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SAN FRANCISCO (
Dun-Well Doughnuts of Brooklyn, N.Y.,
Walk in Love clothing store of Lancaster, Pa., and tech company
Satarii of Belmont, Calif., are three examples of small companies that had successful
crowdfunding campaigns to raise money for their business on
Indiegogo launched in 2008, originally to help independent filmmakers raise money. The next year the crowdfunding site expanded its platform to all industries. Today it boasts as the leading international crowdfunding campaign vehicle.
As President Barack Obama prepares to sign into law the Jumpstart Our Business Startups Act, or JOBS Act, which includes a measure to allow businesses to raise equity investments through crowdfunding platforms, Slava Rubin, CEO and co-founder of Indiegogo, says his company is ready to comply with the new law.
"This is exactly how government can catalyze job creation, encourage the entrepreneurial spirit and maximize the possibilities of online crowdfunding platforms like Indiegogo simply through cutting regulations - and at zero cost to taxpayers," Rubin said in a statement. "We're excited how this bill will democratize fundraising and as demand develops for equity crowdfunding we expect to enter that space."
TheStreet caught up with Rubin to get a better understanding about crowdfunding companies like Indiegogo.
How will the new law change your business?Rubin: Indiegogo has been around since 2008 and now we're distributing millions. We allow anybody to raise money for absolutely for anything. We have many examples of for-profit small businesses using Indiegogo to raise capital. Offering profit will bring in a whole new wave of funders.
We'll check with our customers but ... the SEC will write the regulations of what is needed to happen. It's hard to change until I know the actual rules. That said we are looking forward because this is a very exciting time.
What do you say to those critics who worry about fraud and abuse in the crowdfunding system? Rubin: There are four reasons why anybody funds anything. 1. They care about the person, cause or idea. 2. They want the perks, the product or the experience [they] get in return for the funding. 3. They want to be a part of a community. The fourth is for profit. Right now Indiegogo services the first three reasons dynamically and anybody can raise money. The fourth is illegal in America.