Crowdfunding rules changing the startup equation - New York News

Crowdfunding rules changing the startup equation

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TAMPA (FOX 13) -

From the big screen to a small story book, the little guys are all smiles when it comes to crowd funding.

It brought "Legends of the Knights" to the big screen, and now Kyrja Withers hopes to fund a "huggable Rupert" for her latest storybook series.

"In order to entice them into donating for you, you need to give them a perk -- something that gives them incentive to give to you," she explained.

But soon that could be changing. Instead of just getting a perk, you can actually invest in the company.

"I call it the great democratization of the crowd funding process," said Kendall Almerico, CEO of the crowd funding website Clickstartme.

So for example, when Apple launched, it was big money investors putting their money behind the product. Now, practically anyone could put pennies towards getting a piece of the profit.

"I think it's a tremendously good thing. Someone may be able to get into the ground floor of the next Apple or the next Microsoft. The next big thing. You don't have to be rich to do that," said Almerico said.

However, Kyrja disagrees.

"For me, the way that it is now and the way that they're projecting it to be is the difference between buying one ticket to go to an NFL football game and investing in the NFL team itself," she says.

Kyrja fears crowd funding will turn away reward-based projects.

"Those of us who are trying to make a huggable Rupert or trying to get a CD done, or something smaller, have nothing to offer you that you want except money, and I'm not giving you a piece of my business, because it's not big enough, and so I'm no longer relevant," she argued.

However, Clickstartme sees broad opportunity. Both reward and investment crowdfunding will survive. Though investors and sellers will see strict government oversight.

"There are rules that are going to be in place about certain information you need from people, certain background checks that have to be done in order to do this type of thing, certain limitations of what people can spend," Almerico explained.

Regulations to prevent risky gambles like pouring life savings into a project.

"It's going to change the way that businesses are started, it's going to change the economy," he concluded.

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