Crowdfunding Takes a Hit as Profounder Shuts Its Doors
Our own real-world Stephen Colbert skit is playing out before our eyes. Security Regulators are up in arms about the prospect that the average American can decide if he or she is smart enough to invest $10, $100, $1,000 or $10,000 into an entrepreneur they know, via would be SEC-registered websites, that would allow entrepreneurs (who had cleared background and security checks) to raise money from their friends and family. Hence they are spending millions of dollars on lobbyists and staffing Senate hearings with opponents to derail Republican–led legislation that the House of Representatives passed with 96% approval. (Yes this is the same House that rarely passes things with such bi-partisan approval). This was also endorsed by a Statement of Administrative Policy by our Democrat President –all of which is meant to help keep America competitive, spur innovation, encourage entrepreneurship and create millions of jobs.
There are two bills before the Senate. Senator Reid must act to bring a Crowdfunding Bill much like the House version to the floor to vote on. Entrepreneurs, The US House and The President get it. Jobs won’t come if we don’t provide the capital. Let’s not look to past to get us out of this problem. Let’s look to the future and the success of Crowdfunding globally. If 96% of the House thought it was worthwhile, shouldn’t we expect the same from the Senate? Are we really going to let Special Interests that care more about their own power than our future economic prosperity kill crowdfunding legislation in the Senate?
Even before the equity-based crowdfunding site Profounder had a chance to show to the U.S. (ps -this is already legal and flourishing in the UK) the power of harnessing a few dollars from the crowd to spur innovation, encourage entrepreneurship and create jobs, they have shut their doors. In a statement to their followers they said, “the current regulatory environment prevents us from pursuing the innovations we feel would be most valuable to our customers, and we’ve made the decision to shut down the company.”
An inside-Beltway battle is being fought between the people trying to propel our country forward, America’s job creators, and those holding us back, Regulatory agencies including groups like the North American Securities Administrators Association ( www.nasaa.org ).. They are more concerned with clinging to outdated laws written 78 years ago than the economic needs of our country. Current regulations, were written before most homes had radios, much less the Internet. This was during a time when your “social network” was a stack of business cards that you could write letters to send via the US Post Office. Now, this deeply entrenched bureaucracy prevents entrepreneurs from using the Internet and social media to go to their friends and family for investments.
The U.K. has just updated their security laws to allow their citizens to finance their nation’s job creators much in line with what ProFounder was trying to do. What the UK realizes, is with the advances in technology and the Internet, there is power to a group of interconnected people vetting an entrepreneur in an open and transparent platform where they can decide if she or he is worthy of funding. As of last week, it was going so well that the UK Government began to offer tax credits to their citizens to encourage investment.
The financial markets in the US for entrepreneurs and small businesses are STILL FROZEN. With all the talk about it, the reality for most small businesses is they have no access to working capital. Access to capital is the number on concern according to a recent study by the Small Business & Entrepreneurship Council. Allowing Main Street to step in and fill the void left by Wall Street, the banks and Venture Capital can only help propel our country forward. We need to stand together. We need to legalize Crowdfunding. If you are an entrepreneur register at LegalizeCrowdfunding.org now!
Sherwood Neiss and Jason Best are Co-Founders for the Startup Exemption, which brought the idea for “Crowdfund Investing” to Washington a year ago. They have recently launched LegalizeCrowdfunding.org to quantify the impact the legalizing crowdfunding can have on our nation.