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81–421 2013

FINANCING AMERICA’S SMALL BUSINESSES: 

INNOVATIVE IDEAS FOR RAISING CAPITAL 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT 

AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JUNE 6, 2013 

Small Business Committee Document Number 113–021 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missouri 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. David Schewikert ........................................................................................... 1 

Hon. Yvette Clarke .................................................................................................. 2 

WITNESSES 

Ms. Michelle Sullivan, Senior Director of Corporate Communications and 

External Affairs, Boston Beer Company, Boston, MA ...................................... 3 

Mr. Alejandro Cremades, Founder and CEO, RockThePost, New York, NY ...... 5 

Mr. Benjamin Miller, Co-Founder, Fundrise, Washington, DC ........................... 7 

Ms. Danae Ringelmann, Co-Founder, Indiegogo, San Francisco, CA .................. 9 

APPENDIX 

Prepared Statements: 

Ms. Michelle Sullivan, Senior Director of Corporate Communications and 

External Affairs, Boston Beer Company, Boston, MA ............................... 26 

Mr. Alejandro Cremades, Founder and CEO, RockThePost, New York, 

NY .................................................................................................................. 29 

Mr. Benjamin Miller, Co-Founder, Fundrise, Washington, DC .................... 31 

Ms. Danae Ringelmann, Co-Founder, Indiegogo, San Francisco, CA .......... 34 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

FINANCING AMERICA’S SMALL BUSINESSES: 

INNOVATIVE IDEAS FOR RAISING CAPITAL 

THURSDAY, JUNE 6, 2013 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND

REGULATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. David Schweikert 

[chairman of the subcommittee] presiding. 

Present: Representatives Schweikert, Chabot, Clarke, and Chu. 

Chairman SCHWEIKERT. All right. Let us convene this oversight hearing of small business. 

The Committee members will all have opening statements, and 

I ask them to submit them for the record. 

I would like to take a moment and explain the timing lights, just 

so as we are going along, green, you are fine. Yellow means talk 

faster. Red, please stop. We will actually be handing out five minutes of testimony time and then we will actually just engage in discussions. 

As typical, I have my written opening statement but want to say 

just for expediency, there is probably no hearing I have looked forward more to than this one. Having met three of you, having read 

all of your successes and your bios, you are an interesting group. 

I believe you are doing really special things for our economic future 

and the economy. Where does technology take us and give us opportunities to actually, give everyone that fighting chance to be 

able to participate in taking a risk but also receiving the rewards 

for that risk. Each of you have carved out sort of special, unique 

spots out there. 

As you are doing your testimony, and as we are also engaging 

in the questions, it is not only telling your story but share with us 

where government has done things that work, but also where our 

regulatory environment, and those of us in Congress either did not 

understand or we have created blocks—statutorily, regulatorily—on 

where you think you could take sort of this egalitarian access to 

capital. Because that is what this is really about. It is really about 

helping that small business, those sort of small entrepreneurs that 

want to move and grow, and provide jobs and help all of us in this 

society and economy. 

Ranking Member Clarke. 

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Ms. CLARKE. Thank you, Mr. Chairman. And I thank all of our 

witnesses for being here today. I think you have really set the tone 

for today’s hearing. 

For the past two years, our nation’s economy has experienced 

positive and steady private sector job growth, adding about 4.8 million jobs during that time. However, these gains have not been 

enough to overcome our nation’s above average unemployment, 

which currently stands at 7.5 percent minority unemployment for 

African Americans and Latinos, while retreating remains at 13.2 

percent and 9.2 percent, respectively. So while we are moving in 

a positive direction, we still face challenges in fully putting America back to work. 

Creating nearly two-thirds of all new jobs, our small businesses 

must remain front and center to our recovery. For our national 

economy to experience a more robust recovery, our entrepreneurs 

and small businesses must play their traditional job-creating role, 

and for that they must have access to capital. 

Four years after the financial crisis effectively froze the credit 

markets, entrepreneurs and small businesses are still facing challenges acquiring funding through traditional avenues. Increasingly, 

entrepreneurs are turning to crowdfunding and other innovative 

funding methods to finance their ventures. These include using the 

Internet to reach accredited investors, creating peer-to-peer lending 

platforms, and applying old lending models and new ways to address the issue. Congress passed the Jumpstart our Business 

Startups, or JOBS Act, in 2012, to overhaul SEC restrictions on 

crowdfunding and small, public stock offerings. Once the SEC publishes its final rules, this law has the potential to unlock an untapped network of millions of investors to small businesses and entrepreneurs seeking capital. 

The SEC has faced challenges in the past, balancing capital-raising needs of small businesses with the need to protect investors 

with limited wealth and financial market knowledge. They are now 

in a difficult position of creating the framework for a new finance 

regime that has the potential to be easily exploited without proper 

oversight and regulation. It is important that the SEC work quickly, though not hastily, to finalize crowdfunding rules. Rushing to 

publish rules could overexpose investors or lead to an unworkable 

system that shuns market participants. 

In today’s hearing, we will discuss the new and innovative ways 

small businesses are raising capital and how implementation of the 

JOBS Act will affect lending to and investment in our job creators. 

While the outcome remains uncertain, we must remember that it 

is virtually important that the SEC strike the appropriate balance 

between investor protection and producing a functional system that 

provides the capital for small businesses. 

So I look forward to all of your testimony here today, and I thank 

you for your insights. And I yield back, Mr. Chairman. 

Chairman SCHWEIKERT. Thank you, Ranking Member Clarke. 

I was going to ask Mr. Chabot to introduce Ms. Sullivan. 

Mr. CHABOT. Thank you very much, Mr. Chairman. I appreciate 

that. 

Today, I am honored to introduce Michelle Sullivan, who is the 

senior director of Communications and External Affairs at the BosSBREP-219 with DISTILLER

3 

ton Beer Company. Now, I do not represent Boston; I represent 

Cincinnati, but the Boston Beer Company is actually in Cincinnati. 

I know it is a little confusing. Ms. Sullivan is here to discuss the 

brewery’s signature philanthropic effort, and that is Samuel Adams 

Brewing the American Dream. She worked hand-in-hand with Sam 

Adams’s founder, Jim Koch to engineer this innovative approach to 

small business lending and development. As her testimony this 

morning demonstrates, their program really does work. 

The city of Cincinnati has a rich history of craft breweries dating 

back to the pre-prohibition era. In the mid-‘90s, the Boston Beer 

Company moved to Cincinnati and breathed life into one of those 

breweries which still operates today; very successfully I might add. 

A craft beer renaissance is taking place in hometowns like mine 

back in Cincinnati, but really all over America. And we have entrepreneurs, such as Jim Koch, to thank for that. And with his innovative approach to microlending, Jim continues to give back to all 

of our communities. 

Ms. Sullivan, I thank you for participating in this hearing, and 

as we have discussed, and as you have seen, we actually have a 

Sam Adams barrel top hanging in our office, and on there it indicates the distance between our Washington office and the brewery 

back in Cincinnati. 

I have actually got another hearing, a Judiciary hearing, which 

has just started also and I have to go over there, so if I could, Mr. 

Chairman, I am going to go ahead and ask my question now which 

you can take later on to answer. But it is not every day that we 

hear about the unique effort that your company has made, so I 

would just like if you could at some point, discuss what was the 

inspiration behind the Sam Adams Brewing for American program. 

And again, I thank you very much for your testimony here this 

morning. And Adam Scheidler from my office is here. We will get 

your transcript and read that, as well as your answer to the question. 

Thank you to the other members of the panel for being here as 

well. Thank you, Mr. Chairman. 

Chairman SCHWEIKERT. Thank you, Mr. Chabot. 

Ms. Sullivan, five minutes. 

STATEMENTS OF MICHELLE SULLIVAN, SENIOR DIRECTOR OF 

CORPORATE COMMUNICATIONS, BOSTON BEER COMPANY; 

ALEJANDRO CREMADES, CO-FOUNDER AND CEO, ROCK THE 

POST; BEN MILLER, CO-FOUNDER, FUNDRISE; DANAE 

RINGELMANN, CO-FOUNDER, INDIEGOGO. 

STATEMENT OF MICHELLE SULLIVAN 

Ms. SULLIVAN. Thank you very much for your kind words, Congressman Chabot. 

Chairman Schweikert, Ranking Member Clarke, and other members of the Committee, thank you so much for inviting me here this 

morning to discuss Samuel Adams Brewing the American Dream 

on behalf of our founder, Jim Koch. 

My name is Michelle Sullivan. As the congressman said, and as 

senior director of Corporate Communications and External Affairs, 

I am charged, with Jim, for the implementation of this innovative 

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4 

program. I am pleased to be here to discuss that innovative way 

in which we assist small businesses by affording them access to 

capital and knowledge to start or grow their businesses. 

In 1984, when Jim Koch started the Boston Beer Company, the 

odds were stacked against him. Flavorful, high-quality craft beer, 

like Jim’s, were virtually unheard of by anyone—beer drinkers, 

beer distributors, beer retainers, and certainly not bank lenders. 

After brewing the first batch of beer in his kitchen, he named it 

after one of his favorite revolutionary war patriots, Samuel Adams. 

And after trying to obtain a bank loan from numerous banks, he 

quickly realized the reality of starting a small business went far 

beyond having a great product—namely a lack of access to capital 

and the right network of business contacts could prevent a small 

business from succeeding despite the quality of its product. 

Jim began selling his beer bar-to-bar himself in Boston, having 

had to start his own distribution company in addition to his brewery because all of the wholesalers in Boston turned him down for 

the opportunity to carry Samuel Adams. He scraped together the 

funding for his brewery by risking everything personally, taking 

out a second mortgage, and by raising money from family and 

friends. 

The beer industry has undergone profound changes since those 

days in the ‘80s. America’s big three breweries—Anheuser-Busch, 

Miller, and Coors—have been acquired or merged into foreign conglomerates, and indeed, Miller and Coors have merged their operations in the U.S. So this leaves the brewery that Jim started in 

his kitchen, Samuel Adams, as one of the nation’s largest American-owned breweries today. But after nearly 30 years of significant 

growth, we still only account for just under one percent of the entire beer industry, and the two largest players account for over 80 

percent. So in the beer industry, it is still very much a David and 

Goliath world; that said, we are proud to continue to lead America’s brewing community, comprised of more than 2,400 other small 

brewers in all 50 states, not only in brewing outstanding products 

and creating jobs but also in our unconventional path to corporate 

citizenship. 

In 2008, working with a team of employees led by Jim himself, 

we created Samuel Adams Brewing the American Dream. The program has two major components. We host a variety of mentoring 

and coaching events for low- and moderate-income entrepreneurs, 

and through our nonprofit partner, Accion, we fund microloans 

ranging from as little as $500 up to $25,000. Our program serves 

business owners in the food and beverage industries, including 

craft brewers, the very industry where we compete and sell in, and 

the one where we are most able to give the small business owners 

meaningful nuts-and-bolts advice, guidance, and introductions. 

Microloans are a critical component of the program. As you 

know, there is a serious lack of funding available today to small 

businesses. It is equally as important to educate inexperienced 

business owners in the areas of sales, graphic design, purchasing, 

marketing, hiring, distribution, and other aspects of business that 

can make the difference between success and failure. And we know 

it works because we have a 97 percent payment rate on our 

microloans. As of today, we have disbursed 234 loans totaling over 

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5 

$2 million; have hosted 45 events nationwide that have attracted 

more than 3,000 attendees. More than 300 of our Samuel Adams 

employees have participated in these events as coaches and mentors, and we have saved or created more than 1,400 jobs. So in an 

odd twist, we have actually created more jobs outside of the Boston 

Beer Company than inside, and we are proud of that. 

When Jim started Boston Beer, he was armed with a great product, the financial backing of family and friends, and a passion to 

succeed. What he did not have, and the reason he feels so strongly 

about Brewing the American Dream, were mentors. Jim did not 

have a network of established business owners whose expertise he 

could call on. Through this program he makes what he needed that 

was not available to him available to others; namely funding, nutsand-bolts advice, and access to mentors. Working with these small 

business owners is an honor. We are convinced that well-supported 

small businesses are poised to grow and thrive. They are the engine for future economic growth. They are a source of innovation. 

They will create jobs. They will be the household names of the next 

generation. And like Jim Koch, they will realize their American 

dream. 

I want to thank the Subcommittee for allowing me this chance 

to discuss Samuel Adams Brewing the American Dream, and 

please let me know if you believe our program can be beneficial in 

your district. 

