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SANDY — Getting a new business on the track to stability and profitability takes vision, effort and lots of cash. While figuring out the first two can be challenging, the third can mean the difference between success and failure.
About 300 entrepreneurs spent the day Thursday trying to learn what it would take to attract the financial interest necessary to help make their enterprise the next great Utah business success story. They attended the Utah Crowdfunding Conference at the Salt Lake Region Small Business Development Center at the Miller Campus of Salt Lake Community College.
Panel discussions and speakers focused on creating powerful crowdfunding campaigns and viral videos, as well as how to recruit “influencers” and equity crowdfunding.
Equity crowdfunding is the process where people invest in a startup company in exchange for shares in the company. Previously illegal in the United State, the new resource becomes lawful next month.
Instead of offering incentives to donate in exchange for rewards like the Kickstarter model of crowdfunding, equity crowdfunding allows companies to sell actual shares to interested investors, explained Bryce Hansen, assistant director of the Salt Lake Small Business Development Center.
“It is going to allow some companies to raise money where they wouldn’t have before,” Hansen said. The new method will offer an effective way for companies to raise needed capital and let “average people” consider a new investment option.
“Crowdfunding has become a major resource for companies to create good ideas and see their products become reality,” said Jim Herrin, director of the Salt Lake Small Business Development Center. “With the addition of equity crowdfunding this May, the opportunity to bring many more products to market should substantially increase.”
The presence of crowdfunding to support entrepreneurs through online donations has grown from $1.5 billion in 2011 to more than $34 billion in 2015, with that amount expected to increase even more this year, said Dan Baird, a featured speaker at the conference and co-founderer of Crack the Crowd — a company that provides marketing and strategy for crowdfunding platforms and their campaigns.
“This overall industry is huge,” he said. “It doubles every year. There is a huge trajectory of growth.”
Baird also noted that crowdfunding successes produce exceptional results for local economies.
“The jobs that (crowdfunding) creates are Main Street jobs that on average are held for five years,” he explained. “These are fantastic new companies that stay with the local economy and stick around for a long time. It’s about as ideal as that economic growth and everything else can possibly be.”
While crowdfunding is primarily used by startups, there is hope for existing companies that it could be the resource that helps their enterprise “take off.”
“We want to expand,” said Judith Metekingi, founder and principal owner of Vox Medicus, a medical-legal consulting company. “We came here to figure out some ideas.”
After just over a year in business, Metekingi said she knows that crowdsourcing financial support could be the avenue that propels her business into national and potentially even international markets.
“We haven't really known much about (crowdfunding), so this is very fascinating,” she said. “Not only is it giving ideas about crowdfunding, it’s also giving us ideas about marketing. To grow you have to have funding, so we’re looking at new ways to do that.”