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As one of the first funds to prioritize underrepresented founders, Backstage Capital has long been hailed as an innovator.
Now its founder, Arlan Hamilton, is raising money for what could be another breakthrough: hitting the country’s new $5 million crowdfunding limit. The U.S. Securities and Exchange Commission set the new ceiling on Monday, up from the previous cap of $1.07 million--and the rule change represents another big step forward for crowdfunding investors and the startups they back. The new limit should be a big help to startups reliant on their communities to provide them with early-stage funding, rather than, say, a wealthy family member or angel investor.
Crowdfunding also makes it easier for entrepreneurs to keep control of their companies, which makes it potentially pivotal for Hamilton’s investment firm. Instead of investing directly in a fund operated by Backstage, the company is using crowdfunding to fuel its parent company, Backstage Capital, which runs Backstage's investments and accelerator. In exchange, investors receive a share of the profits and of the management fees generated by Backstage.
Read our story to learn the rationale behind the counterintuitive approach, and how it could create a new path for small, first-time funds and the companies they invest in. |
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