Continuing my ongoing coverage of the state of equity crowdfunding, news is just out that a Republican bill proposing that crowdfunding be allowed will get support from the White House. This is not too surprising given the White House recently explicitly supported crowdfunding in the context of the Obama Jobs bill, but is still a relief given there is not much Congress seems to be able to agree on these days.
The bill summary says:
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.
This is good model, with a very reasonable limit of $10,000 or 10% of an investor’s income rather than the $100 investment that some have suggested, and relaxation of requirements that would be burdensome when you have many small shareholders.
I still believe my ‘betting on success’ model of crowdfunding is a viable and useful additional approach to crowdfunding, however even better if true equity crowdfunding is enabled as well.
As I have written before, this could open the gates to a new structure of capitalism. And it might also boost the economy and create jobs in a meaningful way, which seems a worthwhile outcome.