Entrepreneurs in Mississippi will soon be able to look for start-up capital by selling equity in their company through crowd-funding on the internet. The fundraising strategy marks a shift in how businesses can raise money.
Angela Blackburn is one of the founders of Lucky Town Brewing Company in Jackson, which began making beer after successfully launching a crowdfunding campaign.
"It was a difficult process for us to secure funding," says Blackburn. "So one of our other partners came across a couple other successful brewery crowdfunding campaigns and thought that might be a way for us to raise our initial seed money."
Crowdfunding is a way for businesses to raise capital by soliciting small amounts of money from a large number of people. To entice investors, Lucky Town offered giveaways; a beer can koozie at 25 dollars, a tee-shirt at 50 and so on. That's how crowdfunding typically works.
But Mississippi is joining the growing number of states that will allow entrepreneurs to use crowdfunding to sell equity in their companies; sort of like a miniature stock exchange. Secretary of State Delbert Hosemann's Office is in charge of overseeing how businesses go about employing this new way to raise capital.
"This is where you will own part of the business," Hosemann says. "You look on that business plan, if you put up $5,000, you may own five or ten percent of that business starting up. I think you'll see a totally different type of investor here. It'll give small investors a chance to look on, and know just as soon as anybody else does, about a great investment in Mississippi. And these are all Mississippi companies."
Businesses will be able to begin crowdfunding their start-up next month.