It was in many ways the centerpiece of the Jumpstart Our Business Startups (JOBS) Act of 2012. At the signing ceremony, all the President could talk about was the idea of “bringing Wall Street to Main Street.” And while the JOBS Act has many other terrific provisions, including the new Regulation D Rule 506(c) and the new Regulation A+, the true statutory crowdfunding in Title III got the headlines. Since then, a growing cottage industry of folks dedicated to making this work (some dubbed them the “cool kids” at an SEC small business conference a few years ago) has developed, and they remain enthusiastic. Finally, the new rules under the Act were passed last week.
A Lack of Support in Washington
Did Congress and the SEC do what they could to make Title III extremely attractive? Not really. Politicians took a $2 million limit the House had passed and lowered it to $1 million on the Senate side (in fact, this was the only thing that was changed in the bill in the House-Senate conference). The SEC is very worried about fraud, and built a pretty high wall of compliance for the brokers and portals who are required to be involved in every deal.
If you search the topic these days, however, many articles have declared crowdfunding already DOA. I hope they are wrong, even though my focus has been more on the exciting opportunity for smaller and more streamlined IPOs through Regulation A+. Startups need all the help raising money that they can get. Let’s give this thing a chance...