Thank you again, and I am pleased to answer any questions that 

the Committee may have. 

Chairman SCHWEIKERT. Thank you, Ms. Sullivan. 

Ms. Clarke. 

Ms. CLARKE. Thank you, Mr. Chairman. 

I have the distinct honor and privilege of introducing Mr. 

Alejandro Cremades. He is co-founder and CEO of Rock the Post, 

one of the leading investment crowdfunding platforms for startups 

in the United States. 

After one year of development, his team was able to launch the 

platform to the public on November 23, 2011. In less than a year, 

the platform was already mentioned by Time Magazine as one of 

the best crowdfunding platforms in the world, as one of the top 10 

digital tools for entrepreneurs by Forbes, and as one of the hottest 

startups to watch by Business Insider. Prior to Rock the Post, Mr. 

Cremades worked as a lawyer at King and Spaulding, where he 

was involved in one of the biggest investment arbitration cases in 

history. Mr. Cremades guest lectures on crowdfunding and entrepreneurship at NYU Stern Business School and at the Wharton 

Business School. And I want to thank you for being here today and 

we look forward to your testimony. 

Chairman SCHWEIKERT. Thank you, Ranking Member Clarke. 

Five minutes. And help us. Let us get our pronunciation of your 

last name proper. How should we be saying it? 

Mr. CREMADES. It is Cremades. Either way is fine. I am used 

to it. It is okay. 

STATEMENT OF ALEJANDRO CREMADES 

Mr. CREMADES. Thank you so much for the kind introduction, 

Mr. Chairman, and other members here present today. I am parSBREP-219 with DISTILLER

6 

ticularly interested in sharing my thoughts and experience with regard to the difference that crowdfunding is already having at its 

early stage on small businesses in the United States and the positive impact that services, like Rock the Post, provide. 

According to a Kauffman report, new firms add an average of 

three million jobs in their first year, while other companies lose one 

million jobs annually. Unfortunately, 65 percent of the new firms 

go out of business within the first four years, due mainly to lack 

of access to capital. Traditional methods of financing are very limited. Out of six million businesses that launch every year in the 

U.S., only 400 of them get venture capital money. The rest rely on 

angel investors, which represent less than one percent of the U.S. 

population, or friends and family. With equity crowdfunding offered 

via services like Rock the Post, startups are able to gain exposure 

in front of thousands of investors; obviously, right now, accredited 

investors. In the offering world, startups take on average eight 

months to close a seed round. Via Rock the Post, startups and 

small businesses fundraise their round between 60 or 90 days with 

minimum road show instructions. Success stories, like Villy Custom Bicycles, a Shark Tank-backed company with high-profile investors, like Mark Cuban and Barbara Corcoran, raised their funding goal in just two weeks alone on our platform; Musicx.fm, a little over a month. 

Rock the Post’s crowdfunding platform not only helps entrepreneurs to gain access to funding, but also reduces the fundraising 

time significantly, which allows them to focus on growing their 

business, which is the most critical factor for the bottom-line. However, we are operating under a lot of restrictions, which makes it 

challenging to truly innovate and pioneer this new industry. The 

general public solicitation rule is the most difficult challenge to 

overcome. 

Secondly, the fact that only accredited investors are allowed to 

make investments is also a big obstacle. Even though the law allows up to 34 unaccredited investors per offering, we feel that the 

amount of disclosures required to comply with this exemption kills 

the attractiveness for platforms like Rock the Post to be able to get 

involved. Not to mention, the burden entrepreneurs are faced with 

in providing additional disclosure materials. Allowing nonaccredited investors to partake in private offerings will open the door to 

over 300 million Americans in comparison to the seven million accredited people that have access to use Rock the Post today as investors. 

With that being said, I believe that we are far behind, and every 

day that passes by without the JOBS Act being implemented is another day that startups need to fight for survival. Pandora, the online radio, for example, of which I am sure many of you have 

heard, was rejected over 300 times from financial institutions, and 

thank God they did not give up on their business. 

I invite you all present in this room here today to create a unified voice in order to reduce the delay of the JOBS Act implementation. There are many cases like Pandora out there, and unfortunately, many of them end up giving up in the process. 

Thank you all for listening, and I will be more than happy to answer any questions that the members might have. 

SBREP-219 with DISTILLER

7 

Chairman SCHWEIKERT. I truly appreciate that opening statement. 

Ben Miller is cofounder of Fundrise, a real estate-based development company based right here in the Washington, D.C. area. Ben 

co-founded Fundrise, with his brother Daniel, as a way to involve 

members of the community in real estate development. In addition 

to being cofounder of Fundrise, Ben also serves as managing partner of Westmill Capital and president of Western Development 

Corporation. And you went to University of Pennsylvania. 

Ben, five minutes. 

STATEMENT OF BEN MILLER 

Mr. MILLER. So I deeply appreciate the opportunity given to me. 

My name is Ben Miller, and I cofounded a company called 

Fundrise. And what Fundrise does is crowdfunds real equity into 

real estate. And so we are actually, technically, equity 

crowdfunding today 10 blocks from here on Eighth Street NE. So 

any resident in Washington, D.C.—you can be accredited or 

unaccredited—can invest at $100 a share online through Fundrise 

right now. 

And so I think the reason I was invited is that we are actually 

crowdfunding. We are doing it now. We have a good sense of what 

it means and what it took to do it in the current regulatory environment. And obviously, there were some challenges, so I will 

quickly tell sort of how we did it and what we learned. 

So briefly, my background is real estate development. I built a 

lot of large scale, multi-hundred million dollar properties in the 

D.C. Metro area, such as Gallery Place at 7th and H. But the problem is institutional capital does not understand emerging neighborhoods. I have Mass Mutual, Cornerstone, Angelo Gordon, AFL-CIO 

as our equity partners, but if you look at Brooklyn, Bushwick, L.A. 

Arts District, 8th Street NE, all across the country these emerging 

neighborhoods really do not get the attention of institutional capital, even though that is really where the growth is, especially from 

the millennial generation. 

And so we decided to raise money from people instead of institutional capital, and sort of reconnect this disconnect in real estate. 

To do that, that was very challenging. We actually ended up hiring 

former deputy director of the SEC to help us navigate through the 

SEC and local regulators to figure out how do you equity 

crowdfund with the existing regulations? We did that using something called Regulation A. I think we were one of only two or three 

people last year who cleared the SEC using Regulation A, and we 

raised $350,000 from 175 people. And it took us about three 

months to do that online. We have an offering live today. I think 

we had $250,000 in a few days on the next public offering, so you 

can see how quickly once you start doing it people want to do it, 

and I watched family and friends and wives start to do follow-on 

investments from the first offering. 

So the offering took us nine months to get through the SEC. It 

cost us far and above $100,000, and the final offering was hundreds 

of pages and actually weighed 12 pounds. And we have done multiple Regulation A offerings now, and so I have a good sense of 

what it is. And I would sort of say that I was lucky to have good 

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local regulators in Washington, D.C. and Virginia, because the 

process was very ad hoc. They were really looking at me. This was 

a novel idea, selling shares of a real estate property had never really been done online before, and so I was lucky that I worked with 

them, but if I had not had the depth of resources and the staying 

power, I do not think that would have been possible for most small 

businesses, most community development organizations. 

And so I would say that sort of the basic takeaway is that you 

can invest in a Japanese manufacturing company today, but you 

cannot really invest in your own community. Short of this is no feasible way other than what I am doing for communities to invest in 

themselves. And I have seen we are now operating—we are in L.A. 

We are in New York, actually, working with Third Ward in Brooklyn. Quasi Foundation just gave us a grant to launch in Detroit. 

So we are seeing a lot of communities wanting to reinvest in building their own communities, not looking for some outside sort of 

Wall Street capital to solve their problems. 

But I would say it seems like two big takeaways from doing this 

are, one, that I understand that there need to be safeguards for investor protections, but I found personally putting offerings out 

there publicly, generally soliciting because we filed with the SEC 

and letting anybody invest, the public was a very tough critic. I 

had hundreds of questions from the SEC, and I got thousands of 

questions from the public. And I have real estate analysts from the 

largest companies in the country invested in our deals, underwriting them, asking us questions. And so I found personally the 

public was sophisticated. There was not willy-nilly, you know, funding of investments online. They were really asking tough questions 

and wanted to understand what they were investing in. 

And the second really big takeaway I found was the SEC and the 

local regulators really were not designed to do what I did. This idea 

of small capital formation is not their primary mandate. They did 

not have the staffing I think in the funding to really do that, and 

I think we should, if possible, maybe the private sector and public 

sector come together and look at funding and institutional supports 

that could make maybe that possible or better fund institutional, 

let us say, institutional staffing that small business administration 

maybe would normally do for our sector. 

Thank you. 

Chairman SCHWEIKERT. Thanks, Mr. Miller. 

Our last witness is Ms. Ringelmann. She is the co-founder of a 

crowdfunding portal, Indiegogo. Through Indiegogo, businesses, individuals, and small organizations are able to fund or raise funds 

through donation-based crowdfunding. Prior to co-founding 

Indiegogo in 2007, Ms. Ringelmann worked in finance as a securities analyst with Cowen and Company. Danae—— 

Ms. RINGELMANN. Danae. 

Chairman SCHWEIKERT. I always get this wrong. 

Ms. RINGELMANN. Danae. 

Chairman SCHWEIKERT. Danae. 

Ms. RINGELMANN. No problem. It rhymes with Renee. 

Chairman SCHWEIKERT. Rhymes with? 

Ms. RINGELMANN. Renee. 

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Chairman SCHWEIKERT. Okay. Danae holds an MBA from the 

Haas School of Business and a B.A. from the University of North 

Carolina. I will disclose she also runs one of my favorite sites. 

STATEMENT OF DANAE RINGELMANN 

Ms. RINGELMANN. Thanks. Well, I am happy to be here, everybody. Thanks for having me. 

Yes, my name is Danae Ringelmann. I am one of the founders 

of Indiegogo. We are the largest and global perks-based 

crowdfunding platform. We do not limit our platform to any geography or industry, so we are in every country of the world and 

every industry. So everybody from the arts, like filmmakers and 

musicians, to charities and nonprofits can use Indiegogo, to entrepreneurs and small businesses, which is why I am here today. We 

are also distributing millions of dollars every single week now to 

campaign owners across the world, so it is working. 

I am talking here today though about Indiegogo’s meritocratic 

approach to crowdfunding and perks-based crowdfunding, as well 

as what we think the benefits, the larger benefits beyond money 

are to both small businesses here in America, as well as the greater economy. 

But first, as a way of background, I wanted to introduce myself 

and talk about how I came to this. I actually met my co-founders 

back in 2006. We came together before the word ‘‘crowdfunding’’ 

even existed in our vernacular out of a mutual frustration for how 

unfair and inefficient fundraising was. I, myself, am the daughter 

of two small business owners, who struggled for 30 years to keep 

their business going and get a loan, and not once could they actually get a loan despite growth. Why? They did not know the right 

people. They did not have the right connections. So when I graduated from college, I went into finance to understand how this 

world actually worked, and I actually met failure myself. I started 

working with some theater producers and filmmakers on the side, 

trying to help them raise money the old fashioned way, and I had 

this culminating moment where I failed in security investment for 

a theater production despite audience engagement and response 

and enthusiasm for this production to get off the ground. And it 

was in that moment that I realized that the people who wanted 

this play to come to life the most, which were the actors and the 

audience, did not actually have the power to make it happen. They 

were relying on a third-party gatekeeper who had different interests. 

So at that moment I said, all right, here is my new life. I am 

going to quit finance and I am going to go back to business school 

and start a company that was going to democratize financing. And 

that is where I met my co-founders, Eric and Salva, who themselves had faced frustrating challenges with fundraising—Salva for 

raising money for cancer research and Eric for the arts—and together we started and created Indiegogo, which is now empowering 

millions of people across the world to fund what matters to them. 

So specifically, with perks-based crowdfunding it is a little different. The way it works is you create a campaign page on our site. 

You set a funding target. You set a funding goal, a funding deadline, you put up a video, and then you share it with everybody that 

SBREP-219 with DISTILLER

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you know. The reason why crowdfunding is different than online 

fundraising though is that Indiegogo offers extra amplification 

through social media integration, as well as through our go-go factor promotion, to allow you to reach more audiences beyond your 

inner circle—to your second and third order friends, as well as 

strangers. I can talk a little bit more about go-go factor a little bit 

later. 

