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Monday, Dec 5, 2022

Chapman U. Incubator Ventures Into Show Business

Chapman University’s Leatherby Center for Entrepreneurship has expanded into entertainment. The shift at the incubator comes at the direction of Professor Judd Funk, a former entertainment lawyer who worked for several Hollywood studios and who teaches at Chapman’s law and film schools.

Funk brought his idea to fruition and enlisted lawyer Matt Rabin, who works for the Newport Beach office of law firm One LLP, to oversee the Entertainment Launch Labs. Rabin donates his services as needed to students’ startups. The new initiative provides legal and general guidance to entertainment startups, including Well Told Entertainment and VEGO. Students and faculty of Chapman’s film and law schools also are involved in the effort, providing business expertise and legal services, Funk said.

Crowdfunding Options Grow

A new U.S. Securities and Exchange Commission regulation for online crowdfunding recently took effect in an effort to encourage funding of small businesses.

The new regulation is part of the federal Jumpstart Our Business Startups (JOBS) Act, which became law in 2012. The act was intended to incentivize small-business funding by easing some securities regulations. The new regulation allows what’s known as “equity-based crowdfunding,” a tool that enables groups of investors to give cash to startup companies in return for equity. 

The maximum amount of cash that can be given to a single startup is $1 million. The SEC set out to balance goals of providing protection for investors and making fundraising easier for early-stage companies, said Jeffrey A. Estes, a shareholder at the Newport Beach office of Stradling Yocca Carlson & Rauth P.C. Some of the requirements, however, may make it more expensive and complicated for early-stage companies to take advantage of the regulation, he said.

“For example, we have had clients give pause when they first learn about the disclosure and reporting requirements of the [regulation], including, in some cases, the need for financial statements that must be reviewed by an independent public accountant,” Estes said via email.

Jeff Curie, president and chief executive of Irvine-based Bitvore Corp., which raised more than $1 million through various crowdfunding sites, said the new regulation is tailor-made for nonaccredited investors—people with a net worth of less than $1 million—and who’ve been “locked out” of most pre-IPO investments. 

“For buttoned-up local startups and small businesses, the impact of [the regulation] could be massive,” he said. “You’ll need some cash to start, and you must do your homework, but move fast. The water will get crowded quickly, so dive into this opportunity before the frenzy begins.”

‘Worthy Cause’

The entrepreneurs who relaunched Barefoot Wine in 1986 and built the brand without any commercial advertising spoke to University of California-Irvine student entrepreneurs May 23 at an event hosted by the Blum Center for Poverty Alleviation.

Michael Houlihan and Bonnie Harvey, who used what they call “worthy-cause marketing,” catapulted Barefoot into retail stores around the country, racking up awards along the way, including Wine Spectator magazine’s Top Brand designation for two consecutive years.

In 2005 Modesto-based E & J Gallo Winery acquired Barefoot, hired Houlihan and Harvey as brand consultants, and helped it achieve the distinction of the world’s No. 1 wine brand last year and the world’s top-selling wine brand in 2014, according to London-based trade publication The Drinks Business. Worthy-cause marketing is leveraging the existing passion and network of a nonprofit’s members and advocates by aligning with its cause.

Houlihan and Harvey, as bootstrapping entrepreneurs, did that early on with Barefoot when they aligned with the San Clemente-based Surfrider Foundation, as both entities were passionate about reducing ocean pollution. Barefoot Wine encouraged shoppers who bought its wine to donate to the nonprofit by placing a barefoot tag on its wine bottles that included information about the Surfrider Foundation.

The worthy-cause marketing—which disrupted traditional commercial advertising practices—enabled Barefoot to grow by association with the Surfrider Foundation, which in turn expanded nationally and internationally, Houlihan said. The idea was that advocates and members of the Surfrider Foundation, and others who cared about clean water, would buy Barefoot Wine instead of the competition, and spread the word, Houlihan said.

Houlihan and Harvey have been working with young entrepreneurs at UCI for a few months. The business and life partners also are mentoring the winners of the Merage School Business Plan Competition for Poverty Alleviation for Social Good. Top winner Caroline Cypriano recently won $10,000 in cash from the Blum Center for her startup, Negocios & Etc., which is Portuguese for Businesses & Etc. The law student from Brazil who’s attending UCI as an exchange student said the Barefoot Wine founders’ message resonated with her because they share her passion of changing the world through the private sector.

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