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Creating On-ramps for capital Attraction

Our goal has always been to nurture ideas into a thriving businesses. The Greater Tucson Entrepreneurial Ecosystem has had great success creating businesses that can go nationwide, diversifying our economy, and creating new jobs.

 

However, in the business world, the motto "Capital is King" still holds true, especially for businesses trying to scale. Unfortunately, the vast majority of available investment capital is concentrated in large, coastal cities. Local startups are struggling to raise the capital needed to expand their businesses to their full potential.  Our programs help startups generate the early-stage capital they need to scale and grow in Tucson.

The Goal of the Collaborative Capital Program is to;

1. Provide non-traditional means for founders to raise capital through crowdfunding platforms Kiva and Wefunder, and

2. Develop the investment community in the Greater Tucson Metropolitan Area.

DISCLAIMER

Startup Tucson will promote founders and their fundraising campaigns, however, in no way does Startup Tucson endorse any founder. It is up to the individual to conduct due diligence and invest responsibly.

What is crowdfunding?

Crowdfunding is the raising of large sums of money through nominal investments/donations from a large group of people. In 2016, Regulation Crowdfunding was signed into law, allowing companies to raise up to $5 million per year through crowdfunding and allow non-accredited investors to participate in equity investing through crowdfunding.

To be an accredited investor, you must meet at least on one of the following requirements:

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  • Have certain professional certifications, designations, other credentials,
    or their status as a private fund’s “knowledgeable employee”

  • Have a net worth exceeding $1 million individually or combined with a spouse or spousal equivalent (excluding value of primary residence)

  • Have earned income exceeding $200,000 ($300,000 if combined with a spouse or its equivalent) during each of the last two calendar years. The individual must also demonstrate credibility he or she will at least maintain these income thresholds during the current year.

The significance of this law is the promotion of EQUALITY.

Since 1933, the Securities and Exchange Commission has prevented everyday people from enjoying in the success of companies such as Uber and their IPOs that have made many millionaires and even billionaires over the decade.

Equal access in not just limited to investors however. Startups often struggle to raise capital from banks and especially from Angel Investors. People start businesses for various reasons that serve various purposes. There is such a focus on finding the next unicorn that many startups that still have value get overlooked and even shunned. Not only do founders struggle to raise money because they are not the next Amazon, BIPOC founders struggle to access traditional fundraising options due to the ghosts of systematic racism from earlier decades that still create significant hurdles.

People crowdfund for three primary purposes

  • Raise capital to start and grow their business

  • Raise money for a charitable cause

  • Develop and execute a creative project or new technology

Startup Tucson will be assisting founders raise capital to start and grow their business through two crowdfunding platforms, Kiva and Wefunder

Why Crowdfunding?

Here at Startup Tucson, our goal has always been (and will always be!) to nurture the business ideas of the community into thriving businesses.The Greater Tucson Entrepreneurial Ecosystem has had great success creating businesses that can go nationwide, diversify our economy, and create new jobs. In the business world, the motto "Capital is King" still holds true, especially for businesses trying to scale. Unfortunately, one of the major pillars of our entrepreneurial ecosystem, the investment community, is greatly underdeveloped. Tucson startups are struggling to raise the capital needed to expand their businesses. In other cities around the United States, such as Boston and Los Angeles, the investment community is well established. Due to a lack of home-support, startups are leaving Tucson to move to cities with supportive investment communities.

The Goal of the Collaborative Capital Program is to;

1. Provide non-traditional means for founders to raise capital through crowdfunding platforms Kiva and Wefunder, and

2. Develop the investment community in the Greater Tucson Metropolitan Area.

If you are a founder, please select "FOUNDERS" for founder specific information and to be directed to the Collaborative Capital Application link. If you are interested in being in an investor, please select "INVESTORS" to access information resources.

 
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KIVA

Kiva is a loan-based crowdfunding platform.  This means that individual donors will contribute to your campaign, but they will need to be paid back over 36 months.  They are 0% interest loans.  Typically Kiva loans are between $1,000 - $10,000.   During the COVID-19 pandemic, Kiva offers loans up to $15,000 and a 6-month deferment.

Working with Startup Tucson we will help you to get set up on the Kiva platform, craft a compelling story, and provide you with support and marketing templates. Our team will work with our partner to help to cross-promote your campaign. We understand that raising funds of any kind is not easy. We are here to help so that you don’t have to go at it alone. 