So you might wonder, well, why are people funding if they cannot 

get equity, if they cannot invest, if they are just getting a perk? 

And our research has actually found that there are four reasons 

that people fund. We call them the four Ps. 

People. People want to support the people or team behind a 

project. 

Their passion. They want to support the passion or project itself. 

The third reason is participation. They want to be part of something bigger than themselves. 

And the fourth reason is the perk. And we find that typically, 

people fund for a dynamic number of reasons, so a cross section of 

the four at any given time. 

For example, I recently funded a campaign for an app called ‘‘Not 

Buying It.’’ It is an app where you can take a picture of a piece 

of sexist media out in the world and upload it to Twitter. And if 

everyone is uploading it, it creates pressure for the advertisers to 

change their media. The reason I funded it is for all four reasons. 

I supported the project owner, Jennifer Sebold Newsome. I supported the project. I supported the movement to stop the 

objectification of women, their sexism in the media, as well as I 

wanted the perk itself. 

So a lot of people think crowdfunding is about just money—it is 

a new and alternative form of financing—but there is actually a lot 

more to it than that, and there are people who actually use 

crowdfunding not just for the money but for the other benefits. Specifically, for small businesses, there are four benefits. There is market validation. There is risk mitigation. There is customer feedback. And there is confidence building that happens. With market 

validation, what is happening is that people are voting with their 

dollar, and so it is a far better indicator of interest than any focus 

group or Facebook like button could do. With risk mitigation, a lot 

of product designers and entrepreneurs are using crowd-funding as 

a way to mitigate the risk of overproduction or underproduction of 

their first run of product, because what they are doing is they are 

offering their perk in exchange for funding, and therefore, they 

fund and make the exact amount of product that they need to do 

to get off the ground. 

The third reason is customer feedback. We had a campaign 

owner by the name of Sonny Vu, who had created an activity tracker and he had actually raised money from venture but he still used 

crowdfunding as a way to get off the ground because he wanted to 

become smarter faster. He used the crowdfunding as a way to test 

his pricing and his messaging and his actual features and learned 

that people wanted a certain color of his device more than another 

color and they were willing to pay actually more for it all through 

the crowdfunding campaign. 

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The third reason is—or the fourth reason is confidence. One of 

my favorite reasons I think that people use crowdfunding, and a 

great example of this is Karen, who started a bakery business 

called Free Bread. It was her first business. She lacked the confidence to get going, and so she created a campaign to raise 

$10,000 to launch her bakery business. And she knew that if she 

failed she would be back in the same place that she was before because it was always a dream of hers to start this business. And 

within a few weeks she had the money, and she sent us a note saying, you know, when this started to happen, I started to raise the 

money, my life actually started to change. So there are lots of reasons. 

On the economy side, and the greater kind of financial industry 

side, there are also benefits. The first is meritocracy. Like the other 

panelist said, when every day ideas go unborn, every day ideas die 

because they are undercapitalized, because of the lack of efficient 

access to capital. And so crowdfunding is making it efficient and 

thereby creating this incubation platform for traditional investors 

to actually discover product and businesses based on their own true 

merit. And so that is what I think are the greater benefits. And 

I am happy to go further into that. 

The third benefit there is jobs, of course, and I will end there so 

that we have time for questions. 

Chairman SCHWEIKERT. Thanks, Danae. You had said you 

would probably go long. 

Ms. RINGELMANN. Yes, I did. 

Chairman SCHWEIKERT. As chairman, I am going to give myself five minutes, but—this is one of those moments where I could 

probably grab all of you for hours because this is an area I have 

great interest in. 

I am going to start with Mr. Miller. You and I have had the conversation, technically, you are not doing crowdfunding as we saw 

it in the JOBS Act. You are right now having to use the Reg A mechanics and do SEC filings, and you can also only take nonaccredited investors within the jurisdiction, so within the state or D.C. 

area, that have been given approval. Tell me how much paperwork 

goes with these filings. Tell me what limitations you are having to 

operate under right now. 

Mr. MILLER. So there is a lot of paperwork. I mean, the good 

news is that we have now done it a number of times and we are 

focused on real estate, so we have—I mean, real estate as a product 

has a lot of similarity to building my building—a lot of the same 

risk factors. I mean, I know that a normal public company, like 

Facebook, it took them three months to go public, and I know it 

took us nine, and we raised, I think, $350,000 in this time. Now, 

we are raising another $325,000 for another property, and I think 

most public companies raise billions. So I feel like there is an 

asymmetry there that the JOBS Act can help address. 

The paperwork is actually less of a challenge in terms of I think 

that there is just—I do not think that there is anybody inside the 

SEC who really has the mandate for regulation A. I mean, it was 

really underused and I am going to bet you that that same sort of 

problem will happen when you start seeing potentially thousands 

of other small issuers raising money. And so that is going to reSBREP-219 with DISTILLER

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quire staffing up an organizational focus, and a lot of times I will 

have a comment in from the SEC. The comment will be, you know, 

something pretty small, something about maybe what does this 

footnote mean on the account? And it will take weeks; weeks, really, to hear back about a footnote in an audit statement. 

Chairman SCHWEIKERT. How many pages of paperwork were 

in your first filing? 

Mr. MILLER. Something like 350 pages. A lot. But you go back 

and forth. I mean, ultimately, a file, it is really an integrative process so it was a lot of disclosure. 

Chairman SCHWEIKERT. Okay. Mr. Cremades, you, in your testimony, or in your opening statement, were actually having the discussion of a couple things. One, right now you can only have accredited investors participate. So it is only a small fraction of our 

nation’s population. How different do you think your world would 

look if we actually had the JOBS Act, the SEC rule sets done, 

where unaccredited could start to participate? What difference do 

you think that makes in how you would run your shop? 

Mr. CREMADES. That would make a huge difference because 

right now we are restricted just to a certain amount of people in 

the U.S. and our platform is kind of like closed doors, you cannot 

really have access to any offering or any terms on any offering unless you are an accredited investor. Once the JOBS Act is implemented, then we have the possibility of being able, you know, especially when the general solicitation rule is revised, we have the possibility of converting Facebook likes or Tweet shares into investors 

really, you know. And instead of having really that limitation towards seven million people really, we can access over 300 million 

Americans. And there are going to be different levels of investors. 

Obviously, you have the high-net-worth individuals, which are considered angel investors today, people that are making over 

$200,000 on salary or have one million in assets or that are making 

with their spouse 300,000 combined, but then you are going to have 

the other two different types of investors which is one, the one that 

is making over $100,000. The JOBS Act establishes a limitation 

there of 10 percent, where they can invest only 10 percent of their 

income, so it is not like, you know, like in the casinos, for example, 

here in the U.S., people are spending 45 billion without any type 

of limitation. So also, the other different type of investor that we 

are going to have is the one that is making under $100,000, and 

that the profile of investor is going to have a limitation of five percent of their income. So it is a huge impact what is going to happen 

when the JOBS Act is implemented. 

Chairman SCHWEIKERT. Okay, Danae, just off the side of this 

we have had a conversation. I have tried to share this actually very 

publicly that I believe what we have done in the way we have written our rules is we have sort of split our society. We often hear the 

discussion of the haves and the have nots, but in many ways we 

have done that with our financial rules. We heard the comments 

earlier, that, 118 million Americans—or 318 million Americans and 

only seven million can actually invest with you right now. We treat 

the other 300 million of our brothers and sisters as sort of a second 

class citizen in their ability to participate. I know there is often 

fear of if we move to an equity-based crowdfunding. But at 

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Indiegogo you have built fraud detection technology into your platform. Can you share some of that with us? 

Ms. RINGELMANN. Yeah. So when we started Indiegogo, it was 

very important to us to stay true to our mission, which is to empower people to fund what matters to them. And in order to do that 

we needed to be open and not curate, so we do not just pick and 

choose people to be on our site. We do not pick and choose who we 

promote. That is all done meritocratically. So everyone has an 

equal chance of success. So with that though, when you are an 

open site, you are open to people potentially taking advantage of 

the site in a way that it was not intended. And so we have been 

aware of that since day one, and over the last five years we have 

pioneered and innovated around that risk specifically. I actually remember the day when I was trying to look for any regulation that 

existed to follow, and there actually was not anything out there. I 

did not fit into any specific box, and so I said, well, let me just pull 

from best practices of adjacent industries and let us go at it. 

And so what we ended up doing was really trying to understand 

where fraud could come from, and over the last five years we have 

built a system to fight that. So we really fight fraud in three ways. 

The first is easy. It is the natural dynamics of crowdfunding are 

a natural deterrent to fraud in and of itself because when you are 

raising money from a lot of people, you need to convince a lot of 

people to give you money. And we know successful campaigns start 

with the people that they know first. The early funders in are always the people that know you the best, and then through 

crowdfunding you can amplify it beyond that to strangers. So just 

the natural way that crowdfunding happens is a great way to prevent people from going onto the site and trying to raise a bunch 

of money for something that does not really exist. 

The second way is our fraud systems that we have built. We 

have built proprietary fraud detection and trust and safety systems 

that is constantly learning and evolving because we are applying 

machine learning and all kinds of the latest in data science to get 

smarter, faster. I would probably say that one day our system will 

probably be better than any, and it is better right now than any 

manual process. 

And then the third is we just follow other platforms, like eBay 

and PayPal and we use a community policing site—excuse me, a 

community and policing approach where people can flag campaigns 

if they look suspicious. But that is three layers on top of each other 

that have kept our fraud rates far below one percent, and it has 

enabled us to keep this an open platform and really provide a 

meritocratic place so that we are not judging and picking and 

choosing who has the right to raise money, but the world does. 

Chairman SCHWEIKERT. And I want to touch on that one bit 

and then I have one quick question for Ms. Sullivan, and then I 

will pass to Ms. Clarke. 

Less than one percent? 

Ms. RINGELMANN. Far less. 

Chairman SCHWEIKERT. That somewhat surprised me when I 

came across it because you allow almost anyone. I mean, I think 

you have something up right now to save a horse and to fund a 

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14 

bakery, I have to buy an ad. I mean, you have everything from 

business ideas to social ideas to, you know, save a large animal. 

Ms. RINGELMANN. Yeah, we just had—and because of everything going on in Turkey just three days ago, three Turkish Americans were so bothered by what is going on they put up an 

Indiegogo campaign because they could get started right away, and 

they have raised almost $100,000 in just the last three days to buy 

an ad in the New York Times to help change the conversation 

about what is happening in Turkey. 

Chairman SCHWEIKERT. Which surprised me because, from the 

mechanics of it. 

Ms. RINGELMANN. It is democracy. 

Chairman SCHWEIKERT. Well, you are so egalitarian. And I 

can put up literally everything, but yet you seem to have very, very 

little bad actors. 

Ms. RINGELMANN. Because we pull it down ASAP. Like, right 

away. It is all automated and systematized. So we catch stuff faster 

than a human being can do because we are a data driven, Silicon 

Valley type of startup where we rely on data and analysis and machine learning to catch all that stuff. And we are going to continue 

to evolve there. We are going to continue to innovate there. 

And I guess the point that is probably worth mentioning is that 

we did that not because we had any law to follow or any regulation 

that we had to abide by. I was, in fact, looking for those when we 

were just starting six years ago, but because, again, we were creating a new industry, we did not fall into any boxes. But the reason 

we did it though is because we wanted to stay in business. You 

know, we wanted to have a safe and clean site for our customers 

because we knew that the 99.9 percent of people who were coming 

to our site to use it in the way that it was intended would not want 

to come to our site if they saw or had fraudulent activity. Plus, we 

did not want to lose money because if there is fraud on our site, 

we pay for it, not our customers. 

Chairman SCHWEIKERT. Thank you, Danae. 

Ms. Sullivan, now, you are sort of the unique one here in what 

you are doing because in many ways you are actually a small entrepreneur microlender. Help us understand a little bit on that 

same sort of discussion of, how do you maintain your repayment 

rates? Because in many ways when they repay, you have the opportunity to invest in the next little business and growing concern. I 

mean, how have you built that model to keep it going? 

Ms. SULLIVAN. Yes, that is a great question, Mr. Chairman. 

