SEC opens the gates to crowdfunding and a new structure of capitalism

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This is significant. While talk doesn’t necessarily lead to action, a significant shift in capitalism could be coming.

On Wednesday US SEC Chairman Mary Shapiro sent a letter to Rep. Darrell Issa, chair of the House Oversight Committee. The letter is embedded at the bottom of this post.

Many have focused on the potential from the current SEC review to relax limits on shareholders for private companies, notably the rule that if a private company has 500 investors or more it has to disclose its finances. Changes to this and related rules could have a significant impact on capital raising for private companies.

Few seem to have focused on what I think is potentially a bigger issue from the SEC moves: opening up crowdfunding as a mechanism for equity investment. The Wall Street Journal has an interesting piece called SEC Boots Up for the Internet Age. The article begins:
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Pushstart adds a new start-up seed accelerator to the Australian tech scene

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Today at the excellent SydStart event is the official launch of Pushstart, adding to the increasingly rich network of support available to tech start-ups in Australia.

There are two key elements to Pushstart: a mentor matching service, bringing together a pool of currently over 50 mentors with start-ups through the year, and a Start-Up accelerator, which will offer a small amount of capital, mentoring, and some physical space for a 3 month program.

The reference points for the start-up accelerator are of course the (primarily) US-based Y Combinator and TechStars
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