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HARTFORDBUSINESS.COM | JUNE 15, 2026 13 Community Capital Some CT businesses turn to crowdfunding for growth campaign is completed. All this means that the crowdfunding route is no quick fix for businesses looking to raise money, according to Gaul. "Certainly in my experience, trans- action costs for doing a crowdfunding raise are higher than traditional seed or equity or angel investing," he said, adding it should never be regarded as a tool of last resort when other fundraising efforts have failed. Nor is success guaranteed. Busi- nesses can spend considerable time and money preparing a campaign only to fall short of their fundraising goals. According to Gaul, crowdfunding tends to work best for companies with consumer-facing products or services that are easy for investors to under- stand and support, particularly when the fundraising campaign also serves as a marketing tool. Smollen, the Glastonbury flower shop owner, said that community connection was one of crowdfunding's biggest appeals. "I was really attracted to the idea of something like Honeycomb because you're literally talking to your own community," Smollen said. "You're saying to your community, 'hey, you know, we're part of Glastonbury — now invest in us.'" More funding options Other Connecticut organizations have successfully used crowdfunding in recent years. The Connecticut Green Bank has raised more than $4 million through Honeycomb for its Green Liberty Notes program, which allows residents to invest in energy-efficiency projects for small businesses. The Green Bank has described it as one of the most successful commu- nity investment programs of its kind in the country. In the technology sector, engine developer LiquidPiston has relied heavily on crowdfunding, raising approximately $50 million across seven campaigns rather than pursuing traditional venture capital financing. Just this month, TerraCycle, a New Jersey recycling company, used the proceeds from a crowdfunding round to acquire East Windsor-based NLR Inc., a regulated waste recycler that operates Connecticut's only state-ap- proved lamp recycling facility. Meantime, as crowdfunding has evolved, so have other sources of startup funding. Over the past decade, private equity in particular has become increasingly dominant, consoli- dating industries that were once made up of numerous independent small businesses. The proliferation of funding options means that, in many instances today, there is not a lack of available capital, but perhaps a lack of worth- while investment opportunities, said Carmody's Gaul. "The risk, of course, is that when you have too much money chasing not enough good deals, you're going to have a lot of bad deals," he said. By Harriet Jones hjones@hartfordbusiness.com K erin Smollen's florist business has grown faster than she ever imagined. In less than two years, she's gone from selling flowers by the side of the road to building out a Glastonbury storefront, hosting multiple classes and events and planning for more than 25 weddings this summer. "I actually sell more flowers than I physically am capable of doing at this point," she says of the demand through her website, Flower & Twine. Gen Z-friendly innovations like text ordering, and experiential retail innova- tions like in-store mahjong parties and create-your-own bouquet and corsage events have boosted the momentum. She also gained publicity from a stint creating Christmas arrangements at the Biden White House. "It's been really hard from a capital perspective to keep up with the rate of growth," she said. "I have this demand engine and now I have to make sure that I'm able to fulfill that capacity through a variety of ways." To finance the next stage of expansion, Smollen is turning to crowdfunding. She has launched a campaign through community invest- ment platform Honeycomb, seeking to raise $50,000 while offering investors interest on their money. Smollen plans to use the funds to purchase additional inventory, expand refrigeration capacity to keep flowers fresh and make improvements to her website. She also hopes to expand beyond her current workforce of one part-time employee and several contract workers. Smollen said crowdfunding provides a route to capital that she believes she couldn't get through a conventional bank loan given her company's short operating history. She's not alone. Crowdfunding has emerged over the past decade as an increasingly popular financing option for startups and small businesses seeking alterna- tives to bank loans, venture capital or angel investors. Regulatory reform Crowdfunding's roots can be traced to earlier efforts to make public fundraising more accessible to smaller companies. One of the most promi- nent was Regulation A, a 1933 securi- ties exemption that allows companies to raise money from investors without undergoing a full initial public offering. The exemption gained wider use after being revamped under the 2012 JOBS Act. The changes, known as Reg A+, created two fundraising tiers that allow companies to raise up to $20 million or $75 million annually, depending on the offering. Around the same time, platforms such as GoFundMe, Kickstarter and IndieGoGo popularized online fund- raising. Building on those develop- ments, Regulation Crowdfunding, or Reg CF, took effect in 2016, allowing companies to raise money directly from large numbers of non-accredited investors in exchange for equity or interest payments. The change was widely viewed as a democratization of investing, giving everyday investors direct access to innovative companies and business ideas. Initially, companies could raise just over $1 million through Reg CF. In 2021, the fundraising cap was increased to $5 million. "It really was a seismic change," said Matthew Gaul, a corporate and secu- rities attorney and partner at Carmody Torrance Sandak & Hennessey in New Haven. "When it was initially launched, there was a view that it may turn out to be some sort of panacea for startup funding." The two programs have generated signif- icant fundraising activity. According to recent U.S. Securities and Exchange Commission analyses, more than 1,400 Regulation A offer- ings sought over $28 billion in capital between 2015 and the end of 2024, while roughly 8,500 Regulation Crowd- funding offerings launched between 2016 and the end of 2024 sought up to $8.4 billion. Companies reported raising approximately $9.4 billion through Regulation A and $1.3 billion through Regulation Crowdfunding. No quick fix However, the market's growth has not eliminated the legal and regulatory hurdles facing companies that pursue crowdfunding, Gaul warned. "I think what we found since then is that even regulation light is still regula- tion," he said. "There are significant compliance burdens." The first hurdle for businesses pursuing crowdfunding is the disclo- sure document, which explains the investment opportunity and outlines potential risks. While most crowd- funding platforms provide standardized templates, Gaul said companies should view them only as a starting point. The disclosures must be tailored to the business, its industry and the specific terms of the offering. "These documents are 20, 30, 40 pages. They're not something that you can do over a couple of hours," he said. Those disclosures are important because companies using crowd- funding remain subject to federal anti- fraud provisions, much like companies raising money through an IPO. There are also ongoing reporting requirements after a fundraising Matthew Gaul Flower & Twine owner and founder Kerin Smollen hosts bouquet-making parties in the porch of her Glastonbury store. HBJ Photo | Harriet Jones