OGDEN — Berkeley Geddes knows a little bit about the risks of starting a business.
The self-described “serial entrepreneur” from Ogden has started 24 business ventures in his career, 17 of which have ended successfully. Geddes refers to the others as “seven marvelous life experiences.”
He claims other people need the chance to have marvelous life experiences in the business world, too, if the struggling American economy is to recover.
An emerging tool to foster that opportunity is a mechanism to bring entrepreneurs and potential investors together known as crowdfunding.
Crowdfunding is used to describe a collective cooperation, by people who network and pool their money and other resources together. Crowdfunding represents more than capitalism at its best, said Geddes — it represents freedom.
“The heart of our growth is an entrepreneurial issue,” Geddes said.
He likened entrepreneurs to fish trying to swim upstream, where the water has dried up.
Recent changes, spurred by passage of the Jumpstart Our New Business (JOBS) Act in April, may make crowdfunding a tool, which can give the economy a significant lift. Geddes, a former Brigham Young University professor, estimates that provisions in the JOBS Act could make as much as $300 billion in new capital available to potential entrepreneurs.
The JOBS Act legalizes crowdfunding for individuals and creates the legal framework for a much larger and expanded global crowdfunding community, according to organizers. That expanded community of investors could include people referred to as pillow investors — people with small amounts of money to potentially risk on an idea or venture.
The SEC has 270 days from the enactment day of the JOBS Act, April 5, to set forth specific rules and methods for crowdfunding.
In the meantime, the investment and business community is scrambling to take advantage of the opening created by the legislation.
Geddes and other business experts from throughout the United States moved to form the Crowdfunding Professional Association in May, which Geddes now chairs. CfPA members felt the need to push the envelope even further to have their worldwide conference. That conference was held Thursday and Friday at the University of Utah.
The U of U’s own incubator program for starting new business is considered among the most successful programs of its kind in the United States. Geddes describes Utah as the entrepreneurial capital of America.
Even though the conference was a “historic first” for the worldwide business community, Geddes said, it had a definitive local flavor.
Alan Hall, founder of MarketStar and a regular contributing columnist to Forbes magazine, was among the keynote speakers at the two-day conference. The Roy businessman addressed how entrepreneurs can get access to funding.
Hall said crowdfunding can help close the gap between companies with ideas and their access to capital.
“My point is, there is a challenge and a gap, and it’s not being addressed. Crowdfunding to me is a significant answer. Entrepreneurs need cash for fuel to grow their enterprises,” Hall said.
Hall said he hopes crowdfunding will make it possible for the grandmas and grandpas of America to invest small amounts of income in startup companies and ideas.
He said current investment rules are not fair to the small investor.
“It’s not fair to those who are not wealthy. That’s part of what’s wrong,” Hall said.
Hall outlined a potential scenario where a grandmother could invest $2,000 total among 10 startup companies. He said several of those companies could potentially give grandma a big return on her small investment.
He stressed any investment program should include diversity.
Much of the growth of crowdfunding is linked to the Internet. The first crowdfunding initiative was generated by a rock band in England. Because of the Internet, companies were then established to bring entrepreneurs and investors together. Those companies are referred to within the industry as platforms. Geddes said there are currently at least 452 platforms in the U.S., with as many as 550 expected by the end of the year.
“We are extremely excited about crowdfunding and what it can do for the state of Utah and for America and for the world,” Geddes said.
“Crowdfunding at its heart, the purest definition, is about good people with good ideas and linking those people to money. Funding is the biggest entrepreneurial challenge that exists in the world today, especially in America.”