Startup Exemption

Entries tagged as ‘President Obama’

President Obama Endorses Our Framework and HR 2930!

November 2, 2011 · 1 Comment

When we crafted our framework for Crowdfund Investing in February, 2011 we thought we had a .1% chance of updating the security laws to make equity-based crowdfunding legal.  Now we have HR 2930, the Entrepreneurial Access to Capital Act whose roots come from 2 hearing we’ve had on Capitol Hill and our entire framework!

And this just in from the White House … aaaaaaaah … day by day we get closer to helping entrepreneurs get access to capital to innovate and create jobs!

A TON of thanks for Rep. Patrick McHenry for taking on our cause!!

The Startup Exemption Team!

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Congress is Polling Your Opinion on HR 2930 … Click to Vote

November 2, 2011 · Leave a Comment

Major backers of our bill: US Chamber of Commerce, National Taxpayer Union, Small Business & Entrepreneurship Council (SBE Council). Add your support!

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Another Step Closer to Crowdfund Investing (CFI) Reality

October 27, 2011 · Leave a Comment

Yesterday, October 27, 20011, our bill HR 2930 was amended in the Full Financial Services Committee. It now pretty much matches everything we have been advocating for in Washington! From here it goes to the floor of the US House of Representatives.

Sherwood Neiss, chief advocate of the Startup Exemption said, “What an amazing milestone. Several democrats also signed on showing further bipartisan support for entrepreneurship, innovation and JOBS!”

The Startup Exemption formulated only 10 months ago with a goal to update the security laws to use the tenants of crowdfunding to get capital flowing to entrepreneurs. In that short period of time, they acquired thousands of follows on their petition, blog and twitter feed. They were part of 2 congressional hearing in Washington, DC. They were consulted and included in President Obama’s American Jobs Act and were the backbone for HR 2930, what they like to call the Crowdfund Investing Act.

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Washington Times: Crowd-funding could boost entrepreneurship

September 28, 2011 · Leave a Comment

Updated regulations would allow investors to find innovators on the Internet 

From the Washington Times.  Click here for article:
Illustration: Crowd funding by Alexander Hunter for The Washington Times

A solution is gaining steam to help spur small-business growth and the anemic state of job creation. It requires updating Securities and Exchange Commission (SEC) regulations regarding general solicitation and accreditation so average Americans can choose to invest in small businesses.

Crowd-fund investing is a common-sense solution that has attracted the interest and support of President Obama. Republican Rep. Patrick T. McHenry of North Carolina recently introduced H.R. 2930, the Entrepreneur Access to Capital Act, legislation that aligns with the general framework supported by the president. So here we have a common-ground idea over which both sides of the political aisle agree on many key details. It’s time to move forward quickly so crowd-fund investing can help capital-starved businesses and our gasping economy.

Nascent entrepreneurs and growth-oriented firms continue to have a difficult time finding capital to expand and innovate. Of course, our nation has counted on the job-creating prowess of small businesses to lead us out of difficult economic periods. This time around, unfortunately, the uncertainties have become too great. New startups, which have fueled job creation following previous recessions, have not taken root at the same pace as in the past.

Weak demand, tight capital and credit markets, and policy uncertainties continue to erode confidence and entrepreneurial activity. The crowd-funding solution addresses a key concern that would help entrepreneurs identify new sources of capital, thus providing optimism and much-needed resources for investment and growth.

America, the land of opportunity, is being out-innovated. Other places, such as the United Kingdom and France, with similar capital constraints have already made crowd-fund investing legal. The crowd is vetting the ideas of entrepreneurs and backing only those they deem worthy. Fraud – a key issue of concern for regulators and legislators alike – hasn’t reared its wicked head, thanks to hundreds if not thousands of prospective investors picking apart the idea, the business model or the execution plan of the entrepreneur for bringing his goods or services to market. These discussions and vetting occur in open dialogues on Internet platforms.

While not allowable under existing U.S. securities laws, crowd-fund investing can provide a way for micro-angel investors, both accredited and unaccredited, to pool their individual small investments to support entrepreneurs and enterprises that have merit. If changes are made in U.S. laws, the funding rounds can occur via SEC-regulated websites. These websites will provide transparency, open communication, accountability and reporting among the investors, entrepreneurs and theSEC. This is an expanded version of “friends and family” fundraising, which uses an individual’s or business owner’s social networks to create jobs and grow the economy.

Mr. McHenry’s bill would provide a crowd-funding exemption to SECregistration requirements for firms raising up to $5 million, with individual investments limited to $10,000 or 10 percent of an investor’s income. The exemption would erase limits on the number of investors until the first $5 million of capital is raised. This exemption provides smaller investors an opportunity to support startups, which currently is not an option under SEC regulation.

In my recent testimony before the House Committee on Oversight and Government Reform subcommittee that Mr. McHenry chairs, I noted some other key provisions that may be considered to address fraud and accountability concerns. For example, there could be a requirement that investors take a brief online course about crowd-fund investing and review a series of disclosures that demonstrate they are familiar with the basics of investing and understand the risks.

In addition, general solicitation should be allowed only on registered Internet platforms where entrepreneurs and investors can meet and the crowd can vet in an open and transparent manner. Standards-based reporting would be submitted to the SEC by small businesses using the platform. A project would not get funded until it met its minimum target. It would be an all-or-nothing proposition. Only if the target was reached would money be withdrawn from donor accounts.