I think there are two components to that. One is certainly in the 

screening process, and Accion as our partner, over decades of 

microlending, they have developed a successful system of screening 

potential applicants. For those who have the credit score, the drive, 

the passion, to really succeed in their business, one of the facets 

that is unique to what we do is that unlike a bank, if a person with 

a great idea and a real drive and passion to succeed in starting or 

growing a small business is not qualified for a loan at that point, 

we will work with them through Accion to help the entrepreneur 

actually become loan ready. So unlike a bank, you are not told yes 

or no; you are told not yet. And we are able to actually help those 

folks who are really dedicated and willing to stay with the process, 

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stick with it until they are able to get their loan. So there is a very 

robust screening process in the beginning that Accion has piloted. 

Some of that does involve intangibles, you know, like the person’s 

character and how much drive and motivation they have, which we 

find is actually quite helpful in looking at a business. A small business is not just what can be found on the paper. It really is the 

person, the entrepreneur who is behind it that in many ways is 

going to cause it to succeed or fail. So we do have a robust upfront 

process, but I would say even more importantly and unique to that 

is the coaching and mentoring that we offer. As many entrepreneurs would tell you, the day that they receive their funding, 

they look at themselves in the mirror and they think now what. So 

for us to be able to work with those folk who have a wonderful 

idea, a great product, but are not expert in the other aspects of 

running a business, such as sales, for example, you could have a 

wonderful product, but if you are unable to convince a retailer to 

sell that product to customers, then you are not going to succeed. 

So we work with them hand-in-hand and in any aspects of coaching 

or mentoring that the business owner needs to succeed by pairing 

them up with Samuel Adams employees who have that expertise. 

So if you are in Brooklyn, and we have several beneficiaries in 

Brooklyn, and you would like to work with one of our sales folks 

in New York City to coach and mentor you as to how to sell your 

product to retailers in New York City, we make that available to 

them, and we have found that it has worked. I mean, we have been 

able to partner with many of the entrepreneurs in selling their 

products into the smallest of the small neighborhood grocery stores, 

all the way up to wonderful chains, like Kroger and Whole Foods, 

for example. So they may have a wonderful product, a great idea, 

the drive and the passion, but what we give them are some of the 

skills, such as selling, or hiring, or procuring ingredients, things 

that are very difficult sometimes to attain on your own. 

Chairman SCHWEIKERT. Thank you. 

Ms. Clarke. 

Ms. CLARKE. Thank you, Mr. Chairman. This panel has really 

provided some fascinating information in today’s hearing. I just 

wanted to sort of go down because each has such a unique way of 

going about providing these opportunities and start with Mr. 

Cremades. 

It has been estimated that only three percent of accredited investors are investing in startups and small businesses. In your opinion, is the lack of participation the result of current SEC regulations, the inherent risk of startups, or something else entirely? 

Mr. CREMADES. With all due respect, I would like to argue that 

the point from 2011 to 2012, the angel investors in number increased 59 percent from 200,000 to 318,000. And also, I would like 

to say that the amount that has been invested has also increased 

43 percent. As a matter of fact, it went from being a $15 billion 

market, really angel investors investing in startups, it went all the 

way up to 22.1 billion in one year alone. And in addition to that, 

I would like to say that people, especially investors, are disappointed with the returns that they are seeing on the public markets really investing in startups. Obviously, it is risky, but especially these individuals that are high-net-worth individuals, for 

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them just really putting eight percent of their portfolio into these 

types of investments, it really is not that much. I think that not 

only you are investing in a company, but also you are being part 

of something. And that is the most important part of this. 

So back to your point, I would like to say that the times are 

changing. I think that people are slowly getting educated at the 

same time, and the industry is definitely growing from every perspective. 

Ms. CLARKE. And just as a quick follow-up to that, do you believe that it is important that new regulation and policy be driven 

by the practical application of what your investors are doing? Because this is sort of unchartered territory, which is why you are, 

I think, running into the obstacles that you see. We are trying to 

fit your model into existing frameworks that really are not applicable. What would you say from your vantage point would be a good 

approach to I guess unleashing and creating the space for the development of the model that you have established? 

Mr. CREMADES. So for us we do not rely on what is going to 

happen with the JOBS Act or on what the SEC is going to come 

out with, if they are going to have special vetting mechanisms that 

are going to apply for the crowdfunding industry and the platforms, 

the funding portals that are going to be operating. We do strongly 

believe that platforms, especially now at this point, they should all 

take reasonable measures and also responsibility and accountability for developing the appropriate systems so that they can provide the best services for the angel investors and also for the 

startups that in the end really somehow contribute to that investor 

protection. 

So as a matter of fact, on Rock the Post, and it was funny that 

we touched on this point earlier, we also do have identity 

verification systems and social proof mechanisms that help to conduct the due diligence better between the entrepreneur and the investor, and we do backgrounds on every single individual. So I do 

believe, back to your point, that it is important for the platforms 

to take accountability and not to rely on the public institutions. 

Ms. CLARKE. Thank you very much for your response. 

Mr. Miller, investing in a small business can be very risky. Even 

the most sophisticated investors occasionally make bad decisions, 

losing their investments in the process. Easing SEC regulation and 

reporting requirements for crowdfunding securities as required 

under the JOBS Act will therefore expose tens of thousands of investors to increased risk. In your opinion, how can the SEC adequately inform ordinary investors of the risks while not burdening 

small businesses and restricting access? 

Mr. MILLER. So what surprised me and what we have been 

doing is what a lot of large companies, in real estate, at least, have 

started doing what we are doing. We are using Fundrise. We are 

working with Four City, which is a $11.6 billion company. Based 

in D.C., you see most of the major real estate companies now starting to do this, and the reason they are interested is that they want 

the public as a partner. There is enormous value, social value having the public get activated, be part of building their neighborhood, 

and helping you make better decisions, you get better data. When 

you go to community meetings, when you go through the entitleSBREP-219 with DISTILLER

17 

ment process, when you go get maybe a liquor license, you have a 

more representative support for that project, and so I think that 

the idea that crowdfunding is only going to be small businesses 

that are risky is actually a misnomer. I have actually seen a huge 

diversity of players interested in using this kind of new tool, this 

sort of new innovation that makes it possible to create sort of an 

equity in who is building your city, who is investing in it, sort of 

who owns your environment. And so what I have seen also, and I 

think everybody here is talking about this, you know, it is our lifeblood to make sure that there is quality offerings on the platform. 

I mean, it is a disaster for there to be fraud or even failure just 

from normal entrepreneurial processes. So, you know, everybody is 

focused, anybody who is building a platform and investing millions 

of dollars is going to be focused on that, and I think has a deeper 

expertise, for example, in real estate or underwriting breweries, for 

example, then maybe the regulators do. 

Ms. CLARKE. Just a follow-up to you, can you elaborate on the 

challenges that you have faced with traditional capital with regards to these emerging neighborhoods that you are applying your 

technologies to? 

Mr. MILLER. Yeah. I mean, I take a perfect example. There is 

a developer in L.A. He bought a 450,000 square foot project in 

downtown L.A., and the institutional capital partners said downtown L.A., we do not want to invest there. It is tired. It is really 

not the future. And he could not raise capital from normal places 

and basically ended up raising it from a hedge fund. His cost of 

capital was double, triple really what it should have been. And so 

this problem—and I am giving an example of this is a problem not 

that institutional capital is making with small businesses and 

making with large businesses. They just do not always understand 

the dynamics of growth in neighborhoods. Usually, they are not 

local, and so to them Bushwick looks the same as Williamsburg. 

They are like, oh, that is like the same. Right, but if you live there 

it is a joke. Right? So I just see that crowdfunding is really a way— 

over time you will see that there is a partnership between the institutional capital and the crowd. I am already seeing it with big 

companies coming together, and that is how you will see sort of a 

new sense of why is this like there is decent underwriting and security. Well, because there are institutional players involved. It is 

not an either or. It is really going to be about both. 

Ms. CLARKE. And then Ms. Sullivan, I wanted to ask about this 

program. Your program is quite unique. I am familiar with Accion, 

of course, being from New York, but a larger business, a company 

like yours in collaboration is a model that we have not seen heretofore. A larger business providing smaller ones in the same industry with professional coaching as well as opening doors to lending 

opportunities is quite unique. How has the program been received 

by the food and beverage industry? And has there been interest in 

replicating the model elsewhere? 

Ms. SULLIVAN. That is an interesting question. 

I do not think the answer is yes yet. I wish that were true. We 

would say that the notion of funding those in your industry, you 

know, other food and beverage companies, is really where we can 

add the most value. I think sometimes folks will look at them as 

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potential competitors, but from our perspective, our sector, the 

craft brewing industry is only six percent of all beer sales in the 

U.S., so we believe that there is room for many other small brewers 

to come in and join us as a small brewer. There is still so much 

potential growth. We welcome others to the table. 

I do not believe that really this notion of bricks-and-mortar businesses like ours funding others in their space has caught on to a 

great extent. I am aware that Tory Burch, who is a fashion designer, who designs clothes, has been funding other sort of upstart 

clothing designers. She actually partners with Accion as well. To 

my knowledge, we are really the only two manufacturers who are 

funding other manufacturers in their same space. I would make 

the case that that is a missed opportunity because we are much 

better able to provide what I believe to be one of the more critical 

components of the program—the coaching and mentoring—to people who face the same challenges that we face currently or have 

faced in the past. You know, from my ability to coach somebody in 

the real estate industry, for example, is much decreased versus 

what I can talk to another beverage manufacturer about. So I 

would say that there is a competitive notion that keeps others perhaps from funding or mentoring upstarts. But I also believe there 

is a huge opportunity there. 

Ms. CLARKE. Thank you. Mr. Chairman, I yield back. 

Chairman SCHWEIKERT. Thank you, Ms. Clarke. 

Ms. Chu. 

Ms. CHU. Mr. Cremades, can you describe the process both small 

businesses and potential investors must go through in order to access crowdfunded capital through Rock the Post or similar portals? 

What are the terms or obligations that must be met either as a 

small business or as an investor? 

Mr. CREMADES. That is a very good question. Right now we are 

operating via Regulation D, Rule 506, and we do this in compliance 

with a broker-dealer. And the name of the broker-dealer is called 

Bendigo Securities. And this firm was founded by the former CEO 

and CFO of E*TRADE Financial. So essentially, what we do is we 

aggregate the issuers and also the investors, and then they get to 

do what they do best, which is the backend compliance of the 

transaction itself. So essentially for the compliance, there is a lot 

of paperwork that needs to be done before putting an offering on 

the site. On average, we received—last month I believe we received 

over 1,300 startups, and unfortunately, since the due diligence is 

quite heavy on every single one of them, it takes normally on average between two to three weeks to make sure that we can drill 

down on the terms and also the structure of the company. We cannot take all of them, so it is hard for us really in that sense. 

Basically, the process is that we receive the application from the 

company. Once we receive the application, then we focus on the 

team and the market. And if we are able to see a compelling story 

or potentially something attractive, then we would pass along the 

application to our investment committee. Our investment committee is comprised by four individuals. They have over 30 years 

of experience in the financial service base. They are all professional 

angel investors, and they also have over $2.5 billion in acquisitions 

under their belt, so they are the ones who really take care of the 

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other backend type of the transaction. It is conducted essentially by 

Bendigo. So once everything is met and all the criteria is in place, 

then we will go ahead and host the offering on our site and automatically, it becomes available to the accredited investors that are 

registered on Rock the Post. So that is essentially the process. 

Ms. CHU. And once the SEC issues its regulations, is this going 

to change the investing process? 

Mr. CREMADES. Well, obviously, there is going to be a lot of 

disclosures that are going to have to be done with the JOBS Act. 

I believe many of you have taken a look at what Title II and Title 

III really introduce, and there are some heavy obstacles. Like, for 

example, if you are raising over $500,000, you need to do an audit 

report of your financials. I think that for being a startup that is 

quite unacceptable because it is over $50,000 potentially that you 

are going to have to pay on that. So I think there are many things 

in the JOBS Act that need to be sharpened up a little bit further 

because I think that even though the regulators did a fantastic job 

in putting that out there, I think that they need to really be a little 

bit grounded and establish friendlier terms to companies that have 

been in business for a very short period of time. 

Ms. CHU. And what type of small businesses seek investments 

through your service, and what kind of investors are providing 

funding? And are there certain communities that are benefitting 

more from crowdfunding? 

Mr. CREMADES. So we focus on high growth companies. So it 

is essentially tech-based, the health care, hardware, and also consumer. So those are the type of verticals that we cover. Essentially, 

we try to focus on businesses that are going to be able to potentially have a liquidity event in a timeframe of five years so that the 

investors can get their money back. That is kind of like the end 

that we are going for with Rock the Post. 

