With crowdfunding, Sacramento entrepreneurs need to look before leaping

| Apr 10, 2013 | Intellectual Property Litigation

In our Sacramento office, we assist many entrepreneurs and business owners as they seek to secure intellectual property protections for their innovations. For these professionals, obtaining intellectual property protections, such as copyrights, trademarks and patents, is an indispensable part of the business formation process. After all, if you get your business up and running only to see your idea swiped by a rival, where would you find yourself?

In this post, we want to talk about a capital-raising method that many start-ups pursue: crowdfunding. That is a term for collecting smaller infusions of capital from a plethora of investors. One common way is via websites like IndieGoGo and Kickstarter, for example. One Sacramento artist used Kickstarter to raise funds for his line of eyeglasses and recently called it “the best designed system to fund any sort of creative project.”

We support entrepreneurs and artists exploring creative ways to make their businesses become reality. We would like to sound a word of caution, though, and let our readers know that crowdfunding is not a very well-regulated industry. You should not be scared off from looking in this possibility, but it may not be a bad idea to talk with an attorney first. What would happen, for example, if your investors felt they had a claim to the patent your business depends upon, or if they had a say in how you used your copyright? Neither of those is a far-fetched scenario.

So, once again: Go ahead and look into the possibility of crowdfunding, but treat it no differently than you would any other business move. That is to say, make sure you know what you are doing first and seek professional guidance if you need more information.

Source: The Sacramento Bee, “Personal Finance: Crowdfinding helps creative people raise money for their projects,” Claudia Buck, April 7, 2013