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Arizona entrepreneurs may get boost from crowdfunding law

Upstart Arizona companies have a new way to raise money as a state equity-crowdfunding law debuts. But while this represents a potentially exciting opportunity, investors must be wary.

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Arizona’s new equity crowdfunding law takes effect July 3.

It might spur economic development by helping tiny companies gain financing. It might enrich some shareholders.

But it certainly brings new levels of risk to the investment marketplace.

The law, which Gov. Doug Ducey signed three months ago without any dissenting votes in the Legislature, allows fledgling Arizona companies to raise modest sums of money by selling shares to Arizona residents through Internet intermediaries.

The law seeks to capitalize on the crowdfunding trend, in which people make donations, often to receive perks or rewards, through websites such as Kickstarter and Indiegogo. In fact, websites and social media likely will prove to be critical tools for matching companies with investors.

Under the new law, Arizona companies seeking financing will be able to raise up to $1 million over a 12-month period, assuming they haven’t undergone a financial audit in their prior fiscal year. If they have been audited, they can sell up to $2.5 million of securities.

The new rule is designed to ease the many disclosure, regulatory and cost hurdles associated with selling shares in the stock market. “It’s a great tool for startups and growing tech companies with a story to tell,” said Kevin Walsh, a securities-law attorney at Quarles & Brady in Phoenix.

RELATED: Farnsworth: ‘Equity crowdfunding’ bill could create more jobs

A blueprint for the Arizona law was provided by a provision of the federal Jumpstart Our Business Startups Act, passed in 2012 but for which equity crowdfunding rules haven’t yet been finalized by the Securities and Exchange Commission. Another section of that act lets corporations raise funds through mini-IPOs or initial public offerings, though at greater cost than with equity crowdfunding, Walsh said.

Arizona’s equity-crowdfunding law

A new Arizona law takes effect that will allow small companies to raise cash from investors with fewer costs and disclosure requirements compared to selling shares in the stock market. Here are some key provisions of the new law:

-Companies that haven’t undergone a recent audit can raise up to $1 million in a 12-month period, while recently audited firms can raise up to $2.5 million.

-Companies can’t accept more than $10,000 from any individual, except for “accredited” investors with relatively high incomes and net worths.

-Investors will receive less information from companies, and their shares likely won’t be liquid in terms of frequent trading.

-The new state law restricts fundraising to Arizona-based companies seeking to raise money from Arizona residents.

Economic-development officials hope the rule will attract promising young companies, or at least keep them from heading to the roughly 20 other states that have adopted similar laws. “Arizona is trying to prevent a brain drain,” Walsh said.

But equity crowdfunding won’t work for everyone. Some companies will still find it more worthwhile to apply for traditional bank loans or financing from venture capitalists, especially those requiring more than $2.5 million. Other companies won’t qualify because they won’t be able to meet various Arizona-centric requirements such as having their headquarters here, generating at least 80 percent of their revenue in the state and having at least 80 percent of their assets here, said Walsh, who expects to provide legal guidance to companies interested in equity crowdfunding.

Nor is fundraising success guaranteed. Companies won’t be able to accept more than $10,000 from any individual unless that person is an accredited investor — someone worth of at least $1 million or who earned at least $200,000 (or $300,000 if married) for the past two years. Investments will be restricted to those made by Arizona residents.

For investors, the companies most likely to seek money through equity crowdfunding would be among the newest, smallest and riskiest around. Arizona counts roughly 200 corporations, according to researcher Morningstar Inc., yet roughly three-quarters of them are struggling “penny stocks,” with stock trading near or below $1 a share. Many equity-crowdfunding companies would be even smaller, less mature and more speculative than the state’s penny-stock corporations.

“There will definitely be people who lose money, and some of the companies won’t be able to make it,” said Neal Van Zutphen, a certified financial planner at Intrinsic Wealth Counsel in Tempe. He suggests people view equity crowdfunding commitments as their most speculative investments — not far removed from visiting a Las Vegas casino.

One reason equity-fundraising companies will be riskier is that there’s no guarantee their shares will trade in an organized market. The most likely exit strategy for a company would be acquisition by another entity or person, though the most successful might dream of selling shares one day in an IPO. The lack of liquidity means investors should be prepared to hold on for years.

Also, investors will receive much less disclosure material from companies — even recent audited financial reports might be lacking.

On the other hand, equity-crowdfunding deals offer a chance to get in on the ground floor. In some cases, prospective investors might already know the principals of a start-up company — as relatives, neighbors or former co-workers, offering a chance to join up with them early.

“It’s an exciting opportunity, especially for people with connections to a local business,” Walsh said.

Reach the reporter at russ.wiles@arizonarepublic.com or 602-444-8616.

