Kestner says their hope was to raise $35,000 through the site, which allows visitors to provide financial support to artistic or entrepreneurial endeavors. The money would allow them to produce about 200 Twine devices.
Slightly more than a month after starting their online fund-raising, Kestner and Carr had collected more than $500,000 for their project. And now, ironically, it’s the venture capitalists who are calling them.
They are among the first wave of local entrepreneurs to try “crowd-funding’’ to finance their business idea. And the approach could become more common if a new bill, introduced by US Senator Scott Brown, makes it through the Senate.
Introducing his “Democratizing Access to Capital Act’’ in November with an opinion piece on Wired.com, the Massachusetts Republican asked: “Have you ever wished that you had somehow invested in Facebook, Twitter, or Google before those companies became billion-dollar brands, back when they were first getting started? The sad truth is that under our current laws, you never even had the chance.’’
The law now limits crowd-funding to companies, like the maker of Twine, that produce physical products, which they presell to gung-ho customers. (The customers don’t get a stake in the company.) But many software makers and other virtual businesses have no such products to presell. Their fund-raising, by law, is restricted to accredited investors - people who have a net worth of more than $1 million, or consistent annual income exceeding $200,000.
That’s where new legislation would come in. Brown’s bill, and a similar one passed in the House, would open crowd-funding to all kinds of start-ups. The goal is to help more entrepreneurs raise money more easily, and presumably create jobs as their companies grow.
