These are exciting times for entrepreneurs and small business owners.
Working it’s way through the legislative process is a bill that will allow anyone to invest in private companies through crowd-funding platforms. Currently the average investor only has access to publicly traded companies — that its, any company listed on the major stock exchanges. Private companies like Facebook are currently not accessible to the average citizen; nor were companies like Apple, Google, etc back in their infancy. Only “accredited investors” with connections have access to these companies — but that is about to change.
H.R. 2930, aka the Entrepreneur Access to Capital Act, states (don’t worry, I’ll clarify this):
[blockquote]Entrepreneur Access to Capital Act – Amends the Securities Act of 1933 to exempt from the prohibitions against use of interstate commerce and the mails for sale or delivery after sale of unregistered securities, including unregistered security-based swaps, any transactions involving the issuance of (crowdfunded) securities for which: (1) the aggregate annual amount raised through such issue is $5 million or less; and (2) individual investments in the securities are limited to an aggregate annual amount equal to the lesser of $10,000, and 10% of the investor’s annual income. Authorizes an issuer to rely upon certifications provided by investors. Amends the Securities Exchange Act of 1934 to exclude persons holding crowdfunded securities under this Act from application of “held of record” requirements with respect to mandatory registration of securities. Amends the Securities Act of 1933 to exempt such crowdfunded securities from state regulation of securities offerings.[/blockquote]
A senate version of that bill (S. 1791) is under consideration by the Senate Committee on Banking, Housing, and Urban Affairs.
There are some major differences between the bills, but our best guess is that beginning in Spring 2012, companies will be able to run a Crowd-Investing campaign to:
- Offer a stock or debt investment in their company to everyday investors
- Spread the word about this offering using social media, traditional ads, shouting from the rooftop… anything.
- Raise up to $1,000,000 per 12 month period (possibly more; depends on the final bill)
- Accept up to $10,000 from each individual investor
- Have unlimited number of small investors without the need to go public
- Tap into the power of your tribe to help grow your business!
Upcoming posts will get into more of the details of the crowd-investing process and the pros and cons of this type of investment.
We are truly excited about the positive impact that this new source of capital will have on the entrepreneurial and small-business ecosystems in Boulder, Colorado, and the USA as a whole. Want to help make sure this legislation passes? Please sign our petition!
Got any questions about crowd-investing? We’d love to hear from you!