Ms. CHU. Okay. And for anybody on the panel, how do your companies reach out to small businesses that are not as technologically 

savvy or equipped? How are you able to get those, I mean, what 

are you able to offer the investors in return for the contribution of 

funds? 

Ms. SULLIVAN. In terms of getting the word out about Samuel 

Adams Brewing the American Dream, we find that the old fashioned way works very well. We actually have teams of volunteers, 

both Sam Adams employees and Accion employees who do what we 

call block walking. And they will go from business to business in 

given communities and spread the word about the program. We 

also spend a lot of time letting traditional investors, such as community banks, know about the program. So when they are unable 

to fulfill a funding request for an applicant, they are able to give 

them an alternative and let them know about our program. And we 

also work with local governments. So we find that many of our applicants hear about the program through a mayor’s Office of Economic Development, for example. So we pursue a variety of means, 

including going out into the communities and looking directly for 

entrepreneurs and going through other gatekeepers, for example, 

like the banks, to get the word out. 

We do still find that there is difficulty in getting the word out. 

One of the challenges we have on the program is actually letting 

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folks know when they are turned down by a bank that there are 

other means of financing out there, so we also do call on social 

media and the traditional media to help us build awareness of the 

program. We have more money to loan than qualified applicants. 

So we are looking for qualified applicants. We have capital right 

now that we would like to have out to these businesses but nobody 

has applied for it. 

Ms. RINGELMANN. We use classic marketing tactics from online social media to speaking at events to giving workshops and 

webinars in education about what crowdfunding is all about, but 

one thing I should mention is that at Indiegogo we are very excited 

about equity crowdfunding. We do not offer it right now, but as we 

look at it and assess it and figure out how we can actually do it 

and offer it in a safe way, we would be looking to maintain our 

ethos of being an open and democratic and meritocratic platform. 

So unlike other platforms, we probably would not want to have a 

gatekeeper involved. We would not want to have a team of people 

deciding which people have the right to raise money or which do 

not because inherent in that is bias. And that is where you run 

into things like we had a campaign that raised over 110,000 

pounds in London for a project called The Cat Cafe ́. This is a cafe ́

where you go and you have coffee and you hang out with cats. I 

met a banker who said, ‘‘That is the craziest idea I have ever 

heard. I would never loan to that business.’’ And I said, ‘‘Well, 

110,000 pounds worth of funding just went into it from the people 

because they clearly want it.’’ And so because of that he said, 

‘‘Wow, I am clearly wrong. I missed that opportunity.’’ 

And so when you have a system that is reliant on gatekeepers, 

individuals picking and choosing projects, you inherently have bias. 

So that is why it is also not surprising that on Indiegogo, or sadly 

in the venture world, only three to eight percent of all venturebacked businesses have a woman on their executive team. If you 

go to small business, 40 percent of small businesses are run by 

women in America, which is a much better number. If you go on 

Indiegogo, 47 percent of all successful campaigns are run by 

women. That is the power of meritocracy and democracy. 

And so if you require us, for example, if the regulations were to 

come out and you require us to have a person sitting there reading 

applications, that inherently would be against what we believe in. 

And so we did not know that when we got started, but in being 

able to innovate and being in a regulatory environment that allowed us to innovate, we were actually able to come up with a system that is far more fair and far more efficient. 

Mr. CREMADES. So I would like to—can I add something? 

Ms. CHU. Yes. 

Mr. CREMADES. I agree. I think that obviously having a gatekeeper is not the best way to democratize the access to fundraising, 

but of course, for us as a platform, we want to keep the business 

open. And if we would not have that gatekeeper, then the SEC 

would come after us and then we would be in trouble. Obviously, 

once the job site is implemented, we hope that we can explore other 

ways in which we could have the platform up and running and basically provide the same opportunities to everyone because that is 

the main reason why we decided to put this platform in place when 

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we founded the company in 2010, but obviously right now, to be in 

compliance we need to have a gatekeeper so that we make sure 

that everything is kosher once it hits the platform. 

Ms. CHU. Okay, thank you. I yield back. 

Chairman SCHWEIKERT. Thank you, Ms. Chu. 

And actually, you had a perfect question because there actually— 

I am going to yield myself a couple moments here. Let us consider 

this the lightning round. 

That has actually been one of the discussions, is maybe if I am 

the public and I have a couple thousand dollars but I want to put 

it into a business, maybe I look for a platform that puts up an opinion or has a gatekeeper, or the others, something much more egalitarian where it happens to be my area of interest or my geographic 

or neighborhood I know. As we move towards hopefully having the 

SEC—sorry, I do not mean to be sarcastic—I have faith the SEC 

will get us our rule set and we at least understand the box we are 

operating under, and if those of us as members of Congress need 

to sort of do a JOBS Act 2.0 to fix any things where either from 

our drafting or their rule sets to make it work. If I come to you 

tomorrow and say we have equity crowdfunding as you believe it 

is coming, what changes? What are you as Indiegogo about to do 

different? If I go onto the site, will it look different? Will my mechanics be different? What am I going to see that comes different 

once you can actually legally do equity crowdfunding? 

Ms. RINGELMANN. Well, the moment it becomes legal, that is 

when we actually start to get to work and we start experimenting. 

So you will not see anything new, different, because everything 

that we think customers might want, whether it is certain information that they would want back in terms of reporting, our rating 

systems, all of that, that is all hypothesis. And so as an entrepreneur, it is my job to put on the lien startup hat and not make 

any assumptions; just come up with hypotheses and then go prove 

it. So what we would probably end up doing is try to replicate our 

approach to crowdfunding, perks-based crowdfunding with equity 

in a very manual fashion with maybe a few customers here and 

there and really dig into those experiences and learn what both the 

campaign owners need in terms of help, support, education, features, product enhancement, whatever that may be, as well as 

what funders would need. I think it is very easy, and this is the 

hardest part about setting regulation, is that this industry does not 

yet exist, and the regulators are tasked with coming up with a regulation on how to control it, but clearly the risk is too much regulation will completely stifle innovation and not allow customers to actually—for us to actually explore what this new equity 

crowdfunding experience is supposed to be. So nothing would actually change for us. It would just be far more experiments and 

learning so that we could actually come out with something a little 

bit later. 

Chairman SCHWEIKERT. Thanks, Danae. 

Mr. Miller, the same question. You and I had also had the discussion of would you even move to equity crowdfunding as it is in 

the JOBS Act if that regulatorily, mechanically would benefit you, 

or are you staying with the model you have developed now? 

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Mr. MILLER. I mean, assuming that the regulations are manageable, we definitely would embrace it because one of the challenges is we get people from all over the country, and I was talking 

to a developer yesterday. He is in, I do not know, Kansas, and I 

never heard of him and it turns out he owns 24 million square feet 

of real estate. And so it is just striking how, at least in real estate, 

it is very, very local. In every local market, if you understand your 

local market, and you are really not going to understand the next 

one, so if we could actually open it up tomorrow and have really 

what would be an open platform—where people in neighborhoods 

actually are saying, yes, this guy has got a great reputation. We 

want to make this happen. We can push this—we would not have 

to be having to figure out this sort of top-down approach that really 

is difficult in a scaling environment. We have just so many people, 

so much interest, and if we could basically, as I said, I have lots 

of real estate experts, real estate analysts. Actually, a huge part of 

our user base is real estate people. And so making them a partner 

and figuring out who should get the resources, the limited resources we have to actually get into the depth of underwriting real 

estate deals. So I would actually have an open process in the beginning and at some point dwindle down when I see enormous support 

for something locally. 

Chairman SCHWEIKERT. Mr. Cremades, same question. If you 

had the JOBS Act at the crowdfunding portion, the rule sets 

through the SEC, and I am an unaccredited investor but I know 

and like one of the companies, I mean, how do I now interface with 

you? How does your platform now change because you are right 

now designed actually you have both a gatekeeper model and a 

model that only allows, let us face it, accredited, wealthier investors right now? 

Mr. CREMADES. Yes. So I think right now it is really hard to 

know what the regulations are going to be looking like. I think that 

there are many assumptions that are out there, but I do strongly 

believe that too much investor protection—and I am a big fan of 

investor protection—would kill the attractiveness of the industry 

for platforms like us to switch to the funding portal perspective 

rather than being operational via the Regulation D, Rule 506. 

What I do feel, and I am particularly very excited about, is the possibility of adding social media, blending social media with platforms like ours because it is definitely going to be able not only to 

give more exposure to these ventures, but also to provide much 

more transparency. Because I think that is the beauty of social 

media, is that it is that process of being able to crowdsource a due 

diligence process with a vast amount of people. So I am very excited about that. 

Chairman SCHWEIKERT. Bless you. You hit one of my personal 

fixations, and that is sunshine information from lots of different 

sources is the ultimate regulator because many of us here, we turn 

to the SEC and think they are going to know everything and that 

is impossible. And that is how we have some of the small and huge 

frauds with highly regulated entities. How do they get away with 

it? Well, there is not enough information in a central place where 

we as the public, we as even the regulators can actually see it. Our 

discussions about affiliated blogs. I am sorry, does anyone else do 

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23 

this where you go to the consumer reports of the blog and the first 

thing you do is you look for the negative report and you start from 

there and go backwards? 

Ms. RINGELMANN. Yeah. I mean, I was speaking to the former 

head of risk at PayPal and they said the best thing that has ever 

come along for risk management in the financial industry is social 

media because it is identity management. It is track record management. When people have a social footprint on the web, you have 

a ton of information you can look to to assess risk. And all of that 

information goes into all of our fraud algorithms. So that is why 

I think bringing social medial together with investing is incredibly 

powerful. We did it with perk-based funding, and I think that is 

honestly why we have been so successful in keeping the site clean 

and safe. 

Chairman SCHWEIKERT. All right. Ms. Sullivan, just as one 

aside, are you ready to have a relationship with Indiegogo to actually raise some social entrepreneur money for some of your small 

startups? I see a love connection. 

Ms. RINGELMANN. We do have dare companies in Indiegogo. 

Chairman SCHWEIKERT. Well, I mean, mostly you are microlending. 

Ms. SULLIVAN. Correct. 

Chairman SCHWEIKERT. But your loans range from—what is 

your smallest to what is the biggest you have seen? Ms. SULLIVAN. Five hundred dollars up to $25,000. 

Chairman SCHWEIKERT. So once I got my 25,000, I started 

going. Could you imagine a future where you might actually move 

them on to you need the next tier of capital to actually really start 

to grow? 

Ms. SULLIVAN. Yes. We actually find that with our small business owners, some of them do come back and apply. We have had 

folks who have taken a second loan and a third loan, which they 

are certainly eligible for. We actually have found many times that 

the capital that we are able to grant them has allowed them to 

grow and create a track record that then makes them qualified for 

traditional lenders. So many of the entrepreneurs that we funded 

five, four, three years ago, have had enough success using that capital. They have been able to then qualify to get bank loans, which 

they previously had not been qualified for. But I would love to talk 

more about that. I think the notion of getting consumers—we have 

involved consumers in our program as donors to the loan fund, but 

you are way more expert in doing that than we are, so I would love 

to entertain those conversations. 

Ms. RINGELMANN. Well, with your form of lending and with 

crowdfunding, what is really incredible—I did not get too much 

into this in the testimony, but the market validation that comes 

from people voting with their dollar is incredible. A great example 

of this is we had a campaign owner who was raising money or had 

developed a light called the gravity light, which is this really innovative light where you raise it up for 30 seconds and that creates 

30 minutes of light. It is a great solution for the developing world 

where kerosene is the go-to lighting source, which is dangerous and 

expensive. And so this entrepreneur was really excited about this 

design. He spent weeks calling venture capital, big banks, trying 

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24 

to get them to take interest and give him some startup capital, and 

none of them would return his phone call. So he then went onto 

Indiegogo, raised $400,000 by pre-offering lights in exchange for, 

you know, $10, $20, $50. Guess who would not stop calling him? 

All those venture capitalists that originally would never return his 

phone call because clearly the fact that he was able to raise that 

much money from the crowd is validation that there is market interest. And so he gained the confidence, he gained the customer 

feedback, he gained the validation that he is onto something. And 

actually, it gave him power now in the situation with the traditional investors. The reason why the traditional investors are not 

complaining about it though is that their investment how has been 

completely de-risked. You know, the big job of traditional investors, 

whether they are VCs or banks or foundations investing in nonprofits, or even government and labels and studios trying to find 

the next artist, they have two big jobs. One is one of gambler, essentially. Try to pick the right idea or person or entrepreneur to 

back. And then the second job is to amplify them. So if they are 

lucky enough to roll the dice and get lucky with one, then they 

come in and put more money in and grow them. 

