Crowd Funding FAQ’s

What is Crowd Funding?

Crowd funding is the latest vehicle being used by entrepreneurs to raise capital for new business startups in exchange for equity or a reward.

What is Equity Crowd Funding?

Equity crowd funding is an exchange of stock, units, or other form of ownership transfer exchanged for a capital investment. Equity crowd funding campaigns are subject to State and Federal securities laws which remain currently undefined by the Federal Government leaving risk in the equation for both parties. The Entrepreneur is stating a value which is often hard to quantify in exchange for capital from accredited and non accredited investors. The stock only has value if an exit strategy is clearly defined and executed otherwise investors are buying phantom stock with the expectation of liquidity in the future. People investing in equity campaigns should view the transaction as a loan to a friend that you may never see a return on to avoid disappointment should the venture fail to produce the promised results.

What is Rewards Based Crowd Funding?

Rewards based crowd funding is a non-equity model for entrepreneurs to raise capital without the legal restrictions of equity campaigns because no ownership is promised or transferred. Instead the entrepreneur usually offers a product or prototype in exchange for donations of capital to fund the campaign. Capital is promised far ahead of delivery to fund the production of the reward or campaign once a goal is met. Typically the donation is not captured until the goal is met or the reward is ready to be produced or shipped. Once the goal is met the future date of delivery is promised. If goals are not met the rewards do not ship and the donation is either not collected or returned to the funder in full.

Why did Karen Burns Photography build its own crowd funding platform for La Culture du Vin?

La Culture du Vin originally ran a campaign on Kickstarter in May of 2014 for 30 days to raise $10,000. This took place at the exact same time they were coordinating two weeks of filming in France from June 3rd to June 16th. It was impossible to market a successful campaign and plan the trip for the production in the 30 days set for the campaign. Nearly 20% of the goal was met before the deadline and it was apparent that Kickstarter brought nothing to the campaign other than additional expenses and disappointment to funders who pledged donations hoping to get the reward they donated to receive. The campaign ended with the goal un-met, rewards un-shipped, and donations un-collected leaving everyone un-fulfilled. Upon reflection of the campaign it was realized that Kickstarter was not providing anything special or of value to the funders or the production. The team at Karen Burns Photography already had PCI Compliant merchant accounts, were skilled in building e-commerce solutions and ultimately would be responsible for making the campaign a success. These circumstances left little value in returning to an outsourced crowd funding platform for a solution.

Why did La Culture du Vin choose a Rewards Based Crowd Funding model?

The creators of La Culture du Vin are seasoned entrepreneurs experienced in raising capital through Private Placement Memorandums and understand the risks undertaken by the entrepreneur and the investor in these types of equity campaigns. Research shows that startup television productions have a higher risk of failing to produce profits than most other business ventures because the costs of production are so high. The added expense of overseas production makes the model even more challenging for profits to be recognized that could be shared among a group of investors. Because the creators appreciate every person who contributes to making this production a reality they do not want to create a situation where they could disappoint someone who believes in this project enough to help fund it. This is why they have used their experience in sourcing and creating unique products people will appreciate in exchange for a donation to help fund the production. It is a fair and legal exchange of product for currency with no opportunity for disappointment. Donate to fund the production of La Culture du Vin and receive a unique product or experience you likely cannot find anywhere else. It is a win – win – win crowd funding campaign!