Minimum Requirements

  • Business is based in the U.S.

  • At least 18 years old

  • The debt to income ratio is lower than 80%

  • Not in current bankruptcy or foreclosure

  • Not a registered sex offender or terrorist

  • No violent or financial criminal convictions in the last five years

  • Must have a PayPal account to receive funds

 

As Kiva’s local operating partner, Kiva Tucson works with borrowers throughout the application, fundraising, and repayment process to help them succeed.

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WeFunder 

Wefunder is a for-profit crowdfunding platform that allows founders to raise from $50,000 to $5,000,000 through the sale of equity per year. Wefunder is regulated by the SEC, which has various requirements for companies to crowdfund. Companies should allocate a budget to hire an independent CPA to audit company financials.

 

Unlike Kiva, Wefunder requires an ongoing commitment and engagement by founders in promoting their campaign and engaging investors on the platform. In order to have a Wefunder Campaign go live, Founders must raise up to $50,000 through their own network during the private fundraising stage. If a founder is unwilling to work their own network, Wefunder is not the right fundraising option.

 

Community partners

 
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Startup Tucson is an affiliate member and partner of the Desert Angels. We work closely with local and regional venture capital organizations to ensure our startups have the right preparation and connections to successfully raise capital. 

Check out our Tucson Ecosystem Guide for a full list of local and regional capital organizations. 

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Arizona angel Tax credits

As of July 1, 2021 the Angel Tax Credit program has been extended and the ACA will be able to authorize $2.5 Million in tax credits each fiscal year for the next 10 years. Investments made on or after July, 1, 2021, can be used to apply for credits. Investors must apply for the credits within 90 days of the their investment.

The principal objective of the Angel Investment Program is to expand early stage investments in targeted Arizona small businesses. The program accomplishes this goal by eliminating Arizona capital gains tax liabilities associated with the disposition of investments in small businesses certified by the ACA.

For a list of ACA eligible small business please click here.

BASIC ELIGIBILITY REQUIREMENTS

A small business may be a “qualified small business” if it:

  1. Is a corporation, limited liability company, partnership, or other business entity (Sole proprietors are ineligible)

  2. Maintains a portion of its operations in Arizona

  3. Has at least two principal non-administrative full-time equivalent employees who are Arizona residents

  4. Is not principally engaged in activities precluded by ACA

  5. Does not engage in activities that involve human cloning or embryonic stem cell research

  6. Does not have assets exceeding $10 million, exclusive of intellectual property and qualified investments

  7. Satisfies all other requirements

For more information on the Arizona Angel Tax Credits Program, please visit the Arizona Commerce Authority webpage.

AATC BADGE Usage

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For Founders

If you are approved by the Arizona Commerce Authority to be a qualified small business, please feel free to use this badge during your fundraising campaign.

For Investors

This badge is to inform investors that the business is eligible for the Arizona Angel Tax Credit Program. Please verify eligibility through the Arizona Commerce Authority webpage.

Founders

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Which is right for me?

Stage 1: Kiva

Kiva is a great choice for companies that are just launching their business. Kiva allows founders to raise up to $15,000. Kiva is a loan provider and therefore, the requirements to launch a campaign are relatively low compared to Wefunder, which is regulated by the Securities and Exchange Commission. Rather than using traditional bank metrics for loan approval such as credit score and income history, Kiva uses social underwriting. 

Stage 2: Wefunder

Due to the sale of equities, Wefunder is highly regulated and thus requires the most work to launch a campaign. Wefunder allows entrepreneurs to raise from $50,000 to $5 million. The campaign process is very involved and time consuming. It is up to you to raise the first $50,000 from your network for Wefunder to make your campaign live on the platform. If you are not willing to work your network, Wefunder is not the correct option for you. 

Ready to start your campaign?

While Startup Tucson will provide you with both the support and tools nessecary to assist you in your crowdfunding journey, the success of your fundraising campaign is 100% up to you and how much time and effort you commit.

If you are ready to start your campaign, please click the "APPLY" button below.

Investors

Please refer back to this page in the future as we continue to update our resource guide.

In the Tucson Metropolitan Area of almost 1 million people, there are only 100 or so accredited angel investors. It has been determined that in the there are at least 24,000 individuals eligible for Angel Investor certification. 

Once an individual has obtained Angel Certification, in Arizona, there are 5 angel groups that can be joined.