By Phyllis Furman
A local startup is looking to get a head start as it waits for the SEC to spell out rules on crowdfunding.
Rye-based iCrowd, started by former Wall Street portfolio manager John Callaghan and Brad McGee, the ex-chief strategy officer of Tyco International, is one of dozens of companies lining up to get in on the crowdfunding bonanza.
McGee was one of a group of Tyco employees who were handed unauthorized perks by disgraced ex-Tyco CEO Dennis Kozlowski, who was convicted and thrown into jail.
The iCrowd co-founder, who was not charged, left the company in 2003 and has since been advising small businesses.
Now he’s waiting for the SEC to set down crowdfundng rules that will allow small businesses to raise up to $1 million a year from Main Street investors. Once that happens, iCrowd intends to become a registered crowdfunding portal.
These types of crowdfunding sites are expected to charge companies anywhere from 8% to 15% of the money they raise.
In the meantime, iCrowd is looking to assemble a community of small business owners and potential investors. The startup has just launched a free social network to connect entrepreneurs with peers, mentors and experts.
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By Devin Thorpe
Crowdfunding is not just about creating jobs, it is about creating jobs for the right people. In April of 2012, President Obama signed the JOBS Act into law, authorizing crowdfunding of equity and debt for the sake of creating jobs. The more time I spend studying crowdfunding and working with the leaders in the crowdfund community, the clearer it becomes that not only will crowdfunding create jobs, it will create jobs in the right places.
Recently, I sat down in a hidden valley near Park City, Utah with Candace Klein, CEO of Somolend and founder of the nonprofit Bad Girl Ventures, who explained that overwhelmingly, the people were polled about crowdfunding indicating a desire to raise capital are women, African Americans and Hispanic Americans. In other words, crowdfunded capital will flow to entrepreneurs in the communities that have been most disadvantaged in America.
According to Klein, women own over 50 percent of the businesses in the United States but receive less than 5 percent of “traditional capital” and less than 3 percent of venture capital. Klein notes that she founded Bad Girl Ventures specifically to address this problem. BGV has funded 45 women-owned businesses with a total of $5 million, but also had to turn away thousands of women. This inspired Klein to launch Somolend so that she could provide capital to thousands of women owned businesses. This also allows “women investors to build their own wealth,” she notes.
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