In May, I wrote here about efforts I’ve been involved with advocating a “crowdfunding exemption.” As part of the American Jobs Act introduced by President Obama last night, the White House announced that it will work with the SEC on implementing something along these lines. Here’s how the White House Office of Science and Technology explains it on their website:
As part of the President’s Startup America initiative, the Administration will work to unlock this capital through smart regulatory changes that are consistent with investor protection. This means reducing the disproportionately high costs that smaller companies face when going public, as well as raising the cap on “mini” public offerings (Regulation A) from $5 million to $50 million. It also means responsibly allowing startups to raise money through “crowdfunding” – gathering many small-dollar investments that add up to as much as $1 million. Right now, entrepreneurs like these bakers and these gadget-makers are already using crowdfunding platforms to raise hundreds of thousands of dollars in pure donations – imagine the possibilities if these small-dollar donors became investors with a stake in the venture.
Hear, hear! In a conference call with the press immediately after Obama’s address, U.S. Chief Technology Officer Aneesh Chopra and Office of Science and Technology Policy Deputy Director Tom Kalil explained that they advocate an exemption, or at least a streamlined and less-expensive registration process, for public securities offerings of $1 million or less, with individual investment capped at $10K. They also said that they believe the SEC has the authority to make this regulatory change, no legislation required.
Elsewhere in DC, the House Committee on Oversight and Government Reform has just scheduled a hearing entitled “Crowdfunding: Connecting Investors and Job Creators” for next Thursday, Sept. 15. It isn’t on their public calendar yet, but letters were sent on Wednesday to the people testifying. Among them (and my source on this) is Sherwood “Woodie” Neiss, whose Startup Exemption campaign has led the way on this issue.
Careful readers might note that Obama is a Democrat, while the chair of Oversight, Darrell Issa, is a Republican who is known to have no love for Obama. But hey, uniting diverse interests to a common cause is what crowdfunding is all about!
Of course, I’m thrilled about all of this. I would now bet that crowdfunded investing will become legal here in some form, hopefully fairly soon — and that when it does, we’ll see a surge of grassroots entrepreneurship, innovation, local investing, and economic vitality.
For more, read my blog at crowdfundinglaw.com.