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By now, you’ve probably heard that the JOBS Act passed. The “Jumpstart Our Business Startups,” or JOBS Act, will allow entrepreneurs to crowdfund online to fund small businesses and startups. Plus, entrepreneurs can raise funds from non-accredited investors. The catch: The regulations aren’t in place until the SEC review period is up in January 2013.

While the bill itself is effective immediately, still pending are how the sections that fall under the SEC scope will be regulated. The SEC has 270 days to focus on how to regulate the offerings targeting non-accredited investors. In the meantime, entrepreneurs will be able to crowdfund only to accredited investors beginning July 4, 2012.

So what does the JOBS Act mean for entrepreneurs right now — and how can entrepreneurs make the most of this time?

1. Gather the necessary documents

For starters, entrepreneurs who want to move forward with crowdfunding can begin to gather all the important documents needed to launch a campaign. These include:

I. Financial status of the company or project, including:

  • Information explaining if there is debt (including the amount) and the reason for the debt
  • Information on other rounds of financing or capital that the company has raised already explaining the method used (personal, friends & family, angel investors, VC, bank loan, etc.)
  • Incorporation documents that should include the total number of shares in the company, the amount of equity being sold, and the valuation of the company

II. Financial statements certified by an officer in the company stating that all documents are accurate if the total amount to be raised is under $100,000. If the amount is over $100,000 but under $500,000, then the financial statements should be certified by an independent public accountant. If the amount to be raised is over $500,000, then the financial statements must be audited.

III. Company’s tax return for the most recent year

IV. Business plan including executive summary, financial forecasts, etc.

V. Capital structure explaining who owns what percentage of the company

2. Prepare a great pitch

After gathering the documents, the best thing to do while waiting for the SEC grace period to end is to prepare a convincing pitch. Pledging campaigns differ greatly from investment campaigns, and it is important to keep in mind what motivates contributors in each case.

Pledging comes down to three things:

  • People connect with the message and reason for the project
  • People connect with the unique way in which the sponsor is trying to raise funding
  • People connect with some physical aspect of the project such as the gifts they get from pledging

When creating a pledging campaign, it is important to pull at the emotional heartstrings of potential contributors and to plan your pitch accordingly.

Investments, however, are more of a strategic decision than an emotional one, so with investment campaigns, it is important to present the business case professionally and fully by:

  • Having all the required paperwork handy for viewers to access
  • Having an attractive business proposition
  • Establishing credibility and trust of the executive team through well written bios, references, etc.

3. Plan the marketing campaign of your pitch

One of the most important factors in a crowdfunding campaign is marketing the campaign. You may have the best cause or business idea, but if nobody knows about you, the money simply will not flow in. By marketing through leveraging your networks and reaching out to people within your circle of friends, family, colleagues, and possibly customers, your campaign will have a much greater chance of success.

In order to reach out to people, try:

  • Linking your fundraising post to all social media pages, such as Facebook, Twitter, and LinkedIn
  • Linking to the company’s website
  • Providing constant updates and being very responsive to all questions (trust me — you will have a lot of questions)
  • Creating a YouTube and Vimeo video that showcases the team and any other details you can share. Transparency is key here!
  • Reaching out to the media to try to get coverage of your story — remember to reach out to blogs and established outlets
  • Making sure that all messages exchanged, whether via email, social media, snail mail, etc, have a signature containing information on how to get in touch with you

Just because some JOBS Act regulation won’t be in place until 2013 doesn’t mean you can’t get a head start on the competition — and crowdfunding — by gathering your documents, preparing your pitch, and outlining your campaign in the meantime. Note that you will be able to equity crowdfund for potential investment of accredited investors starting July 4, 2012.

Tanya Prive is the co-founder of Rock The Post, a crowdfunding platform for entrepreneurs and small business owners who are seeking funding through pledges or equity based crowdfunding. 

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