Crowd funding rules hold promise, raise questions
By Erik Siemers
Siteworks' Jean-Pierre Veillet worries about dealing with many investors at once.
New rules making it easier to use the Internet to attract equity investors could provide a new pathway to capital for the world of sustainable business.
But questions over when and how the “crowd funding” structure may be applied still hold equal weight to the excitement over its potential.
The JOBS Act — an acronym for Jumpstart Our Business Startups — signed into law last month by President Barack Obama will enable small businesses to use the Internet to raise up to $1 million in small investments from lots of people.
The funding mechanism has generated excitement in the world of sustainable business, where goals are often driven by a mission rather than profits, making it difficult to attract angel investors or venture capital.
“I think everyone can really benefit from this,” said Jenny Kassan, CEO of Oakland, Calif.-based Cutting Edge Capital, one of the earliest advocates of crowd funding who stood alongside Obama at the White House Rose Garden bill signing ceremony.
Before the JOBS Act, soliciting equity capital online was forbidden under U.S. Securities & Exchange Commission rules. Companies were limited mostly to seeking out “accredited investors” — individuals with a net worth of at least $1 million — giving them just a tiny fraction of the population from which to solicit equity capital.
The JOBS Act, though, opens the field to an endless array of equity investors and could allow sustainably focused enterprises the ability to link-up with investors that believe in their mission.
“There are all kinds of people out there with all kinds of different motivations for investing,” said Kassan. “Some might be looking for the next Google. Some might be looking for a business in their community. Some might be looking for businesses that promote women’s equality. It opens up a huge new potential group of investors.”
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.