Web's Largest listing of crowdsourcing and crowdfunding events
Web's Largest Directory of Sites2,364 crowdsourcing and crowdfunding sites
Is Crowdfunding the Future of Journalism?document
Crowdfunding Could Support Civil Rights Reportingdocument
Change Crowdfunding Lawblog
Scred: Open accounting and meaningful banking for communitiesdocument
On November 3, the U.S. House of Representatives voted almost unanimously to pass Representative McHenry’s (R-NC) H.R. 2930 bill, the ‘Entrepreneur Access to Capital Act’.
Of the 241 house republicans, 238 voted in favor of H.R. 2930 and three abstained; of the 192 democrats, 169 voted in favor of the bill, 17 voted against it, and six abstained. The bill will progress to the Senate within the next few weeks, and should it pass, it could be implemented as early as the first quarter of 2012.
If the bill becomes law, individuals could invest up to $10,000 in start-ups via the internet without first approaching the Securities and Exchange Commission. It would also represent a rare moment of bipartisan cooperation in a staunchly divided political climate.
Four of six proposed amendments to H.R. 2930 passed, including one by Representative McHenry that limits “the aggregate annual amount raised through the issue of the securities to $5,000,000 or less.” Also, individual investments in securities are limited to an annual amount of $10,000 and no more than 10% of the investor’s gross income.
In addition to the Obama administration's recent affirmation of the bill, H.R. 2930's sweeping victory in the House shows that the United States’ elected officials recognize crowdfunding as a transformative, economically productive way of raising funds for start-ups.
Meanwhile, the North American Securities Administrators Association (NASAA) calls the legislation "well intended, but structurally flawed," arguing that the bill "will needlessly preempt state securities laws and weaken important investor protections."
A similar crowdfunding investment framework to the one proposed in H.R. 2930 is already legal in countries like France and the United Kingdom.
Flag This
Founded in 2010, the industry website, Crowdsourcing.org, is a neutral organization dedicated solely to crowdsourcing and crowdfunding. As one of the most influential and credible authorities in the crowdsourcing space, Crowdsourcing.org is recognized worldwide for its intellectual capital, crowdsourcing and crowdfunding practice expertise and unbiased thought leadership.
Posted by Eric Blattberg
The solution for early stage crowd source funding requires a combination of Trusted Endorsers and due diligence on the part of the investor.
This system of Trusted Endorsers should be somewhere between the restrictive nature of the current overly regulated and overly expensive government system, and Al Pacino vouching for Johnny Depp in the movie, “Donnie Brasco.”
A Trusted Endorser for an early stage company can range from an incubator, an accelerator, a university, current angels, etc.
No Fund Raising Allowed from 3rd Party intermediaries. There has to be direct accountability.
There must be a trusted online venue where Trusted Endorsers and Sponsoring Organizations present Sponsored Companies. There must be an eBay like feedback system where investors can comment on the companies requesting funding..
All of these safeguards become even more important when you realize that the Early Stage Marketplace is a global community for early stage partnering and funding.
Elliott Dahan
Elliott(at)thegrowthgroup(dot)com
I agree with Elliott Dahan (see his comment above) and support the fraud protections in Senator Brown's bill (S 1791.IS); e.g., requiring companies raising capital under a corwdfunding exemption to 1) do business through an intermediary like Kickstarter or indiegogo, and 2) that the intermedaries positively identify the issuers and their principals, and 3) that the crowdfunders disclose risk, incorporate pursuant to state law, and register with the SEC. Like Mr. Dahan, I am wary of the potential for fraud, especially in businesses that already appeal to naive investors and have a history of abusive practices. For example, the film business: Neither S 1791.IS nor HR 2930 addresses why even prize-winning feature length films are not currently paying back their equity investors. Without a revenue model for finished films - a crowdfunding exemption from SEC rules could actually hurt legitimate filmmakers. If HR 2930 becomes law 1) more economically-unjustifiable films will be made - further glutting the market and making it even harder for professional filmmakers to get a fair price for their finished films and 2) HR 2930 will attract the worst kind of con-men and grifters - ultimately making it harder for professional filmmakers to do business. Instead of championing a crowdfunding exemption (a rollback of investor protections that appeals primarily to people who don't understand the economics of professional filmmaking and crooks), perhaps legislation could be enacted that focuses exclusively on developing new revenue streams for finished films. <http://bit.ly/tJp4Ou>
I believe that con men will be an issue only at the beginning. I believe that in this day and age of the internet, and more specifically social media, and the plethora of other policing entities that exist online, that scams will be shut down immediately. Just like other industries online there will become leaders that are reputable and trusted that will be the go to brand names that will handle the majority of the work. There will always be scam artists that will seek to swindle people. This should not deter us from allowing and embracing innovation, especially when that innovation will be such a great boon to our economy. We can clearly see how effective platforms such as this can be by simply looking across the pond at Crowdcube, that is effectively connecting individuals with businesses using the crowdfunding platform. Great achievement is not obtained by cowering at the fear of unethical individuals but rather found through boldly moving forward, adapting along the way.
I Agree with all the prior comments on this thread, and from recent panels, I have been on round-tables and I believe we will see a bill passed sooner than later. Also, I see some sort of oversight imposed by the SEC on platforms (intermediaries) like ours (www.EarlyShares.com), and other equity-based solutions. I don't know if Kickstarter or IndieGoGo will play in this equity space, as everyone assumes they will? These companies are doing very well in their non-equity niches and it’s a completely different animal, Equity Vs. Donation based.
First of all, with donation based crowdfunding the transaction ends at the funding completion stage (the donations reach or exceed the required amount and the time line ends), Kickstarter or IndieGoGo collect their fees, then write a check to the project owner, the end...
While this is just the beginning with an equity-based platform, now that the company has reached its funding target, it needs to be verified, due-diligence docs have to be completed, corp. docs need to be verified, background checks on the co. owners, shares (class of shares?) have to be issued to all investors, shareholder management & communications need to be implemented, use-of-funds verified (escrowed if applicable), term-sheet executed and once all of this is done, only-then should the intermediary platform charge a fee, and then the company can get their funding released. So I don’t think Kickstarter or IndieGoGo will probably jump-into the equity side for the cost associated with all of the above, when they have such a dominance in the non-equity crowdfunding market.
Enough about comparison of platforms, let's get McHenry's or Brown's bill passed.
I have also posted a petition online to speed this up, please sign it http://www.change.org/petitions/crowdfunding-bill-raise-capital-legally