Important Updates on Crowdfunding Laws & SEC Rulings
We’ve got some inside scoop for you on crowdfunding laws and the timelines.
As a quick reminder… Congress passed the JOBS Act to much fanfare, and President Obama signed it into law on April 5th. Many people thought that the battle was won and that business crowdfunding was legal.
Well… not exactly.
Business crowdfunding (equity crowdfunding) is what we call “pre-legal.”
The SEC was given a 270 day period to give Rulings on crowdfunding- scheduled for December 31st. Since then, and over the past few weeks in particular, there has been quite a bit in the press about the slow pace with which it appears SEC and FINRA, the two agencies in charge of creating the regulations for the crowdfunding industry, are embracing their Congressional mandate to do so.
SEC Commissioner Mary Shapiro gave testimony before congress last month. In her testimony she acknowledged the SEC would miss the first deadline of July 5 for the relaxation of Reg. D offerings and General Solicitation- rulings that would essentially allow for crowdfund offerings to be made to accredited investors.
With the missed first deadline, rumblings could be heard from pundits and observers from both sides of the political spectrum. Would the SEC also ignore the December 31 deadline for regulations of Intermediary Crowdfunding Platforms?
Crowdfunding Symposium Connects SEC + FINRA + CfIRA
Part of the work the SEC has on their desk is to interpret the framework spelled out for business crowdfunding under the CROWDFUND Act by those in Congress who drafted it.
To help the process along last week Crowdfunder co-hosted the first symposium on crowdfunding as part of CfIRA, the leading regulatory advocacy group for the crowdfunding industry, in Washington DC.
crowdfunder joined regulators and lawmakers to discuss how to best move business crowdfunding regulations forward, and to create a more open forum for the SEC and FINRA and legislators to discuss specifics.
We wanted to share with you some insights from that day on where things are right now, and to answer the question of “how far off are we?”
When Will Equity Crowdfunding Go Live?
Unfortunately, we can’t crowdfund investment in your company quite yet. Here’s the timeline for when that can happen, and what we can do for you right now:
The SEC is working hard to implement the crowdfunding regulations by their deadline of December 31, as it was assured by SEC staff members participating in the symposium.
Another positive sign came from Rep. Patrick McHenry (R-NC), who was also attending the symposium. He stressed his belief of how business crowdfunding will have a huge impact on small businesses and job creation in the United States, and urged the SEC to work diligently in order to meet its deadline.
The dialog amongst both regulatory agencies, Congressman Patrick McHenry, staffers from Senators Brown and Bennet offices, as well as members of the crowdfunding industry was engaged, robust and at times pretty funny.
We left the symposium feeling positive about what’s happening in the regulatory scene in D.C. The enthusiastic participation of regulators from both the SEC and FINRA is a strong sign for the Rulings.
Most importantly, the interplay and dynamic among the various stakeholders showed a genuine willingness and desire to work together to create a safe and vibrant new financial market, timeline and deadlines notwithstanding.
Why People Are Joining Crowdfunder Today
Here are a few reasons why thousands of crowdfunders and founders have already joined crowdfunder:
*$500,000: Startups are now competing on Crowdfunder for up to $500,000 in funding in our CROWDSTART LV contest.
*$17,000,000: Future crowdfunders have already pledged to invest up to $17,000,000 on Crowdfunder in companies they believe in, once crowdfund investing rolls out.
*4,000 Over 4,000 Founders of companies looking to raise money have signed up to create their profile.
How To Use Crowdfunder Today
Aside from these great reasons to sign up… there are several other reasons and ways to connect to possible funding sources by having your company on crowdfunder. Here are a few specific ways in which your Crowdfunder profile will help you:
1) Leverage Your Existing ‘Social Capital”
One of the most powerful things you can bring to bear in your fundraising efforts is to demonstrate that you have a real network of people who believe in you and endorse you and your company.
Your network will include your mentors, your advisors, your team, your LinkedIn network, and your closer friends & family.
Strong referrals and endorsements are one of the single most important ways to separate yourself out from the pack and give yourself a great shot at getting funded by investors.
Crowdfunder makes this easy by allowing you to add all these people to your company profile- so that when investors go to your Crowdfunder profile they instantly see that you’re for real, and take notice.
2) Get Out Of The Inbox
Most investor pitches start with a founder emailing an investor and attaching a deck and perhaps some numbers. For the recipient, this is a static experience of just another email and a deck.
By building a Crowdfunder company profile, like TradeYa did, you communicate and sell yourself in a more powerful way – complete with a pitch video, your deck, a strong team, and a huge list of Supporters (social capital).
Then all you send along is a single URL, like TradeYa: http://crowdfunder.com/tradeya
Your Crowdfunder profile does the rest of the work for you.
3) Set Yourself Up For Crowdfunding Success On Day 1
Fundraising doesn’t happen over night, no matter where you do it. Neither does a successful Crowdfunder round.
The companies who start now in collecting their existing “social capital” and building their network of Supporters on Crowdfunder will be setup for success.
Now is the time to create a powerful profile + video and build your Supporters. When you launch your fundraising campaign, you will have a built in potential investor base of Supporters who will be automatically notified about your raise and already up to speed.
Don’t wait. Go sign up now and start building your Followers as a crowdfunder, start Commenting and Supporting companies… or create your own Company.