Eve Picker is at it again. The pioneer behind downtown Pittsburgh loft space and living, and developer of the first Tiny House in Pittsburgh, she is involved in a new enterprise — a first for Pittsburgh — called equity crowdfunding. The founder and president of Small Change explains the new and innovative concept here.
We’ve all heard the stories.
WidgetCo is spurned by venture capitalist. WidgetCo launches a Kickstarter campaign. WidgetCo raises $10,000, or $50,000 or $11 million.
It’s the story that America loves. David versus Goliath. Crowdfunding versus venture capital. Little guy does good.
Crowdfunding, the sourcing of funds from a crowd of everyday people, entered into our psyches just a decade ago and it has taken us by storm. You probably know someone who has raised (or tried to raise) funds on a crowdfunding platform. And you might have even given $10, $25 or $50 for some project that captured your attention in exchange for a reward that you probably didn’t really want. If you did, you are part of an enormous global crowd, expected to donate $34.4B on 1250 crowdfunding platforms in 2015.
What inspired you to donate? Maybe you know the people behind the campaign? Or maybe you want to support a local company, an industry you are part of or you just love the idea. Whatever the reason, you were willing to give some money to a venture to get it off the ground, understanding that you will never get those dollars back.
Now imagine that you might get those dollars back. And imagine that you might even get a return. This is where the story gets really big.
Welcome to equity crowdfunding.
In 2012, Congress passed the Jumpstart our Business Startups (JOBS) Act and equity crowdfunding was born. This law encourages funding of small businesses or buildings by easing various securities regulations. Just three years old, it shows promise of being wildly successful. This is evidenced by a new online financial industry that is rapidly emerging. The real estate sector alone, an industry that was $0 in 2012, is expected to top $2.57 billion in 2015.
Pittsburgh will soon join in. In Garfield, the developers of the Tiny House are seeking to raise equity through crowdfunding, instead of financing construction with a bank loan.
And this is despite the fact that perhaps the most important part of the Act has stalled. Now we have Title II for so-called accredited investors. Title III, which would permit everyone to invest, is yet to come.
So hold onto your hats. Crowdfunding like you’ve never seen it before is about to change the world.
Eve Picker is the founder and president of Small change.
