BLOG*August 14, 2012
©Greg Spalenka

By Jack Kelly, CEO of Adva Mobile, a mobile marketing and technology firm for Artists, successfully crowdfunded via IndieGoGo.

Crowdfunding is this decade’s new tool for helping Artists raise money to reach their goals – and it just got better. Kickstarter, IndieGoGo, RocketHub, and other Crowdfunding service companies are being used successfully by Artists to raise money for projects, but the average Kickstarter campaign raises about $4,500.

For the Artist with more serious aspirations – and a need for more serious funds – the new JOBS Act signed by the President has a provision that can help.

Kickstarter and other Crowdfunding services require “rewards” for donations, but don’t allow you to offer a share of your profits as a reward for your successful project. That’s called “equity”, and only wealthy people were considered smart enough to invest in businesses – and Artists ARE businesses – where the risk of losing money was high but the potential for making money was significant.

That’s what changed in the JOBS Act. Small businesses – again, that’s you – can now incorporate and sell ownership in their business venture, to the general public, exchanging a portion of your subsequent profits for an initial investment of capital. Equity Based Crowdfunding could become a disruptive force in the music industry, providing capital for the kind of marketing, production and touring support previously provided only by major labels to large Acts. This level of capital – up to $1 million (and there are restrictions on individual investment levels) is now available to small businesses, including those small businesses known as “Artists”.