Title III of the JOBS Act stipulates that crowdfunding intermediaries – brokers and funding portals – must provide educational materials to potential investors, and ensure that those thinking about investing their money review that information. It is still too early to know what this education process will look like, as the SEC has yet to finalize the regulation around crowdfunding. Some portals, however, are beginning their educational efforts early, helping to raise awareness about the field while getting a better understanding of what knowledge potential investors lack most. One example of this is “the Academy” set up on Localstake, a portal that helps investors find entrepreneurs in their communities. The Academy is a short game that asks players to invest money among three fictional companies, and then explains why the players lost or gained money from their choices. Another portal, EarlyShares, is embarking on a roadshow around the country, speaking about crowdfunding at 24 cities in 24 weeks. We got in touch with EarlyShares chairman and co-founder Stephen Temes to discuss the company’s tour and the education provision in the JOBS Act.

Crowdsourcing.org: Could you tell me a little bit about EarlyShares and what your role in the company is?

Stephen Temes: I am the chairman and co-founder of EarlyShares. I represent the investor aspect of it. EarlyShares is a crowdfunding platform, which was put together in the spirit of the JOBS Act, which goes into effect on January 1, 2013. We will be a portal for both start-ups and existing companies to raise equity from individual investors.

What was the idea behind the roadshow?

Education is the number one theme here. On our website, we’re actually going to be doing an educational series, where I’m going to be talking to the investors, [co-founder and CEO] Maurice Lopes is going to be speaking to the companies and the entrepreneurs, and [co-founder] Renee Caputi is going to be speaking about the legalities of the whole business. The whole idea of the roadshow was to educate. We’re educating the entrepreneurs and the crowd, meaning average Americans, about equity based crowdfunding – what that really means and how everybody can take advantage of it.

Based on your conversations with people and your impressions, how much do people know about crowdfunding? Is there a need for a big educational push?

Oh, a huge need. You know, this is the first time in history that individual investors have been able to invest in companies directly. Usually, that’s been saved for the very wealthy or the institutions. So, this is a whole new way of investing. A lot of people have never been a part of this and they need to start learning what it really means. The roadshow is going to start as basic as, “What am I buying? What is a common stock? What is my interest?” It goes all the way on from there. There is a very large need for education.

I wanted to ask: how close are you with the people at the SEC and the White House? I’m sure you must be very interested in what the discussion is among all the different parties involved in the process.

Yes, absolutely. Last month, actually, I was in front of an SEC panel. EarlyShares is the first, and the only portal as far as I’m aware of, that has been asked to speak in front of the SEC. We listed about 25 questions that we wanted some clarity on. It was very interesting, because for some of the questions, the answer was, “That’s a really great question, something we haven’t thought about yet; if you could come back here with some thoughts on how to address that, we would really appreciate it.” So it’s a really exciting time for us because we get to be a part of the making of the law. So, we are working very closely, in fact the memorandum which we were a part of is on the government website, with our questions.

Your answer kind of touched on my next question – how are you able to educate people without knowing the specifics of the regulation? I know there are some topics which are a little bit more general, like the ones you mentioned, but the more specific stuff is not going to be known at least until closer to January, right?

Yeah, you know, although the specific rules haven’t been written yet, Title III of the JOBS Act is very clear in its intent. Its intent is to provide entrepreneurs with easily accessible way to finance their businesses and to allow average Americans to support ideas and create jobs by investing small amounts of money. So, you know, we can only go by what’s already out, and make a very large caveat to things that could change in terms of regulations. But as far as what is allowed to be done – that is written in the Act already, and that’s what we’re really educating on. The rules are going to be towards me, not towards the investors. So what we have to teach them is not really going to change dramatically, I think.

Do you get the sense that as time goes on, and we get closer to January 1, there will be more information out there? The final document is not going to be published until January, but do you think that the SEC is going to offer some sort of hints?

No, I don’t think they will. It’s not really my opinion; it’s the SEC style. I think they’re going to wait and wait. They have to take it to the committee, and then the committee takes it and presents it to higher-ups at the SEC, who are going to implement it into law. They’re not going to put out drips and drabs, it’s going to come out as a one-package deal, and I’m hoping that it comes out sooner than not, but I really have no control over that.

What are the things you’re stressing in this roadshow? You mentioned some of them already, but what are some of the other things you’re telling investors and potential entrepreneurs?

We’re just trying to educate everyone about to this phenomenon called crowdfunding. You know, there is no real secret that we’re giving out; it’s more of an education process. A lot of companies are not used to talking to investors. Even a company that has a great idea for a product can have no business sense, whatsoever. So, we’re trying to teach them how they can turn their idea into a realistic pitch to put on our website that is going to address their financial needs. Conversely, we’re trying to do the same with the investors. As I said before, this is the first time that they have been privy to be able to invest in these kinds of companies. There are a lot of emotions that are going to be taking place, and we’re just trying to help them see what’s out there by gathering everybody together so they can see that there are a lot of great companies and products to invest in. There are several reasons that investors are going to invest in these companies. Interestingly enough, probably the last reason is return on investment. These companies have to make them feel good, make them feel that they’re a part of something. There is a lot of emotion, and we’re just trying to show what crowdfund investing is like.

Do you think there is also going to be some learning for you guys from talking to the potential investors and the entrepreneurs?

Oh, absolutely. I think learning is a two-way street. My background is on the investing side – I run a hedge fund and I do a lot of private equity investing. So I’m used to looking at companies. But I think the beauty of the crowdfunding is that the crowd helps each other, and it’s also going to help us. The crowd is going to point to really interesting investments, in my opinion. If 5,000 people that sign up to invest in a company, that company has created 5,000 customers who are going to tell all their social circles about the product – friends, family, and everyone. It’s going to self-feed, and so I’m going to be getting clues on what to invest in myself, in the future. I’ve never been able to see the end user’s opinion. I always have to make a guess about what the end user is going to think. Now I get to see it first. It’s really exciting.