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Incubator Conference Tackles Crowdfunding

Ken Kousky is president of Blue Water Angels, a network of private investors in Michigan's Great Lakes Bay region.

But he figures the passage of the recent federal JOBS act just might put angel networks out of business.

And he thinks that's great.

Kousky spoke Wednesday at the Michigan Business Incubators Association's 2012 annual conference. He said the law allows average Americans to be solicited by entrepreneurs for small investments in startups.

"This is huge," Kousky said. "It obsoletes the primary function of the angel club."

Kousky said he believes Americans will make smart investments under the new rules. And given that very few actively managed investments that Americans buy now for their retirements beat overall market averages, Kousky said: "I believe that crowdfuncting is going to be smarter money than what you see on Wall Street."

The U.S. Securities and Exchange Commission is to issue rules within the next 90 days regulating investments to be made under the law.

There are limits on the total amount that can be raised by a small business under the law -- $1 million without audited financial statements, $2 million with.

Kousky said the new law is particularly perfect for restaurants and other food service businesses. "If you need to raise $500,000 to remodel, give somebody who gives you $1,000 free dinner on Tuesdays for a year," Kousky said.

Nonprofits and film and music productions are also naturals for the funding, Kousky said.

Current Web sites for crowdsourcing include kickstarter.com, indiegogo.com, peerbackers.com and rockethub.com.

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