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Publishing Campaigns Grow On Kickstarter

Publishing Campaigns Grow On Kickstarter

Crowdfunding

By Calvin Reid |

May 16, 2014

Crowdfunding, and Kickstarter in particular, continue to make inroads in book publishing, providing financing for everything from one-off projects to support for entire lists.

Kickstarter’s general publishing category is managed by Maris Kreizman, who’s been on the job just a few months, along with Margot Atwell, while the comics category is managed by Jamie Tanner, a published cartoonist. PW recently spoke with Kreizman and Tanner, who outlined how they work to assist campaign organizers; they also discussed the growth and impact of crowdfunding on publishing.

Kreizman is a former editor at the Free Press and is the former editorial director at Nook Press, B&N’s self-publishing channel. She’s also got a book coming from Macmillan’s Flatiron Books imprint in 2014. While she has not personally run a Kickstarter campaign, she said, “I have a lot of ideas about how to do it; a publishing Kickstarter campaign doesn’t have to be a book, it can be an author’s tour or an event.” She added, “People are really empowered now to try self-publishing and create their own stuff.”

She’s right. In 2013, there were just under 6,000 publishing projects launched on Kickstarter, with $22.2 million pledged (compared to 5,634 such projects with $15.3 million in pledges in 2012). Overall, the publishing category has a 32% success rate. In comics, which is treated as a separate Kickstarter category, 1,401 projects launched and the category generated $12.5 million in pledges in 2013. The prior year, there were 1,170 comics projects launched and $9.2 million in pledges. Comics projects on Kickstarter have a success rate of nearly 50%.

Kreizman said her job is “to look at every publishing campaign, magazine, and book.” Indeed, she noted that, because the platform is so automated, it’s important to let creators know that “a human being looks over every project” and to “reach out to the publishing community.” Kreizman will attend BookExpo America in New York in late May and the Brooklyn Book Festival in the fall, and she has other speaking engagements slated for the year, at which she will offer tips and encouragement to campaign organizers and receive feedback directly from the publishing and self-publishing communities.

“Everyone has a different idea about how to use [Kickstarter] in publishing,” Kreisman said. She pointed to Fantagraphics Books, an indie comics publisher that launched a successful campaign at the end of 2013 and raised $220,000 to fund its entire spring 2014 list of nearly 40 titles—an unprecedented use of the platform. “I’d love to see more small presses and literary magazines do the same thing,” Kreisman said.

Tanner, whose graphic novel The Aviary (AdHouse Books) was nominated for an Eisner Award in 2008, has managed a successful Kickstarter campaign (raising $7,555 in 2009 to self-publish a new graphic novel), and, much like Kreizman, he said his job is “to be a resource, to help creators with their campaigns.” He also noted that a big part of his job is outreach (he was heading to the Toronto Comic Arts Festival earlier this month).

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Photo: Calvin Reid

Jamie Tanner, community manager for comics on Kickstarter.

The comics category has the fourth highest success rate on Kickstarter, behind dance (70%), theater (64%), and music (55%). “The comics community got [Kickstarter] right away,” Tanner said, also citing the Fantagraphics campaign. “The broader publishing community is catching up. Kickstarter is a tool.” He added that the high success rate of comics projects also “demonstrates that people still love print.” Indeed, “setting up a [Kickstarter comics] project, offering rewards and a delivery date, is very much like any conventional comics publishing project,” he explained.

This year, Kickstarter has introduced more subcategories to help connect users with projects that interest them—publishing added YA and academic subcategories, among others; comics added anthologies, graphic novels, and Web comics. Kreizman and Tanner both urged organizers to keep their rewards simple: “You don’t need T-shirts and tote bags; people just want what you’re making,” Kreizman said. And while there are “best practices” for launching a Kickstarter campaign, Tanner encourages organizers “to do some weird dream project that they may not believe has an audience,” asking, “Why not?”

Kreizman said Kickstarter is working on “new tools for organizers” and she urges them to “create books they wouldn’t have done otherwise.” She added, “I love to talk about people who want to start their own presses. Consolidation [in the book industry] has led to people looking for new ways to publish. We’ve only scratched the surface of what we can do here at Kickstarter.”

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Pocket Sized Printer Moves Across Page

Pocket-Sized Wonder-Printer Would Work Its Own Way Across a Page

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Pocket-Sized Wonder-Printer Would Work Its Own Way Across a Page

With what has to be one of the most ambitious Kickstarter projects to come along in a while, the folks behind this Mini Mobile Robotic Printer want to revolutionize the mobile office. Because of instead of carrying a page-wide device that has to pull paper through it, this little marvel will instead print directly on a piece of paper while it rolls around on top of it.

