No sign of equity crowdfunding, 1 year after JOBS Act
- Cromwell Schubarth
- Senior Technology Reporter- Silicon Valley Business Journal
- Email | Twitter | Google+
But 12 months later, the only crowdfunding being done is through product-oriented sites like Kickstarter and Indiegogo, social do-good fundraising at sites like Causes.com and the old-fashioned “friends and family” funds that many new businesses tap into.
The Securities and Exchange Commission has dragged its
feet for the past 12 months studying how to implement the equity-based
crowdfunding fundraising part of the law.
That has led skeptics like Launch Festival organizer and entrepreneur Jason Calacanis to doubt
whether the SEC will ever actually allow it to happen."You will still be able to go to Vegas and lose $100 on blackjack but you are not going to be able to invest in Linkedin or Facebook or the next Zynga, which is really sad for America," he told me last month.
So for now getting stock or convertible notes in exchange for investing in a startup is limited to accredited investors, otherwise known as millionaires.
The closest thing to crowdfunding being done today involves sites like FundersClub and AngelList where accredited investors can pool together much smaller amounts of money than they normally would need to pledge in order to get a stake in a startup.
Judging from the numbers in 2012, though, it doesn’t appear that the lack of true crowdfunding has slowed investments in projects and startups at all.
Kickstarter says that it raised nearly $275 million and funded more than 18,000 projects last year.
And there were so many seed-funded startups last year that fears were fanned of about 1,000 startups being “orphaned” in the coming year.
Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.
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