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From NewHope A founder wears many hats: leader, evangelist, visionary and more. One of the heaviest of those hats is as a fundraiser. Great ideas don’t become good businesses without money. Too often, this chase for capital becomes all-consuming. There are alternatives to friends and family, angels and venture capitalists. Crowdfunding, both rewards-based and equity, is a growing avenue for early-stage food startups. Cheryl Clements, founder and CEO of PieShell, a rewards-based food and beverage crowdfunding platform, shared, “There is currently an appetite for funding food. Investment in food and beverage has tripled since 2013 and the crowd wants in on the action.” Stating the obvious, reward-based crowdfunding campaigns provide product samples, brand swag and recognition in exchange for investment dollars. Equity crowdfunding is a democratized way to sell shares of the company.

On May 16, new SEC rules become effective allowing businesses for the first time to provide equity to investors through crowdfunding platforms. Given uncertainty in the funding market for startups, these new rules could be extremely useful to entrepreneurs. How? A new infographic published by the Office of Advocacy using previously unreleased research shows you how. Early-stage funding is critical to the survival of innovative startups. Venture capital markets are a primary source of early-stage funding, but they are moving away from financing new startups. However, crowdfunding offers startups unique fundraising opportunities to help them withstand this negative momentum. In addition to raising capital, crowdfunding can establish an audience for a product or service; both things strengthen an innovative startup, making a risky investment worth a second look from VCs. See the infographic here. New Advocacy Report: The Effect of Crowdfunding Performance and Outside Capital .

What it is: Crowdfunding is about persuading individuals to each give you a small donation -- $10, $50, $100, maybe more. Once you get thousands of donors, you have some serious cash on hand. This has all become possible in recent years thanks to a proliferation of websites that allow nonprofits, artists, musicians -- and yes, businesses -- to raise money. This is the social media version of fundraising. There are more than 600 crowdfunding platforms around the world, with fundraising reaching billions of dollars annually, according to the research firm Massolution. Crowdfunding Basics

Crowdfunding has a reputation as an accessible way to secure funding for startups and small businesses. It’s quick and easy; just throw up your video, backers start investing their money, and you’re set. Anyone can do it, right? The truth is, it’s far from that simple. For every story of someone whose project went viral and exceeded its goal in the first few hours, there are several from earnest entrepreneurs whose crowdfunding efforts missed the mark. So, why do more crowdfunding campaigns fail than succeed? What can you learn from a crowdfunding failure? I talked to entrepreneurs who’ve made crowdfunding mistakes, and got their perspective on what went wrong with their initial campaigns, and what eventually led them to success. Read more from BPlans

It seems that almost every day, there's another startup proudly announcing that it has reached its crowdfunding goal. With so many success stories out there, it's easy for other aspiring entrepreneurs to believe that sites like Kickstarter are their golden ticket to launching a business. But the reality is, crowdfunding isn't always as simple as it seems. "New entrepreneurs often believe that crowdfunding their venture or project is an easy endeavor," said Sang Lee, founder and CEO of Return on Change. "However, it requires much groundwork as well as a strong support network to truly make it a success. As they say, there's no such thing as a free lunch." Crowdfunding Challenges

The December-January issue of The Small Business Advocate newsletter features new research from Advocacy, the chief counsel’s review of 2013 highlights, and the chief economist’s perspective on the important policy choices of 2014. The issue also includes reports on regulatory activities in several areas that affect small business: crowdfunding, cybersecurity, reverse auctions, and critical habitat designations. In This Issue (PDF) The Year of Innovation: The Ride to Entrepreneurial Advancement Factors Leading to Firms’ Hiring Their First Employee Positive Small Business Indicators in 2013 and the Challenge Ahead New York City Roundtable on Crowdfunding Comments Filed on Fish and Wildlife Service Proposals Congressional Testimony on GSA’s Reverse Auctions Advocacy Comments on NIST’s Preliminary Cybersecurity Infrastructure

The Securities and Exchange Commission voted unanimously to propose rules under the JOBS Act to permit companies to offer and sell securities through crowdfunding. "Consistent with the JOBS Act, the proposed rules would among other things permit individuals to invest subject to certain thresholds, limit the amount of money a company can raise, require companies to disclose certain information about their offers, and create a regulatory framework for the intermediaries that would facilitate the crowdfunding transactions." Note the SEC is "seeking public comment on the proposed rules for a 90-day period," which will end sometime in mid-January. See more from the SEC .

From here : When it comes to crowdfunding, most people forget that there are tax implications. Did you really think Uncle Sam would give you a pass? Everyone who raises money through crowdfunding will be taxed as it is considered revenue. There is one exception to the rule, however, and that is either you are a registered non-profit 501(c)(3), or you have secured an authorized fiscal sponsor to chaperon your fundraising campaign. So when you do plan your crowdfunding campaign, check to see if you would be eligible for a tax-exemption. Basically, there are three taxable ways money raised in crowdfunding can be categorized: Sales Tax, Income Tax, or Gifts.