The printer’s arrow-shaped design makes it easy to properly position on a page—you just need to make sure it starts in the upper left-hand corner of a piece of paper. It works on any sized piece of paper, but with a standard letter-sized sheet the current prototype can fill a page in just under a minute.

Pocket-Sized Wonder-Printer Would Work Its Own Way Across a PageSExpand

Its built-in ink cartridge is promised to churn though around 1,000 pages before needing to be replaced, but that’s assuming every page you print isn’t solid black. And at the moment the print quality is a less-than-amazing 96×192 dpi, but it’s claimed that that will be improved if and when the Mini Mobile Robotic Printer becomes a reality.

Its creators are currently trying to raise $400,000 on Kickstarter to make it a reality, but there are certainly some very steep roadblocks to making it reliable and accurate enough to be worth carrying around. You can reserve one for yourself with a donation of $180, but you’ll have to be patient since delivery isn’t expected until early January 2015 at best.

Admittedly, it’s a little hard to get excited over a printer, especially one that seems so implausible. But if this thing ever does see the light of day, it will certainly be a must-have addition to any road warrior’s kit. And if you only find yourself in need of a printer a few times a week, it has the potential to replace that giant gray box on your desk. [Kickstarter via Pocket-lint]

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Film Raised $2 Million in One Day on Kickstarter!

‘Veronica Mars’ film’s online fundraiser hits $2M goal

Published March 13, 2013

Associated Press

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    This 2007 publicity photo supplied by the CW shows Kristen Bell, who plays the title role in “Veronica Mars” on The CW Network. (AP/THE CW)

LOS ANGELES –  “Veronica Mars” fans just bought themselves a big-screen version of the cult favorite TV series.

A crowd-sourcing campaign on the Kickstarter website to raise $2 million for the project hit its goal in less than a day.

“Veronica Mars,” which starred Kristen Bell as a young sleuth, ended its three-season run in 2007. With Bell’s help, series creator Rob Thomas started the effort Wednesday to make a big-screen version.

More than 33,000 contributors had pledged $2.1 million as of Wednesday evening, and the total was still growing.

In his online pitch, Thomas promised, “The more money we raise, the cooler movie we can make.”

The movie is the fastest project yet to reach $1 million on Kickstarter, hitting the mark in 4 hours, 24 minutes. It’s also the most-funded film or video project to date, according to a spokesman for the site. Previous top movie fundraisers are the planned “The Goon” ($442,000) and “Charlie Kaufman’s Anomalisa” ($406,000), both animated.

Thomas said “Veronica Mars” owner Warner Bros. has given the project its blessing, and Bell and other cast members are ready to begin production this summer for a 2014 release. A studio spokesman said a limited release, meaning it may not be on thousands of screens or in every city, is likely at this point.

The fundraising campaign, which was confirmed by Thomas’ representative at United Talent Agency, ends April 12.

“You have banded together like the sassy little honey badgers you are and made this possibility happen,” Bell said in an online message, promising the “sleuthiest, snarkiest” movie possible.

Bell is back on TV in “House of Lies,” the Showtime series starring Don Cheadle.

She and several “Veronica Mars” cast members appear in a lighthearted video on Kickstarter in which they mull the prospect of reuniting.

The series averaged between 2.2 million and 2.5 million viewers in its two-year run on the now-defunct UPN and final season on the CW network. Those modest numbers are overshadowed by the intense fan devotion that has kept dreams of a movie alive.

Backers are eligible for various goodies, ranging from a PDF copy of the script to be sent on the day the film is released (for a $10 pledge) to naming rights to a character (for $8,000). An appearance in the movie, available to one $10,000 contributor, was snapped up.

Crowd sourcing has given filmmakers a new way to get always-elusive funding. At last month’s Academy Awards, the short documentary “Inocente” became the first Kickstarter-funded film to win an Oscar. It received $52,000 from 300 contributors.

Read more: http://www.foxnews.com/entertainment/2013/03/13/veronica-mars-film-online-fundraiser-hits-2m-goal/?intcmp=features#ixzz2NUHfCNm5

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Project: Shadows

My good friends, and recently married couple, Alfred “T-Virus” Trujillo and Cara Nicole (AZ Powergirl and cover model for Twisted History and the upcoming Blood Bank novel by yours truly) are producing a new comic book series called Project: Shadows.  Alfred is already a famous comic producer and artist, invited to many conventions and a featured guest at the Phoenix ComicCon as well as many others.  Cara Nicole is well known as AZ Powergirl.  Please help support this dynamic duo and the rest of their team.

Here is the kickstarter link:

http://www.kickstarter.com/projects/1264805463/project-shadows

Project shadows

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