Arizona Attorney Jonathan Frutkin has recently published a new book about this new source of finance, known as “equity crowdfunding”. According to Frutkin, the same power of online funding will soon let local companies raise capital online – and more importantly, make customers into owners, increasing the market share of businesses that successfully leverage this new opportunity.
There has been widespread recognition of the emerging power of crowdfunding, the online phenomenon that provided more than $10 million for iPhone-compatible watch creator Pebble and $5.7 million for the upcoming Veronica Mars movie.
The book, titled Equity Crowdfunding: Transforming Customers into Loyal Owners, provides insight into how business owners can turn their customers into loyal customers while raising money for their company.
“Equity crowdfunding is the single largest marketing opportunity for local businesses to transform mere customers into loyal owners,” Frutkin said when describing the concept. “By resetting the relationship between corporation and patron, the new rules for crowdfunding are going to fundamentally shift the way entrepreneurs think about both raising capital and creating long-term engagements with their customers.”
Interest in crowdfunding drastically increased after President Barack Obama signed the JOBS Act (Jumpstart our Business Startups) in 2012 legalizing equity crowdfunding, subject to new rules being agreed by regulators. A total of $2.7 billion was provided through crowdfunding by individual donors last year, according to reports by research firm Massolution — up 81% from 2011. This space is only going to heat up further when SEC rules for the JOBS Act are released this year, paving the way for equity crowdfunding.