CrowdHut Emerges from Beta, Brings Aggregation Services to Crowdfunding

10/11/12Follow @jpruth

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successful campaigns to the site. Borish says his company is in talks with the other players in the crowdfunding sector as well. “We want to become the go-to place for all these platforms,” he says.

CrowdHut is banking on the continued growth of crowdfunding, which offers entrepreneurs an alternative way to finance their projects by pooling money online from investors. “With the passing of the JOBS Act, we’re looking at a whole different type of company [emerging],” Borish says. “It’s going to be a different picture.”

With the rise of crowdfunding also comes some skepticism about the process and fears of fraud. Borish believes such apprehension will subside as the sector matures and the public learns more about the risks. Crowdfunded companies can fail just as easily as other early-stage businesses. “People link failure with fraud but they are two different things,” Borish says. “[These companies] can only approach accredited investors and a limited amount of non-accredited investors.” Furthermore, he expects regulatory rules to be established and create structure for this evolving industry. “It’s not going to be a free-for-all,” he says.

In addition to serving as an e-commerce hub, CrowdHut also plans to play matchmaker between crowdfunded entrepreneurs and advisors who can lend their business expertise on such matters as applying for patents. The panel of advisors is still being assembled, says Borish. CrowdHut will be compensated by the advisors for making the introductions.

Founded in May by Philip Reicherz and Borish, CrowdHut is bootstrapped and plans to raise a seed round later in October. Reicherz, the CEO of CrowdHut, is also managing partner of seed-stage venture capital fund Magnolia Ventures. Previously he was a partner with the online marketplace and investment site SecondMarket in New York. Borish’s prior entrepreneurial endeavors include developing BPWWiz.biz, which is software used for submitting book proposals to publishers.

The duo created CrowdHut, Borish says, after realizing there was little long-term guidance for businesses that raise capital through crowdfunding. “These companies need help from the minute they’re funded,” he says.

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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