There are plenty of good business startup ideas, but a big problem is finding the funding to get them underway. For some entrepreneurs, the answer is crowdfunding -- a way to raise money, notably online, from small, individual investors.
Crowdfunding is getting a boost in Virginia because of a bill sponsored by Delegate Scott Taylor (R-Virginia Beach), which passed in the House of Delegates by a 99-0 vote this week. The bill exempts $2 million each year of money raised for startups from taxation under the state Securities Act. Individuals can’t invest more than $10,000 in a single purchase unless they're accredited investors.
Startup funding typically has involved venture capital, seed money, angel investors and the like, which go through several rounds as the business project progresses. Crowdfunding, as the name implies, is more democratic and much faster.
The concept has been around since about 2006 and now is believed to be a $5.1 billion industry. One early user was a Japanese rock band called Electric Eel Shock that raised about $15,000 to start making music. Businesses can involve movies, civic projects or any small, for-profit venture. Another user is Brooklyn filmmaker Spike Lee, who's used crowdfunding for a yet-unnamed work.
Closer to home, Michelle Logan and Marilyn Collins of Richmond have used crowdfunding through the Indiegogo website to create their new business called Marilyn and Michelle.
Their product? “TaTa Toppers,” which are mattress toppers that come with breast-area cutouts and custom inserts. These help women who've had breast surgery or simply have large breasts sleep more comfortably if they tend to sleep on their stomachs or sides.
According to their website: “Our goal is simply to help women who are recovering from breast issues related to cancer, enhancements, reductions or simply large breasted or pregnant gals who are side or stomach sleepers. After all, if you’re recovering from surgery, what you need most is a good night’s sleep. Sweet, solid, sleep.”
The topper costs about $189. The new crowdfunding bill -- which is expected to pass the state senate -- will give businesses like theirs a boost. Both women got the idea for the toppers after going through double mastectomies.