What the Heck is Crowdfunding? Investment Capital for the Little Guy!
Crowd funding (sometimes called crowd financing, crowd sourced capital) describes raising money through collective cooperation by funders who pool their money and other resources together via the Internet, to support efforts initiated by entrepreneurs. Crowd funding is the newest most direct way to fund start-ups or small business.
Crowdfunding is a hot new way to source capital for your early-stage business or growth-stage for-profit enterprise. Traditionally, the amounts for investment are small (up to $10,000), but can provide seed money for innovative initiatives. Crowdfunding is so new, it must pass SEC hurdles before it can really take-off. The following information details the current legislative proposals that would open up the market for start-up investing beyond traditional venture capital and angel investment.
For more information, check out: Cash to Start’s “Top Ten Crowdfunding Websites”
“The Entrepreneur Access to Capital Act, otherwise known as the H.R.2930, passed by the House of Representatives in November 2011 was stalled in the Senate this month. If passed it would provide a significant boom to entrepreneurs and small businesses across America So what’s so great about it? In simple terms, it allows small commercial enterprises, such as individuals with ideas or small businesses, to utilize “crowdfunding” over the internet by selling non public-securities to the public through “social media solicitations” – essentially asking for money in exchange for some promise of return at a later date, over the web.
With this influx of new job creators seeking investment, the economy should receive a boost as Washington and the large lenders (banks) are forced to relinquish some control over the flow of money. However, one final hurdle remains. Senator Scott Brown of Massachusetts introduced the Democratizing Access to Capital Act, S.1791, which he claims is “[a] bill to amend the securities laws to provide for registration exemptions for certain crowdfunded securities, and for other purposes.” This is essentially the same objective as H.R. 2930, as it allows small commercial enterprises to get in on the crowdfunding scene. However, it has some differences: its major divergence is its cap on investments at $1,000 per person. Both bills limit the overall contributions to an enterprise at $1 million in any 6-month period.”
Good-b TAKE ACTION: Good-b asks our readers to Take Action. Call your Senators and demand they pass these important acts allowing access to capital investments for Entrepreneurs and Small-b’s.