Currently before the U.S. Senate are at least 3 bills proposing to legalize how private companies raise private investor capital through a process called Crowd Funding. A contentious and potentially epic battle is under way…. not just in the hallowed halls of capital hill but between two of the biggest and most visible arms of the federal government that have much to lose or gain depending on how this legislation is approved. Read on to learn more and to get the links to the two podcasts recorded on this topic:
The Entrepreneurs: Innovators who struggle to find capital and attract money for their project and are frustrated with the barriers to identify potential investors and the limits on how you can communicate to those investors about their opportunity.
The Investors: Not really in play, generally not showing up for the game or the practice or the signing day. Basically, by and large, they could care less because if they even know about making private investments, and wanted to be in that game, they could find a local pitch event to attend and meet the companies in their area to invest in, they could join Go Big Network, or any number of posting sites already in existence and invest away.
The Politicians: As we approach the BIG GAME election year, they want to be the ones that say they voted favorably for some program that had potential to create jobs. And since most new jobs come from early stage small business, they want to go back to their voters and say they helped change the world for entrepreneurs seeking capital will work, since general consensus is all the money spent trying to get banks to lend and tax breaks to investors to invest haven’t worked. Even Obama has jumped into the fray by expressing his support for the JOBS Act.
The Lobbyists: There really are 3 groups of lobbyists trying to push this legislation through–why because they have the most to gain financially when Crowd Funding is approved. 1) Current Crowd Funding sites like Kickstarter and Indiegogo already have a platform to turn the switch on to enable equity transactions, 2. Posting Sites like Go Big Network that can lift the veil of secrecy between their investor subscribers and their entrepreneurs subscribers and charge bigger fees, and 3. Social media sites like Facebook and Google that can now tap their MILLIONS of eyeballs to introduce entrepreneurs to investors – through ad revenues and posting & transaction processing fees.
The Government: The SBA (Small Business Administration) and the SEC (Securities Exchange Commission
Will Crowd Funding legislation be the solution to entrepreneurs’ challenges in raising capital? Not likely. Two part podcast explain why:
PT 1: Overview of the regulatory environment and history of how we got here:
PT 2: The realities of using crowd funding really won’t make it better, but could make it harder and more frustrating for entrepreneurs:
TO BE CONTINUED……