So what crowdfunding is doing is creating this incubation platform, almost like a farm league for the major leagues if you want 

to think about that, where the majors are traditional investors, 

where the cream rises to the top, not based on a lucky connection 

but truly based on how hard the campaign owner is working and 

how much the audience and community cares, which is we think 

the only two factors that should matter. And they rise to the top 

and then get discovered by the more traditional financiers who 

could then not roll the dice on them; they have proven themselves, 

but come in and just focus on their amplification job. And so that 

is why I think crowdfunding and these creative alternative forms 

of financing, it is truly American. It is really empowering people to 

go after their dreams and have control over themselves and their 

own futures and not really and hope that some third-party gatekeeper will say you are good. 

Chairman SCHWEIKERT. Ms. Clarke. 

Ms. CLARKE. Mr. Chairman, I really do not have any further 

questions but just to say to our panelists today that you have kind 

of renewed my faith in the capacity of our nation to sort of remake 

itself from a capitalist standpoint. So much of what we experience 

here in Washington is from the macro perspective and that has not 

been a fun ride recently. But what you are doing is remaking this 

in a way in which it is much more democratic. I would be interested in seeing how each of your endeavors is translated into future 

generations; how other young people see this as a new discipline 

and buy into it because, of course, the predominant model is the 

traditional model and many communities do not have access to 

that. Having the platforms that you all have makes it much more 

available, and I hope that we can see some new schools of financing 

thought come from it. And I wish you all well in your future endeavors. Thank you. I yield back. 

Chairman SCHWEIKERT. Thank you, Ranking Member Clarke. 

As we get ready to shut this Subcommittee hearing down, look, 

I have grown to become an absolute believer by literally the end 

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25 

of this decade, for small business and maybe even mid-size business, the way we find investors, the way we capitalize our organizations is going to look different. And much of this is embracing 

the technology around us and the ability to capture information as 

that sunlight. As that refiner of concept and also eliminator of 

fraud because so often what happens here, in my experience in the 

last previous two years in financial services and here, is our terror 

of fraud, the terror of someone losing money in a deal means we 

take a huge portion of our society and our population and say you 

do not get to participate in receiving a rate of return, even though 

you desperately need that rate of return to have a future, because 

we are terrified that someone might lose money. That ability to 

take risk is also the ability to grow. It is the ability to have a future in our society and for all populations. So what you are doing 

is incredibly important to us. 

I am going to ask you if you have ideas or you come across information or you even hear rumor coming out of the SEC, let us 

know, because this Subcommittee and I think the Committee in 

general are watching very closely, hoping that the SEC puts out a 

fair, rational, workable rule set. For a lot of us it has been a lot 

of time over the last couple of years trying to put together those 

elements of the JOBS Act. So I have faith this is not the last time 

I am going to see the four of you, and this has been very interesting. 

And with that I will ask for unanimous consent, which I guess 

that means just you and I, that members have five legislative days 

to submit statements, supporting materials from the records. With 

that also may come some questions being extended out to each of 

you, and if you have the ability to, with the chaos of your lives, to 

send us back a response, that is truly appreciated. 

And without objection, so ordered. This hearing is now adjourned. Thanks. 

[Whereupon, at 12:41 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

Testimony of Michelle Sullivan 

Senior Director of Communications and External Affairs, The 

Boston Beer Company 

Before the 

United States House of Representatives 

House Committee on Small Business 

Subcommittee on Investigations, Oversight and Regulations 

June 6, 2013 

Chairman Schweikert, Ranking Member Clark and Members of 

the Subcommittee: 

On behalf of Jim Koch, the founder of The Boston Beer Company, 

I want to first thank you for the opportunity to testify today about 

our philanthropic program Samuel Adams Brewing the American 

Dream. My name is Michelle Sullivan, and as Senior Director of 

Corporate Communications and External Affairs for The Boston 

Beer Company, I am charged by Jim with the implementation of 

this important program, and I am pleased to be here to discuss the 

innovative way in which we assist small businesses by affording 

them access to capital and knowledge to start or grow their businesses. 

In 1984, when Jim Koch started The Boston Beer Company, the 

odds were stacked against him. Flavorful, high quality ‘‘craft’’ beers 

like Jim’s were virtually unheard of at the time by anyone—beer 

drinkers, beer distributors or beer retailers and certainly not bank 

lenders. After brewing the first batch of beer in his kitchen, he 

named it Samuel Adams Boston Lager after one of his favorite revolutionaries and, after trying to obtain a loan from numerous 

banks, he quickly realized the reality of starting a small business 

went far beyond having a great product. Namely, that a lack of access to capital and the right network of business contacts could actually prevent a small business from moving forward despite hose 

good its product is. Jim began selling his beer bar to bar, restaurant to restaurant and tavern to tavern in the Boston area himself. He had to start his own distribution company because the beer 

wholesalers in Boston all turned down the opportunity to carry his 

product. He scraped together the funding for his brewery by risking 

everything personally, taking out a second mortgage and by raising 

money from family and friends. 

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27 

Today, we are in the third decade of America’s Craft Beer Revolution, and Boston Beer is proud to have been a catalyst for this 

movement. The beer industry has undergone profound changes 

since the 1980s. America’s big three brewers, Anheuser-Busch, Miller and Coors, have been acquired by or merged into foreign conglomerates and indeed Miller and Coors have merged their operations in the United States. This leaves Samuel Adams as one of 

our country’s largest American owned breweries. But, after nearly 

30 years of significant growth, we still only account for just over 

one percent of the American beer business, while the two largest 

beer companies account for over 80%. In the beer industry, we still 

live in a David and Goliath world. 

That said, we are proud that we continue to lead America’s brewing industry, comprised of more than 2,400 other small, qualitydriven brewers in all 50 states, not only in creating an outstanding 

product, but also in our unconventional path to corporate citizenship. 

From our earliest days, before we could make monetary donations to charities, we had beer. And we happily supported hundreds 

of Boston-area charities by providing Samuel Adams for their fundraisers and auctions. It was a real benefit to those institutions to 

save on the cost of buying beer, and it helped us get our name out 

and our Samuel Adams into people’s hands. This program continued, and in 2012, we donated thousands of cases of beer to 501 c3 not-for-profit organizations. 

As The Boston Beer Company grew, however, we wanted to create a unique program that went beyond donating beer. 

That was Jim’s challenge to me in 2007. Working with a team 

of employees, led by Jim himself, we created Samuel Adams Brewing the American Dream. The program has two major components: 

we host a variety of mentoring and coaching events for low and 

moderate income small business owners and, through our non-profit partner ACCION, we fund microloans ranging from as little as 

five hundred dollars up to twenty-five thousand dollars. Our program serves small businesses in the food, beverage and hospitality 

industry including other craft brewers, the very industry we compete and sell in, and the one where we are most able to give them 

meaningful nuts-and-bolts business advice, guidance and introductions. 

Microloans are a critical component to Brewing the American 

Dream as there is a serious lack of funding available today to small 

and very small businesses. It is equally as important to educate inexperienced business owners in the areas of sales, graphic design, 

purchasing, marketing, hiring, distribution and other facets of business that can make the difference between success and failure. Effectively, we want to ensure businesses that are part of Brewing 

the American Dream do not make the same mistakes that Jim and 

others starting small businesses before them have made. 

And we know it works, because we have a 97% repayment rate 

on the loans. As of today, we have disbursed 234 loans total over 

$2 million dollars and have hosted 45 events in 12 states that have 

attracted over 3,000 attendees. More than 300 of our employees 

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have participated in these events as coaches or mentors. And, we 

have saved or created more than 1,400 jobs. So, in an odd twist, 

through Brewing the American Dream we have created more jobs 

outside of Boston Beer than inside. And we are proud of that. 

When Jim Koch started The Boston Beer Company back in 1984, 

he was armed with a great recipe, the financial backing of family 

and friends, and a passion to succeed. When he didn’t have, and 

the reason he feels so strongly about Brewing the American Dream, 

were mentors. He didn’t have a network of established business 

owners whose expertise he could call on. And through this program, he attempts to make funding, provide nuts and bolts business advice and access to mentors, all of the resources he didn’t 

have, available to Brewing the American Dream small businesses 

owners. 

Working with these small business owners has been an honor 

and an education. Based on our experience, we are convinced that 

well-established and well-supported small businesses are particularly well-poised to grow and thrive. They are an engine for future 

economic growth. They are a source of innovation, and their passion is contagious. They will create jobs. They will be the household 

names of the next generation and like Jim Koch they will realize 

their American Dream. 

I want to thank the Subcommittee for allowing me this chance 

to discuss Samuel Adams Brewing the American Dream, and please 

let me know if you believe our program may be helpful in your district. Thank you again and I am pleased to answer any questions 

you might have. 

SBREP-219 with DISTILLER

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Mr. Chairman and other members of the Committee on Small 

Business. 

Thank you very much for the kind introduction and for having 

me here today. I am particularly interested in sharing my thoughts 

and experience with regard to the difference crowdfunding is already having, at this early stage, on small businesses in the US, 

and the positive impact that services like RockThePost provides. 

According to a Kauffman report, new firms add an average 3 million jobs in their first year while older companies lose 1 million jobs 

annually. Unfortunately, 65% of these new firms go out of business 

within the first 4 years due mainly to lack of access to financing. 

Traditional methods of financing are very limited. Out of the 6 

million businesses that launch every year in the US, only 400 of 

them get Venture Capital money at an early stage. The rest rely 

on angel investors, which represents less than 1% of the US population or friends and family. 

With equity crowdfunding offered via services like RockThePost, 

startups are able to gain exposure in front of thousands of investors. In the offline world, startups take on average 8 months to 

close a Seed round. Via RockThePost, startups and small businesses fundraise their round between 60 or 90 days with minimal 

road show distractions. Success stories like Villy Custom Bicycles, 

a Shark Tank backed company with high profile investors like 

Mark Cuban and Barbara Corcoran, raised their funding goal in 

just two weeks on RockThePost or Musicx,fm in little over a month. 

RockThePost’s crowdfunding platform not only helps entrepreneurs 

access funding, but reduces the fundraising time significantly, 

which allows them to focus on growing their business, which is the 

most critical for the bottom line. 

However, we are operating under a lot of restrictions, which 

makes it challenging to truly innovate and pioneer this new indusSBREP-219 with DISTILLER


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30 

try. The general public solicitation rule is the most difficult challenge to overcome. Secondly, the fact that only accredited investors 

are allowed to make investments is also a big obstacle. Even 

though the law allows up to 34 unaccredited investors per offering, 

we feel that the amount of disclosures required to comply with this 

exemption kills the attractiveness for a platform like RockThePost 

to get involved, not to mention the burden entrepreneurs are faced 

with in providing additional disclosure materials. Allowing non-accredited investors to partake in private offerings will open the door 

to over $400 million Americans in comparison to the 7 million accredited people that are currently in the US. 

With that been said, I believe that we are far behind and every 

day that passes without the JOBS Act being implemented is another day that startups need to fight for survival. Pandora for example was rejected over 300 times from financial institutions and 

thank god they did not give up on their business. I invite you all, 

present in this room today, to create a unified voice in order to reduce the delay of the JOBS Act implementation. There are many 

cases like Pandora out there, and unfortunately many of them end 

up giving up in the process. 

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Testimony to the Committee on Small Business Subcommittee on 

Investigations, Oversight, and Regulations 

‘‘Innovation and Micro Financing,’’ June 6, 2013 

Benjamin Miller, Co-Founder of Fundrise 

Members of this esteemed House. I deeply appreciate the opportunity to share my experiences as a small business owner, a real 

estate entrepreneur, and a technology company executive. Let me 

spend a moment on my background so that you understand how I 

came to run Fundrise, one of the only companies in the country 

currently raising equity online from anybody and everybody in 

Washington DC and Virginia—from both accredited and 

unaccredited investors—prior to implementation of the JOBS Act. 

We are legally crowdfunding real investment today, through currently existing regulations, and have been for almost a year. 

