Next for Puerto Rico’s Antrocket: Equity crowdfunding
Since its launch in February 2013, Antrocket.com has raised nearly $100,000 in funds for sundry enterprises, will soon add a new category to its lineup of fundable projects and intends to be a player in equity crowdfunding once the federal law allowing this type of activity is implemented.
Co-founder Javier Torres said more than 100 projects have been funded to date through the site. Come August, fundable activities will include health to allow people to raise money for medical treatments and health-related ventures, applications and technology.
Torres is one of four partners in Innovation Fund Corp., creator and owner of the crowdfunding platform, the first of its kind in Puerto Rico. The site receives between 15,000 to 20,000 visits each month.
Meanwhile, Innovation Fund is looking for new opportunities.
For one, it is poised to enter the equity crowdfunding field and to this end is seeking investors to help finance a separate platform targeting this area.
Since equity crowdfunding aims to raise larger amounts of money (in excess of $250,000), Torres said this vehicle will likely be of interest to companies seeking to fund their next level of growth rather than business start-ups.
Antrocket, which last year announced it was expanding its reach to the continental U.S. and Latin America, is also actively seeking to increase the number of project launches outside Puerto Rico by recruiting representatives in some of the Latin American countries it is now focusing on, said Torres.
These countries are Mexico, Costa Rica, Panama, Colombia, Chile and, in the Caribbean, the Dominican Republic.
Volume is critical for the financial sustainability of a crowdfunding platform and more project launches will spell greater revenue for Antrocket, which expects to be profitable within the next three years, according to Torres.
Project launches are projected to increase by 20 percent this year.
Two types of crowdfunding
Crowdfunding platforms, the largest of which is Kickstarter.com, are vehicles thatenable people to finance projects and causes without resorting to traditiona lsources of funding such as a bank loan.
Entrepreneurs create an online profile to explain their goals and share their project ideas with relatives, friends, social networks and visitors to their page. In return for their financing support, backers receive a reward, which may range from a public appreciation to an actual good or service.
The difference with equity crowdfunding is that instead of getting a small token of appreciation, project backers would get company stock.
This vehicle to raise capital was allowed by the JOBS Act of 2012 (the acronym spells Jumpstart Our Business Startups). The Securities and Exchange Commission is currently finalizing the rules to implement the new law but it is unclear when it will complete the process.
Reaction to a 585-page rule proposal released by the SEC has elicited a variety of reactions with some critics complaining that the extensive registration and disclosure requirements will make it harder and costlier for businesses to use this vehicle. Critics also said that investors could be at greater risk because of inadequate protections.
Torres is gung-ho, however.
“With the Jobs Act all of us can be investors,” he said. “This is democracy.”
Equity crowdfunding also will open the door to more business-related launches.
Antrocket’s fund raising activity is currently tilted towards the creative arts with film and fashion-related projects more popular among backers.
These types of projects, according to Torres, “get more sympathy from the public. You can share a film, read a book, wear a dress,” he said.
“Art has no language. People understand it. They want to have it.”
Torres said the kinds of business projects that lend themselves to being successful on Antrocket are businesses with a social conscience, especially those having to do with renewable energy, medicine, health, wellbeing, and technology (like games and apps).
He ascribed the low number of business projects — they make up 15 percent of all the projects launched to date — to unfamiliarity with Antrocket and too few business success stories to enthuse entrepreneurs about the platform’s potential.
To raise awareness of Antrocket, the company is forging links with academia and business groups on the island and the mainland, including the University of Puerto Rico, Catholic University in Ponce and the University of Huston; the local chapter of the Silicon-based Founder Institute, the world’s largest start-up accelerator; the Puerto Rico Chamber of Commerce; INTECO (Central Eastern Technological Initiative); and the Puerto Rico Science, Technology and Research Trust, among others.
Projects submitted to Antrocket currently encompass the arts, business, community, design, education, fashion, film & video, food, games, music, publishing and technology. The platform is also available to nonprofits.
Funding campaigns run for 15 to 90 days and typically seek to raise small amounts of money. The average amount raised by individual campaigns is between $3,000 and $5,000. The average contribution is $25. Out of the amount raised by each campaign, Antrocket takes a fee that varies depending on whether the funding goal was met in full or partially.
To date, the fundraising campaigns that have generated the highest financial support are Alive & Kicking, which raised $12,900 for a documentary on music by the same name, and El Departamento de La Comida (The Food Department), which raised $9,265 to expand its Miramar-based small restaurant and store devoted to organic food grown on the island. Funding fell short of its $50,000 goal.