20 Oct 30th-NOv 5th, 2025 phoenixnewtimes.com PHOENIX NEW TIMES | NEWS | FEATURE | FOOD & DRINK | ARTS & CULTURE | MUSIC | CONCERTS | CANNABIS | the concept isn’t new, explains Hitendra Chaturvedi, a professor of practice in Arizona State University’s W.P. Carey School of Business’ supply chain department. The phenomenon of crowdfunding has its roots in Kickstarter, which launched in 2009 as a platform connecting creators across various industries with financial backers to help bring their ideas to life. The crowdfunding movement went a step further with the JOBS (Jumpstart Our Business Startups) Act of 2012, which made it easier for small businesses to raise capital and go public by easing SEC regulations. These platforms gained momentum on the East Coast, but it took a while to move west, Chaturvedi says. In 2015, the AZ Equity Crowdfunding Act put them on local entrepreneurs’ radars. The act allows Arizona residents to purchase shares in Arizona-based businesses through online platforms. The movement finally spiked in Arizona in 2021, after pandemic shut- downs took their toll on small businesses, Chaturvedi says. East Coast businesses that saw success through crowdfunding had strong brand loyalty and local support and produced arti- sanal food and beverages sold directly to customers. Chaturvedi expects to see that in Arizona businesses, too. Pros and cons The advantages of crowdfunding are plen- tiful. In addition to not having to repay loans with interest and offer collateral, platforms like StartEngine attract loyal customers who have a vested interest in the company’s success. So they have more incentive to frequent the coffee shop or brewery, in addition to purchasing their products from other shops or restaurants. This motivation is very different from that of a traditional large investor. “With a single, big investor, they are interested in the business because of dollars and cents,” Chaturvedi says. “But with this, your customers believe in your mission and often there’s a compelling story. They are investors who want to help grow your identity, and that’s why this model has become so interesting.” A veteran entrepreneur, Chaturvedi launched the SMB (Center for Small and Medium-sized Businesses) Lab at ASU. Since 2022, it has helped 35 companies generate a total of $20 million in value. He has witnessed the challenges and successes of local businesses and sees promise in this kind of fundraising, particu- larly here. “Arizona is very local-centric. It took us over 15 years to discover crowdfunding and that would give Arizona an entrepreneurial ecosystem that will be the envy of many other states,” Chaturvedi says. However, with the pros come a few cons. While online crowdfunding platforms help ease barriers to entry, they are still regulated and monitored by the SEC. The reporting requirements for finances, profits and transparency can be tedious for small business owners. And it doesn’t take a math wizard to understand that managing 100 or 1,000 investors is more difficult than managing one or two. It’s all about the ride SEC rules prohibit businesses from offering a promise, a projected return on investment or a timeline on when an investor can expect to see a financial benefit. However, online equity platforms have produced an 8-13% rate of return, according to P2P MarketData, which provides a database of crowdfunding platforms and investment deals to help investors compare those opportunities. It typically takes five to 10 years for investors to be able to turn their shares into cash. Chariti likes the welcoming feeling of Cartel and the diversity she sees among customers. Joel likes Cartel’s various chari- table efforts and community involvement. Their decision to invest is rooted there. “It’s not about how much (money) we’ll get (back),” Joel says. “It’s an oppor- tunity to be part of that ownership community and place where some of our memories are formed.” Doherty also likes being more person- ally connected to a business that has become like family. “If something happens, great,” Doherty says, referring to a possible return on her investment. “If not, we’re happy to be there for the ride.” Takes a Village from p 18 Mother Road will release three new beverages thanks to the brewery’s small-investor campaign. (Mother Road Brewing Co.)
