Hartford Business Journal

8 HARTFORDBUSINESS.COM | MAY 3, 2021 coordinator for the town of West Hartford. The past year has been particularly challenging for startups, she says, because they often don't have experience or sufficient credit, so lenders view them differently; additionally, federal COVID relief funds through the Paycheck Protection Program (PPP) have been more targeted toward keeping established businesses afloat. "Looking to start a business requires a significant amount of investment and build out," Gorski said, "and that's really challenging, especially to finance." Capital stack In McCormack's case, he and his business partner, Robbie Wendenborn, set a crowdsource goal of $75,000 and gave themselves 90 days to complete the campaign, which was managed as a revenue- sharing campaign by Mainvest, a Salem, Mass.-based third- party vendor that specializes in crowdsource funding for businesses. The crowdsource funds, McCormack says, were used to purchase brewing equipment, furniture, fixtures and café equipment. In exchange, McCormack is promising his investors — who, on average, contributed $1,000 — a 50% return paid over six years. In total, WeHa Brewing & Roasting's campaign exceeded its goal, raising nearly $90,000 from more than 100 investors. McCormack says he may end up paying more through a crowdsource revenue-sharing agreement than he likely would have under a traditional loan, but he sees a value in having community buy-in. He estimated roughly 90% of his crowdsource supporters live in Connecticut, which he hopes creates a customer base with a vested interest in his business' success. "It's an added benefit [of crowdsource funding] to be able to Startups, Innovation & Technology Kim Bushey Senior Vice President CT Commercial Market Head EQUAL HOUSING LENDER | NMLS#402947 | MEMBER FDIC Intimate knowledge of the local business community. "Putnam Bank… a division of Centreville Bank." Those words do more than describe a relationship between financial institutions. They give you confidence that our commercial lending team has the local experience and expertise to help your business succeed here in eastern Connecticut. Local knowledge is essential in developing the robust, flexible, and individualized banking partnership that will work best for your business. putnambank.com/commercialbanking | Kim Bushey at 860.753.8516 That's part of what it means to be a division of Centreville Bank. Centreville-38222 HBJ_Bushey_10x325_f.indd 1 Centreville-38222 HBJ_Bushey_10x325_f.indd 1 2/25/21 1:11 PM 2/25/21 1:11 PM By Matthew Broderick Special to the Hartford Business Journal C ody McCormack always dreamed of opening his own brewery. With the growth and popularity of craft beers over the past decade, McCormack saw an opportunity but was also looking to differentiate his business. "I wanted to do something unique," said McCormack, 29, "so we [are opening] a combined café and brewery." WeHa Brewing & Roasting Co. — slated to open in early summer in the Elmwood section of West Hartford — will include a tap room, private event space and roasting room with artisanal coffee. But McCormack's hybrid model is not the only thing that's different about his business; his approach to raising startup capital through crowdsource funding is, too. Crowdsource funding — the practice of funding a venture or project by raising small amounts of money online from a larger group of people — has existed for more than a decade. Platforms like Indiegogo, GoFundMe and Kickstarter have been used for everything from charitable support to independent movie productions to paying a family's medical bills. But increasingly, startup entrepreneurs like McCormack — who may face greater challenges in securing loans from traditional financial institutions — are turning to their local communities for venture capital. Overall, according to forecasts from Research and Markets, the crowdsource market — including business ventures — is expected to grow annually by 16% between 2021 and 2026, tripling the current number of crowdsource campaigns. The need has been exacerbated by COVID-19, says Kristen Gorski, economic development Crowdsource funding grows as path to capital for new startups Cody McCormack Kristen Gorski An artist's rendering of the planned Moxi on the Rocks complex in East Hartford, which will be funded, in part, by crowdsourced capital. RENDERING | CONTRIBUTED

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