Crowdfunding PART 3(A)– Alternatives: Rewards-Based Crowdfunding

Posted by on Aug 5, 2013 in Crowdfunding and Fund Raising

The prior 2 crowdfunding discussions focused on what crowdfunding is under Title III of the JOBS Act and its potential disadvantages should the SEC and FINRA ever get around to promulgating the applicable final rules…

Today the discussion will focus on what, if any, alternative crowdfunding opportunities are out there, given you can’t yet rely on the exemption in Title III of the JOBS Act to raise capital from the general public.

Alternative Crowdfunding Opportunities– REWARDS-BASED CROWDFUNDING

Rewards-based crowdfunding is perhaps the most familiar form of crowdfunding and does not require an exemption from the SEC’s registration requirements of typical offerings because there is no “offer” or “sale” of securities as those concepts are defined in applicable Securities laws.

Under the rewards-based crowdfunding method, a company or an individual can raise funding for a project by promising individual donors that they will receive some specific reward from the project when the project is complete.

The classic example of a rewards-based crowdfunding method is an author or a filmmaker trying to raise money for a book or a documentary by promising those who donate that they will receive a free copy.  Thus, the rewards-based crowdfunding method is analogous to the pre-sale of goods and services.

There are many companies who have used rewards-based crowdfunding platforms to raise or help companies raise capital, including Kickstarter, Inc. and Indiegogo, Inc., and the popularity of this fundraising platform continues to grow.  Kickstarter, for example, has helped raised over $732 million and successfully funded more than 46,000 different creative projects since its inception in 2009 .  (Check it out:

For more information on other crowdfunding alternatives to the delayed Title III exemption in the JOBS Act stay tuned for Crowdfunding PART 3(B).

Also, if you’re interested in learning more about how to raise capital for your company or project, please get with an attorney who can help bring some of this to life.