DENVER (CBS4) – There’s a new way for start-ups to solicit money while pitching their projects to the world after Congress has given the green light to a practice known as “crowd funding.”
It all started with a sketch two years ago. From that Steve Katsaros set out to invent the world’s first portable solar light bulb. Today his company, Nokero, does business in 120 countries. Katsaros says coming up with the idea was easy. The hard part was financing and he sold a house for seed money.
“A lot of it has just been save up and spend and save up and spend,” Katsaros said. “This is a cycle of entrepreneurs’ poverty.”
Now the bill passed by Congress could open up a whole new venue for entrepreneurs to secure capital. Start-ups post their ideas on a website where anyone can invest in the company and share a slice of the profit.
“If somebody’s got a great idea for everything from an app to a pizza oven they want to put in a restaurant; and now for first time you and I can invest in these enterprises over the Internet, which is something that we’ve been banned from because of the regulations in Washington,” Sen. Michael Bennet said.
Bennet sponsored the legislation and is now going around the state educating entrepreneurs how it works.
Evan Husney, an attorney who helped Katsaros launch his company, says its especially important as traditional venture capital dries up.
“People will now have access to capital from a wider group of people,” Husney said.
“The next company that might be four years down road, depending on what happens with Nokero, I will obviously look at crowd funding as a great option,” Katsaros said.
The crowd funding legislation has safeguards including limiting the amount of money investors can put in so nobody will lose their life savings.