Prior to starting Fundrise, I ran a real estate company. In that 

capacity, I have lead the acquisition and development of more than 

2 million square feet of real estate property. We built some of the 

more iconic projects in Washington DC, such as Gallery Place on 

7th and H Streets NW—a 750,000 square foot mixed-use development. As a real estate entrepreneur, I have partnered with some 

of the largest institutional investment companies in the country, 

such as Mass Mutual, Angelo Gordon, and the AFL-CIO. I understand what it means to raise debt and equity. 

After the 2008 financial crisis, I began to focus on real estate in 

emerging neighborhoods. Neighborhoods filled with new energy and 

growth driven by the millennial generation, and a reinvigorated desire from people of all ages to move into cities. When I went to my 

traditional capital partners, they didn’t understand the dynamics of 

these neighborhoods—areas such as Washington’s H Street NE, 

Cincinnati’s Mason District, Brooklyn NY, or the L.A. Arts District. 

It was striking to me how little they understood local neighborhoods, where new growth is, as compared to traditional core downtown markets. 

I would speak to local people in the communities where I was 

building and they would get very excited about what we were 

doing. They understood why we were investing there. They cared 

deeply about the places we were changing. They wanted to participate in building their city too. 

So one day we asked ourselves, ‘‘Why are we raising money from 

institutions that have no real relationship with the places in which 

we are investing? What if we raised money from the people who 

live there, who care, who get it?’’ 

So that’s what we’re doing. Which is why I am sitting here. We 

have been raising real investment, in increments as affordable as 

$100 per share, from the local public who live near our real estate 

projects. Anyone and everyone locally can invest—even if they are 

not accredited investors, as defined by the SEC. Hundreds of people have been investing hundreds of thousands of dollars through 

SBREP-219 with DISTILLER

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Fundrise, purchasing shares of their neighborhoods through our 

web platform. 

Since the JOBS Act did not exist when we started our endeavor, 

we had to work within the existing regulatory framework. Thanks 

to crackerjack attorneys—Marty Dunn and Bjorn Hall from 

O’Melveny Myers—we found a way, using Regulation A. Ultimately, our filings with the Securities and the Exchange Commission (SEC) totaled more than 350 pages, and eventually allowed us 

to sell equity online at $100 per share to the local public. Last year, 

I was one of only two or three people who have successfully cleared 

a filing under Regulation A. 

It was a serious undertaking. The first offering took nine months 

to get qualified by the SEC and registered with the District of Columbia and Virginia regulators. It was novel, and there were new 

issues we had to work through. Yet, we were fortunate. The local 

regulators understood that we were working to build local places 

and create a new capital source for local job growth. 

After doing multiple public offerings, raising millions of dollars 

online, and spending a lot of money, time, and effort to crowdfund 

equity online, here are my two big takeaways: 

1) It’s difficult to build trust with the local public to invest in 

your company online. I have interacted with thousands of potential 

investors. People were skeptical at first. There is a fear among critics of the JOBS Act that the Internet will make it too easy to raise 

money, but I found that the public were even tougher critics of our 

investments. Anyone who has read a movie or restaurant review 

online knows the truth of that. 

There are a lot of experts out there. We have real estate analysts 

from the largest real estate companies in the city invested in our 

offerings. Even though they are not accredited investors, these men 

and women know their subject. And they are vocal. And put me 

through my paces. While it is absolutely prudent to crate safeguards against potential investor fraud, my firsthand experiences 

raising real investment online is that the public put us through 

just as much scrutiny as the SEC. 

2) The regulatory institutions today are not designed to manage 

small business raising capital from the public. I was lucky because 

I found a real partner with the local regulators. I have now done 

multiple local public offerings working with the SEC, and District 

of Columbia and Virginia regulators. I say I was fortunate because 

I found that in some other states, the regulators were far more resistant and wary. Therein lies the problem. On the state level, in 

many ways, it was an ad hoc process. While DC and Virginia were 

terrific, other states gave the impression that they cared less about 

creating new opportunities for small businesses to raise capital and 

create job growth. 

In terms of the Federal regulations, while I found the SEC extremely reasonable, it takes six to nine months to clear an offering 

for $300,000 under Regulation A. This waiting period creates high 

legal fees, an expense most small businesses cannot afford. The fact 

of the matter is the SEC is not funded to handle small offerings 

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1http://www.forbes.com/sites/ryancaldbeck/2012/12/11/crowdfunding-predictions-for-2013/ 

like mine. At times, I felt like no one in the SEC really owned my 

filing. The SEC is currently not built to manage and review smallscale issuances. Yet, we are about to see a sea change in the number of such issuances. 

Based on my experience, I would recommend that Congress fund 

a group designed to take responsibility for the filings of small, 

agile, job-creating companies. A venture fund or private equity 

company can review an offering in a matter of weeks, if not days. 

Could a well-funded department, housed at the SEC or Small Business Administration, do the same and help thousands of small 

businesses like mine raise capital while substantially mitigating 

concerns over investor protection? I believe so. 

Already, donation-based crowdfunding is approaching a $3 billion 

per year industry.1 Once the SEC and FINRA implement the JOBS 

Act, we will almost certainly see even more tremendous flow of 

small-scale fundraising. As of today, however, there is no institutional body mandated with a special focus to manage and support 

this new industry. The Federal government has agencies to represent and engage with constituencies ranging from chicken farming to glacier research. The SEC’s small business department is 

only a handful of people. Small business growth, innovation, and 

community development will be one of the greatest sources of jobs 

in our country in the next decade. Shouldn’t we set up the type of 

institutional supports that crowdfunding deserves to help it succeed? 

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Introduction 

My name is Danae Ringelmann, and I’m one of the founders of 

Indiegogo—the largest global crowdfunding platform in the world. 

We launched in January 2008, before the word ‘‘crowdfunding’’ existed in our vernacular. Our mission is to provide an equal opportunity platform that empowers people to fund what matters to 

them—whatever that might be. Film, music, non-profits, small 

business, inventions, medical treatments, trips and more—all happen on Indiegogo every day. Today we distribute millions of dollars 

every week to campaign owners in every country of the world. 

Why I’m Here Today 

I’m here today because Andy Guggenheim asked me to share 

Indiegogo’s story in pioneering what today is called perks-based 

crowdfunding. I will also be sharing the benefits of crowdfunding 

specific to Indiegogo’s inclusive and meritocratic approach and with 

a focus on small businesses in America. I will also talk about lessons learned and share a bit about how we’ve had to innovate and 

mitigate risk in order to create a whole new industry. 

As background, I was compelled to start a company that would 

democratize finance as I saw firsthand the impact of an inefficient 

and unfair financial system that needed to be fixed. I was a child 

of two small business owners who sweated it out for 30+ years. Not 

once, did they get a loan from the bank to expand, despite steady 

growth, loyal employees, and top-notch customer satisfaction. The 

reason they struggled was not for lack of performance, but lack of 

connections to gatekeepers. They were on their own, like most 

small business owners in America. When a bank rejected them that 

was it. There was nowhere else to turn except our own savings, 

own mortgage or worse, our credit cards. 

So after witnessing my parents hustle and overcome intense 

challenges (e.g. making payroll without laying off anyone after September 11), I went into finance to understand how money worked 

and flowed. It was while I was on Wall Street, however, that I 

began volunteering with filmmakers and theater producers on the 

side and experienced first hand the struggles of fundraising. Even 

I—someone who worked at a bank—failed at helping brilliant artists with proven audiences get off the ground, not for lack of heart 

and hustle, but rather lack of connections to financial gatekeepers. 

When I failed to secure investment for a theater production after 

staging a one-time show in front of an audience that loved it, I realized that the people who wanted the play to come to life the 

most—the audience and the actors—lacked the mechanism to make 

it happen themselves. Shortly thereafter, I quit finance and returned to business school at UC Berkeley to start a company that 

would democratize finance. It was there that I met my two cofounders Slava Rubin and Eric Schell who themselves had been 

struggling with fundraising. Together we created Indiegogo—now 

the oldest and largest perk-based global crowdfunding platform. 

What’s Crowdfunding on Indiegogo 

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Crowdfunding on Indiegogo is people-powered finance. it’s individuals directly funding the ideas, businesses, artists, non-profits 

and causes they care about. There’s no middle-man or traditional 

investor—like a bank or a VC, a media publisher or a studio, or 

even a grants-oriented foundation or government funding body. 

Crowdfunding is—simply—lots of people contributing a few dollars 

each to raise enough money together to push an idea or project forward. 

While this concept might not feel new, the reason the industry 

has a new name ‘‘crowdfunding’’ is because people-powered finance 

has never been so efficient and effective as it is today. 

Through the integration of social media and incorporation of online payments—two irreversible shifts in online behavior— 

Indiegogo campaigns for funding spread to like-minded folks (both 

people you know and don’t know) far faster than ever before. If traditional fundraising helped you raise money from the first degree 

of people you know, crowdfunding on Indiegogo helps you turn your 

first degree connections into havens, thereby allowing you to raise 

money from people interested in your project who are 2nd and 3rd 

degrees away. 

Landscape of Crowdfunding 

Within crowdfunding, there are a few models. There’s donation 

and perks-based crowdfunding, like Indiegogo. In this case funders 

contribute money in exchange for perks—tangible or intangible 

goods and services of finite value. There is no investment made, no 

profit participation or upside. 

There is also securities based crowdfunding like peer-to-peer 

lending, and equity crowdfunding for accredited investors only, and 

mainstream equity crowdfunding that will soon be permitted under 

the JOBS act. Today, I will focus on perks-based funding as that 

is the model Indiegogo pioneered in 2008. 

How Indiegogo’s Donation & Perks-Based Funding Works 

The way Indiegogo works is as follows: 

1. Create a Campaign 

A person or organization with a project or idea in need of funding 

goes to Indiegogo.com and creates a campaign page. On Indiegogo, 

there is no application process nor arbitrary vetting of ‘‘quality’’ as 

Indiegogo believes that every idea has the right to try to raise 

money. Only campaigns that are illegal or in violation of our Terms 

of Use are removed automatically and systematically. 

On the campaign page, the campaign owner: 

• pitches their idea, team and impact (in both a text and a 

recommended video). 

• sets a funding target and deadline (typically 30–40 days) 

• outlines their use of funds. 

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• offers perks (optional), which can be anything from a 

thank you note or twitter shout out to a tangible item of finite 

value. A campaign for a business that creates innovative coffee 

mugs, might offer the coffee mug itself as a perk 

• picks their funding framework, either: 

Æ ‘‘Fixed:’’ campaign owner receives money only if they 

reach goal 

Æ ‘‘Flexible:’’ campaign owner receives money whether or 

not they reach goal 

(It’s worth noting that we encourage campaign owners to set a 

funding target that matches an amount they need to move their 

project forward. It does NOT need to be 100% of budget, as campaign owners can do multiple campaigns, or use their Indiegogo 

campaign to attract additional funding from other sources—more 

on that later.) 

2. Go Live. 

Once the Indiegogo campaign page is drafted, they can go live at 

any time. Once live, campaign owners share their campaign with 

their friends, family and followers via newsletters, social media and 

other outlets. For artists, followers are typically their fans. For 

businesses, it’s their customers. For non-profits and causes, its people passionate about their cause. On Indiegogo we typically see 

that campaigns that reach their funding goals raise the first 30% 

of funds from people they know. 

Due to the social media integration embedded into the funding 

experience on Indiegogo, friends of friends begin to fund. (For example, when people fund, they are prompted to tweet or post to 

Facebook.) Thus 2nd and 3rd order funds begin to come in... leading eventually to ‘‘stranger dollars.’’ 

Lastly, campaigns earn extra promotion and exposure on 

Indiegogo.com and our marketing channels as well. Indiegogo’s proprietary algorithm—the gogofactor—determines the amount of 

added exposure. The gogofactor, similar to google’s pagerank algorithm, is a measure of a campaign’s activity and its community’s 

responsiveness—i.e. two factors completely in the control of the 

campaign. Indiegogo’s promotion, therefore, is completely 

meritocratic. Just as we don’t decide who has the right to raise 

money, we also don’t decide who we promote—the campaigns and 

their communities do. No other platform offers this meritocracy. 

As you can see, crowdfunding success on Indiegogo is earned. I 

call out the ‘‘friends-first-strangers-later’’ pattern of success simply 

to dispel any assumption one might have that crowdfunding is a 

field of dreams. People do not just post ideas, walk away and come 

back to find money in their account. If campaign owners build it, 

the proverbial ‘‘they’’ will NOT come. It takes work, akin to the 

work of grassroots and guerilla marketing tactics. This is an important fundraising dynamic to understand as it may inform your 

opinion on the risks of crowdfunding in general. More on that in 

a bit. 

