Sweet! I was hoping they would break this part out into its own bill.
This is true economic jet fuel. Most of the jobs package was not terribly exciting but when I came across this bit I truly got jazzed about the possibilities. I hope the SEC doesn't drag their feet after this is passed.
Even if we end up with a ton of failed companies from this and a lot of burned investors the individual risk will be low and the entrepreneurs that come out of the other side will be that much better the next time. It really opens up the game to a huge number of people that otherwise would not have much hope of even getting 'friends and family' seed money.
After actually reading the short article, NO it did not pass in the house. I'm not a legislative expert but it sounds like it passed through the rules committee and will be debated today and tomorrow. Crossing my fingers...
That was my read too (due to what "crowd funding" brings to mind, e.g., Kickstarter). However, this does not seem to be the case. In fact, it only changes the rules about general solicitation.
"the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors"
Ah, cool. If I'm reading that right, you can raise $10,000 or up to 10% of the investors annual income (whichever is less) as long as you're raising less than $1M (or $2M with audited financial statements, whatever that means).
That will open up a lot more people as potential funders.
This makes me wonder what the paperwork is going to look like.
Can you imagine gathering and verifying paperwork on potentially thousands of investors at an early stage? Talk about a time suck that people trying to get a company off the ground won't want or need.
As long as individual investments made are less than $10k:
`(B) individual investments in the securities are limited to an aggregate annual amount equal to the lesser of--
`(i) $10,000; and
`(ii) 10 percent of the investor's annual income;
Pretty interesting -- if this goes through it seems like you could experiment with funding models somewhere between normal angel investing and the tiny bites that Kickstarter usually deals in.
Huh. That would be a big change. I'm surprised I haven't seen more advocacy for it from HN.
A question, though: in a post-"crowdfunding" world, what would a "crowdfunded" round do to your prospects of getting venture capital down the line? Wouldn't it gnarl up your cap table? How long will it take to shake the legal intricacies of this out?
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[ 4.4 ms ] story [ 50.2 ms ] threadThis is true economic jet fuel. Most of the jobs package was not terribly exciting but when I came across this bit I truly got jazzed about the possibilities. I hope the SEC doesn't drag their feet after this is passed.
Even if we end up with a ton of failed companies from this and a lot of burned investors the individual risk will be low and the entrepreneurs that come out of the other side will be that much better the next time. It really opens up the game to a huge number of people that otherwise would not have much hope of even getting 'friends and family' seed money.
Anyone who understands this thing have a read on whether that is actually so?
"the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors"
http://democrats.rules.house.gov/112/text/112_hr2940_txt.pdf
That will open up a lot more people as potential funders.
Can you imagine gathering and verifying paperwork on potentially thousands of investors at an early stage? Talk about a time suck that people trying to get a company off the ground won't want or need.
http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112...
Pretty interesting -- if this goes through it seems like you could experiment with funding models somewhere between normal angel investing and the tiny bites that Kickstarter usually deals in.
A question, though: in a post-"crowdfunding" world, what would a "crowdfunded" round do to your prospects of getting venture capital down the line? Wouldn't it gnarl up your cap table? How long will it take to shake the legal intricacies of this out?
http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02940:
http://www.opencongress.org/bill/112-h2940/
--
H.R.2930 (CrowdSourcing one) still making its way
http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02930:
http://www.opencongress.org/bill/112-h2930/
http://www.opencongress.org/bill/112-h2167
I doubt any YC companies are using this service with these kind of terms...
http://clerk.house.gov/evs/2011/roll825.xml