(NBBJ) - Entrepreneurs, particularly in the wine business, can use the coming expansion of U.S. crowdfunding rules to convert “social equity” for the brand or operation into financial capital, and boost higher-margin direct-to-consumer wine sales at the same time, according to advocates of the funding method.

“Crowdfunding is an opportunity for businesses to engage their community — their tribe,” said Kim Kaselionis, who started Breakaway Funding in 2013 and is managing partner of the Sausalito-based crowdfunding portal. That “tribe” includes not only the friends and family who often are the first source of funding for startup ventures but also the aspiring enterprise’s vendors and suppliers, she said. “This is an opportunity for wineries to mobilize, to harvest, to engage their clientele to become a financial partner.”

The U.S. Securities & Exchange Commission on Oct. 30 voted to expand the definition of a crowdfunding “accredited investor,” as proposed two years ago in rules for Title III of the 2012 Jumpstart Our Business Startups Act, or JOBS Act. At the moment, “accredited” equity crowdfunders are those with net worth of $1 million-plus and annual income of more than $200,000.

When the new rules take effect, set for May, annual investments can be up to $2,000 or 5 percent of annual income or net worth, whichever is more, for crowdfunding projects up to $1 million. For those worth or annually making $100,000-plus, excluding certain real estate, they can invest up to 10 percent. Such investments would have to be made through an SEC-registered broker–dealer or fund portal, and auditing and tax-return-reporting requirements for initial small-scale offerings were eased.

The wine business is well-suited for crowdfunding, said Michael Brill, founder of Cruzu, a wine crowdfunder he launched earlier this year and operates from San Francisco and Napa.

“It’s the integration of wine clubs and investment into a very tight, long-term relationship,” he said. “People who have $10,000 to $100,000 sitting around are going to invest it somewhere. But why not invest it where they can get better financial and social returns?”

He imagines that a winery with roughly 40 percent gross margins and selling wine to equity crowdfunders at 50 percent of the free-on-board price may reach the point where the cost of capital through crowdfunding may be zeroed out. And investors getting perhaps a 5 percent financial return may reap twice as much or more in “social equity,” via big wine discounts, VIP perks and bragging rights for being involved in the wine business.

Cruzu and NakedWines, based in the United Kingdom but with North Coast winemaking and tasting room operations, currently offer rewards-based crowdfunding opportunities, rather than equity stakes or debt placements. That means those chipping in funds for winemaking projects basically are prepurchasing wine.

Brill designed the Cruzu system with equity and even debt crowdfunding in mind, but hasn’t turned on those features publicly as the Title III rules were in flux. With the SEC action, he wants to create a “vertical” funding portal focus just on wine, rather than a portal that works with a number of industries. By doing that, due-diligence and other legal and financial documentation can be standardized, potentially reducing the costs of an offering greatly, Brill said. The goal is to have things in place by the January timeframe expected for portals to apply to the SEC.

“We want wineries to scale up direct to consumer in a way they cannot do today,” Brill said. “We’ve done crowdfunding winemaking projects, but this would jump to the next level with funding wineries. And wineries would pick up new customers on discounts on wine. How does the three-tier system compete with that?”