The proposed reforms to existing law are modest and follow the spirit of the Securities Act of 1933 and the Exchange Act of 1934. The modifications include anti-fraud safeguards and create a peer-to-peer system in which communities become the de facto seed and early-stage funders to entrepreneurs. There is wisdom in crowds. They are massively diverse and have a better collective intelligence. Every investor contributes to the crowd’s knowledge. An interconnected, knowledgeable crowd brings more experience. Together they will fund ideas that help small businesses – and the investors themselves – succeed.

A crowd-funding model, of sorts, has been taking place successfully online for the past five years. The current model allows a group of people to pool their money and “donate” it to fund an idea. More than $300 million has been donated to more than 500,000 artists, musicians and developing world entrepreneurs. Imagine what could be accomplished if investment dollars were devoted to promising U.S. entrepreneurs whose ideas only need the capital to launch into the marketplace?

Now it’s time to take action. Americans need to be allowed to do what they do best: come together as one to out-innovate, outproduce and outwork the rest of the world. The only question: How long will it take for our government to let us?

Sherwood Neiss, an entrepreneur, is founder of Startup Exemption and a member of the Small Business and Entrepreneurship Council.


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Crowdfunding Has its Day on The Hill

September 16, 2011 · Leave a Comment

 

Sherwood Neiss, Chief Advocate of the Startup Exemption testifies September 15, 2001 in front of a Congressional Committee on the ways in which we can get capital flowing to entrepreneurs, spur innovation & create over 500,000 companies and 1.5M net new jobs over the next 5 years.

1) Sherwood Neiss’ testimony: http://1.usa.gov/oHrFy5

2) Video of Crowdfunding hearing: http://bit.ly/raknZY

3) List of panelists including their respective testimonies: http://1.usa.gov/oVD9OX

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Categories: Crowd Fund Investing · Jason Best · Sherwood Neiss · Zak Cassady-Dorion
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Dylan Ratigan Interviews Startup Exemption Chief Advocate, Sherwood Neiss

September 15, 2011 · 2 Comments

September 14, 2011 Interview

Sherwood Neiss being Interviewed by Dylan Ratigan

On September 14, 2011, Dylan Ratigan interviewed Startup Exemption Chief Advocate, Sherwood Neiss.  The interview took place in advance of the 9:30am hearing on September 15th on Capitol Hill regarding Crowdfund Investing.

Sherwood spoke to Dylan about the importance of young businesses asjob creators, the need for capital to help fund these companies and how the Startup Exemption is a framework under which the SEC can allow equity-based crowdfunding to take place.

Sherwood discussed how under the Startup Exemption framework entrepreneurs that pass the muster of the crowd can raise equity capital.  How the model accounts for investor protection and how by working together not only can we get capital flowing but we can help those entrepreneurs with the best ideas succeed.

The Startup Exemption was just endorsed in President Obama’s American Jobs Act and it has been promoted by Republican leaders of Congress as a way to promote business and capital formation for our nation’s net job creators.

The framework for the Startup Exemption has the ability to create 500,000 new companies over the next 5 years employing over 1.5M Americans.

To watch the interview click here.

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Obama Evokes the Startup Exemption in American Jobs Act!

September 9, 2011 · Leave a Comment

Last night President Obama delivered a speech to the nation in front of both houses of Congress.  During his speech he laid out his plan to create jobs and jumpstart our economy.

He had the following to say: “Everyone here knows that small businesses are where most new jobs begin.  And while corporate profits have come roaring back smaller companies haven’t.”  “Ultimately our recovery will be driven not by Washington but our businesses and our workers.  We can help.” “I agree there are some rules and regulations that do put an unnecessary burden on businesses at a time when they can least afford it.” So “we are … planning to cut away the red tape that prevents too many rapidly growing startup companies from raising capital and going public.” “We should have no more regulation than the health, safety and security of the American people required.  And every rule should meet that commonsense test.” “We should be in a race to the top and I believe we can win that race.” “And it has been the drive and initiative of our workers and entrepreneurs that has made this economy the engine and envy of the world.”   “Members of congress it is time for us to meet our responsibilities”

Today his Jobs Act was released with the following paragraph pursuant to his speech.

Reducing Regulatory Burdens on Small Business Capital Formation: As part of the President’s Startup America initiative, the Administration will pursue efforts to reduce the regulatory burdens on small business capital formation in ways that are consistent with investor protection. This includes working with the SEC to explore ways to address the costs that small and new firms face in complying with Sarbanes-Oxley disclosure and auditing requirements. The administration also supports establishing a “crowdfunding” exemption from SEC registration requirements for firms raising less than $1 million (with individual investments limited to $10,000 or 10% of investors’ annual income) …. This will make it easier for entrepreneurs to raise capital and create jobs.

The bolded line comes directly from what the Startup Exemption has been advocating within its networks in Washington, DC!  Sherwood Neiss, the entrepreneur and Chief Advocate for the Startup Exemption said, “It is AMAZING to see Washington come together over this issue.  Crowdfund Investing (CFI) is an AMERICAN opportunity.  It has the ability to get capital flowing to our nation’s struggling entrepreneurs so that they can grow and hire.   Our zero-cost government initiative has the ability to create over 500,000 companies and 1.5M net new jobs over the next 5 years.”

President Obama is pushing congress to enact the Jobs Act.  If passed, the crowdfunding changes advocated by the Startup Exemption will be the first changes to the security laws in the past 20 years.

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Categories: Crowd Fund Investing · Jason Best · Sherwood Neiss · Woodie Neiss · Zak Cassady-Dorion
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