemplated by the JOBS Act bill because, under the JOBS Act, we can now reward investors with equity. I believe Equity Based Crowdfunding  will fundamentally alter, in positive ways, small businesses, including those small businesses known as "Artists".

Touring Bands and Recording Artists should watch the early efforts of Artists who attempt Equity Based Crowdfunding projects very carefully. While fans may be willing  to donate small contributions for a nationwide tour, SXSW concert, or studio session, the significant money needed for large marketing campaigns, previously only available from large labels, may now be available to a much larger pool of Artists. Crowdfunding without equity through campaigns with KickStarter and IndieGoGo are still available to the Artist, so Equity Based Crowdfunding represents an alternative when more significant capital is needed.

The "crowd" also provides benefits beyond capital to Artist businesses. For example, a touring band that raises money via Crowdfunding may now have 150 new passionate fans as shareholders, who can serve as a great sounding board for new ideas and as brand evangelists -- a critical asset in Artist promotion.

Equity Crowdfunding will go a long way towards alleviating Artists' capital access needs, and benefit investors in the process. The capital markets have finally entered the 21st Century and the future for Artists looks bright.