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Benefits of Indiegogo—It’s not just about the money! 

Many people first hear about crowdfunding as a new and alternative form of finance. This is true. But what many people don’t 

appreciate at first, are all the other benefits crowdfunding on 

Indiegogo brings to campaign owners, their funders, the entire financial ecosystem, and our economy. 

Benefits to Campaign Owners: 

For campaign owners market validation, risk mitigation, customer feedback and confidence are non-monetary benefits often 

great enough to drive small businesses to crowdfund even if they 

didn’t need the money. 

1. Market validation: Crowdfunding on Indiegogo enables entrepreneurs raising money to test their market and prove demand. 

A vote with one’s dollar before a product or service even exists is 

a far better indication of true interest than any focus group or 

‘‘facebook like’’ button could ever provide. 

2. Risk Mitigation: Along with market validation, comes risk 

mitigation. In the case of Luminaid—a business started by Illinoisbased Andrea Sreshta and Anna Stork that makes environmentally 

friendly, solar-powered lights for the developing world (as a safer 

alternative than kerosene)—crowdfunding protected them from the 

risks of over-production and under-production. 

They used Indiegogo to raise $51,829 to fund their first-run production. For a $25 contribution, a funder would be sent a light a 

few months later. Because the funding came in up front, and because the amount raised was tied to an exact count, it was impossible for the Luminaid entrepreneurs to ‘‘over-manufacture’’ or 

‘‘under-manufacture’’, thus mitigation production guesswork and 

risk. 

3. Customer Feedback: A crowdfunding campaign on Indiegogo 

enables entrepreneurs to gather direct feedback, both qualitative 

and quantitative. California-based Sonny Vu is a product designer 

who designed a product called the Misfit Shine—an activity tracking device that elegantly fits on your clothing. He and his team 

used Indiegogo to raise $846,675 to fund this first-run production. 

He actually had already raised venture capital funds, but he still 

used Indiegogo to get ‘‘smarter, faster’’ on his product features, 

messaging, and pricing. 

Throughout his campaign he swapped perks in and out, and 

learned that his funders far preferred the black version of the 

Shine over the silver version, and were willing to pay $50 more for 

the black. He also discovered a new revenue stream—necklace accessories—after his funders suggested he add necklaces as a perk. 

To his surprise, the necklaces were quite popular. Based on feedback from his funders, he discovered new revenue streams and 

gathered quality feedback on features, messaging and pricing. 

That’s priceless information and data for a new business that 

hasn’t even launched yet. 

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4. Confidence: Perhaps my favorite non-monetary benefit of 

crowdfunding on Indiegogo for campaign owners, however, is the 

confidence a campaign owner builds. Karen Freer of Brooklyn, NW 

had always dreamed of opening a gluten-free bread company. But 

the idea of saving $10,500 to launch seemed almost impossible. So 

rather than wait and save, she launched an Indiegogo campaign 

and raised $10,771 from 95 funders. For $1, she gave folks a hug: 

For $10, a note. For $50, several rolls of bread. Within a matter 

of weeks, she had the funds to launch her business. She was beside 

herself. What was a dream, instantly became a reality. Here’s what 

she shared with Indiegogo in a note to our Customer Happiness 

team: 

‘‘I’d like to tell you something. Once I began my Indiegogo campaign, I truly saw my life start changing. Indiegogo has given me 

the confidence in my first business venture—and with that a great 

feeling of hope for my future. That is a true gift’’ - Karen, Free 

Bread. 

Benefits to Funders: Empowerment 

In addition to being a source of funding and a great way to validate a market, reduce risk, get feedback and gain confidence for 

campaigners, crowdfunding is turning funding from a ‘‘transactional’’ experience into a ‘‘social and relationship-based’’ experience. 

When people fund what matters to them, they’re not just buying 

bread or activity trackers in advance, they’re creating their own reality around them... often times for as little as the price of a cup 

of coffee. As a result, they’re more engaged and empowered. 

A great example of this is the fastest growing political campaign 

on Indiegogo right now. Distraught by the way the government was 

handling the sit-ins in Turkey, three Turkish Americans felt compelled to take action. They started a campaign four days ago to 

raise $55,000 to purchase a full-page ad in the New York Times 

calling for democratic action and a new dialogue on Turkey. As of 

Wednesday, June 5th at 10 am, 2,369 people from across the world 

had joined forces and funded this ad together, raising $93,290. 

Crowdfunding on Indiegogo, therefore, empowers. No longer do 

people have an excuse to complain about bad Hollywood movies, 

nor the lack of local coffee shops in their neighborhood. If they 

want to see good movies and have a local hang out with friends, 

they can fund them can get their friends and other like-minded 

folks to fund them too. 

Why People Fund if there’s no Return or Profit Potential 

Indiegogo’s research reveals that people on Indiegogo fund for 4 

reasons. We call these reasons the 4 P’s: 

• People - they like the person or team running the campaign. 

• Passion - they are passionate about the idea or project. 

• Participation - they want to be part of something bigger 

than themselves. 

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• Perks - they want the perk 

However, we have also found that there is a dynamic mix of motivations at play for any given contribution. For example, I recently 

funded an app called ‘‘NotBuyingIt.’’ It’s an app for the phone 

where you can take a picture of a piece of public media that you 

deem sexist and/or belittling towards women. The app posts the 

image to twitter with a hashtag #notbuyingit. With enough tweets, 

the goal is to make the advertiser revisit and remove their sexist 

ad. This app campaign is being run by Jennifer Newsom, an activist whose film ‘‘Miss Representation’’ sparked a movement to eliminate sexist media in the public. I funded this campaign for all 4 

reasons—I want to support Jennifer Newsom and this project. I 

want to be part of the movement, without having to quit my day 

job, and I want the app (i.e. the perk). 

Benefits to the Finance Industry and the Economy 

The macro benefits of crowdfunding on Indiegogo to the larger finance industry and the economy as a whole are also grand. 

1. Meritocracy. When people fund what matters to them, ideas 

that might once have gone unborn or remain undercapitalized due 

to lack of access to traditional gatekeepers, now have a chance. In 

London, a cat cafe ́ recently raised 110,000 on Indiegogo to open. 

This cafe ́ will be a place where people can get coffee and hang out 

with cats - or what some might call a very niche business. After 

sharing their crowdfunding success with a banker whose job it is 

to review loan applications for new businesses, the banker stated 

in shock ‘‘I would’ve never thought a cat cafe ́ would have a market. 

Had that application come across my desk, I probably would’ve said 

‘no.’ Clearly, I would’ve been wrong.’’ 

Because funding success is based on hard work and community 

or audience engagement, not based on winning over an arbitrary 

gatekeeper whose goals, beliefs and biases may be different, 

crowdfunding on Indiegogo is making finance fair and efficient, 

once and for all. 

2. Incubation Platform & New Role for Gatekeepers. 

Crowdfunding on Indiegogo is also fundamentally disrupting finance. Unlike disrupting technologies in other industries, which 

typically destroy the traditional industry, crowdfunding on 

Indiegogo is making the financial ecosystem stronger as it’s providing an incubation platform for the worlds’ ideas. 

Just as crowdfunding de-risks a business or venture for the entrepreneur starting it, its also de-risking any follow-on investment 

that comes from a traditional investor. For example, the designers 

of Gravity Light - another lighting product that creates energy by 

lifting it up - couldn’t get a Venture fund to return their phone call 

when they needed to raise funds to prototype their product. So they 

turned to Indiegogo and raised $399,590 from the people. After the 

campaign, venture funds couldn’t stop calling the team. They had 

proven to them his business was a good investment by proving demand through their Indiegogo crowdfunding campaign. 

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3. Jobs. As a result of crowdfunding on Indiegogo, ideas and businesses that went previously unborn or under-capitalized due to 

lack of efficient access to funding will now have a chance to thrive 

on their own merit. As they grow, so will the jobs they create. 

Samantha started her gluten-free bakery business Emmy’s 

Organics on a small business loan. She had one store in the first 

year. With the opportunity to distribute her product in a regional 

grocery store chain - a huge growth opportunity - just 10 months 

into her venture, she needed to take on another loan to pay packaging changes (a requirement for distribution). Unable to secure a 

second $15,000 loan - as her bakery was deemed too young and 

high-risk - she didn’t give up and throw away the distribution opportunity. 

Instead she turned to Indiegogo to raise $15,000 in three weeks. 

She offered macaroons as her perks. Her customers funded her, 

and brought in their friends as funders too. Within a month of her 

campaign, she had redone her packaging and started selling her 

product through the grocery store chain. This lead to further 

growth, and within the year she was distributing her product in 40 

states across America. To keep up with production, she had to 

move into a new kitchen and hire over a dozen employees. Had 

Indiegogo not existed, she might still be selling baked goods out of 

her one store front, employing just herself and her partner. 

Indiegogo’s Innovation around Risk 

With a mission to be an equal opportunity funding platform, it 

was important to us to take an inclusive and meritocratic approach 

to crowdfunding. As I mentioned above, this is why we do not curate. We want all ideas to have an equal chance of success - a principle this country was founded on. 

However, this inclusive approach also makes Indiegogo open to 

people wishing to use the platform in a way it was not intended 

- i.e. for fraud. Given that, Indiegogo has innovated on this front 

to keep the site clean and safe for the 99%+ users on the site who 

are using it for its intended purpose - to fund what matters to 

them. 

We’ve developed proprietary screening technology and Trust & 

Safety algorithms on our backend to automatically screen out bad 

behavior. In addition, we employ a community policing system 

similar to eBay or Paypal that adds another layer of surveillance. 

Finally, the dynamic of crowdfunding (raising a lot of funds from 

a lot of people a little at a time) is a natural deterrent of fraudulent activity as convincing a lot of people to fund an idea typically 

takes a track record, social media activity and hard work to get 

funding going. This is one reason why it’s a good thing that successful campaigns typically have to raise the first 30% of funds 

from people in their inner circles, as I mentioned above. 

Future Innovation 

As the SEC reviews the rules for equity crowdfunding, which 

we’re very excited about as equity crowdfunding is in-line with our 

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mission to empower people to fund what matters to them, I like to 

share that one of the reasons Indiegogo was able to pioneer perksbased crowdfunding is because the regulatory environment allowed 

us to experiment and innovate. 

Since our launch in 2008, hundreds of platforms have followed, 

each with their own twist on crowdfunding. Clearly, a new market 

has been unlocked that might not have had overly burdensome regulations been in place. 

Often regulation is put in place to protect all parties. While too 

little regulation could lead to another 2008, too much regulation 

could also be damaging as it could stifle innovation. Regulation setting is a tough challenge; there’s no question about that. What I 

hope regulators keep in mind, however, is that business pressures 

and business uncertainties are often better drivers of innovation 

and protection, than regulations. 

For example, Indiegogo developed proprietary screening systems 

and Trust & Safety algorithms to ward off fraud not because a law 

told us to, but rather because we wanted to stay in business. A safe 

site would attract more customers. An unsafe site would repel customers and lose us a lot of money. 

Indiegogo’s Vision: 

At Indiegogo, we think crowdfunding is just in its infancy. Just 

as Twitter and Facebook democratized communication formenting 

the Arab Spring, we hope Indiegogo and crowdfunding will democratize funding. We imagine a world where funding the ideas and 

people around you is a daily habit, like commerce and social networking. Perhaps one day, people will even be able to control where 

their tax dollars go. After submitting one’s taxes online, I see a day 

where the next pop-up screen says: ‘‘to which local, state and national efforts would you like your tax dollars to fund?’’ A dropdown 

of options would be provided. 

Anyhow, while it seems we’ve innovated quite a bit to get perkcrowdfunding off the ground and help make equity crowdfunding 

an option, there’s still quite a bit of innovation ahead. It’s an incredibly exciting time to be an entrepreneur in this space as we’re 

helping change finance for good, both permanently and for the better. 

In closing, it’s probably worth pointing out that one of my cofounders Slava Rubin was an immigrant to this country, and my 

other co-founder Eric Schell is the son of a librarian. As the daughter of two hard-working small business owners, the three of us together struggled to get Indiegogo off the ground as we ourselves 

lacked the right connections to make it happen early on. I often 

think about how much quicker we might’ve been able to grow 

Indiegogo had we had Indiegogo to fund Indiegogo. 

Thank you. 

Æ 

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