The WRAL Crowdfunding event was an education in the latest startup funding tool, and that’s exactly what the experts at the event stressed entrepreneurs need. Do your homework before embarking on a crowdfunding venture if you want to succeed.

“Crowdfunding changes things,” said angel investor Mark Easley. “Educate yourself. Find out how it works and what you need to do to have a successful campaign. There are tons of examples. Learn from them. Look at companies similar to yours. Get ready to work hard and find new investors. Get a legal advisor. It’s still highly regulated.”

He suggested several web sites where you can start.

During the “Money Hunt” panel, entrepreneur Justin Miller, who founded Wedpics in his basement and proceeded to raise $10 million from various sources, including $250,000 from a crowdfunding platform, said he overcame the drawbacks of being a pre-revenue social company by “building a story based on data and analytics. How many people use it every day, how they’re using it, how many new users.”

We won’t win without incentive tools

North Carolina Commerce Secretary Jon Skvarla said NC has a tremendous opportunity to attract startups and established businesses here from places such as Silicon Valley, where the cost of doing business is as much as 3 times higher than in NC.

“I talked to someone in Silicon Valley recently who has been extraordinarily successful and he can’t wait to get out. We’re well positioned in the Triangle. The entrepreneurial spirit here is tremendous and the cost of doing business is much less.”

Still, the state may have trouble attracting new business without being competitive when it comes to offering incentives and right now the state is “out of business” in that department, he said. “We’re not going to win without incentive tools.”

The problem there is that some legislators-particularly from rural counties-don’t realize that incentives such as the Jobs Development Incentive Grants (JDIG) don’t take money from either the treasure or rural counties, and in fact do the opposite over time. The JDIG grants are based on job creation tax breaks. “It’s new money we didn’t have and we give some back to the companies that created the jobs,” he explains.

He said two things would help the state create more startups. First, there’s a need to smooth the tech transfer process between our universities. “We have brilliant people doing brilliant things, but need to do a better job collectively of monetizing them.”

Second, he added, we need broadband throughout the state, especially in the rural areas where it’s less expensive to start a business than in the cities.

The Legal View panel offered an overview of some of the regulatory complexities around crowdfunding. The gist, overall, is that you need legal and accounting advice. You want to raise money, not lawsuits.

JIm Verndonik of Ward and Smith noted that “Capital raising in a digital world has brought walls tumbling down. One reason the U.S.. Securities and Exchange Commission is acting “like the wicked witch of the West” when it comes to crowdfunding, he suggested, is that it’s because crowdfunding punches a big hole in the wall between private and public funding the SEC has maintained.

Other walls crumbling are the divide between entertainment and business via such shows as Shark Tank, where people can go on a show and raise capital; the wall between lawyers who specialized in certain types of financing acts; and the wall between rich and poor, where you had to know someone to get financing.

Benji T. Jones of Smith Anderson said entrepreneurs need to realize that even with crowdfunding, they will have to write disclosures and have ongoing reporting obligations. “It’s the cost of raising capital this way,” she said.

She also advised: “Know your audience. Sophisticated investors are used to riding the up and down waves and understand risk.” Bringing in large numbers of retail investors who may not be so sophisticated via crowdfunding can pose additional risks to the entrepreneur. “So be prepared to describe the investment risks and tone down your marketing hype,” she said.

Verdonik added, “Keep it simple. You’ll turn people off if you make the deal tricky with preferred securities and such.”

Mital Patel of Wyrick & Robbins said, “We recommend the same things about crowdfunding that we recommend to entrepreneurs in general. Hustle. Talk to people. Talk to attorneys. And educate yourself.”