“I mean, somebody made a mistake on this, and it should’ve gone through a committee.” – Quote by U.S. Senator Mary Landrieu, Chair, Senate Committee on Small Business and Entrepreneurship on the JOBS Act, H.R. 3606, – the bill that includes key capital formation provisions supported by SBE Council. (Read the quote in its context here.)
So, Chairwoman Landrieu has become the biggest opponent of H.R. 3606, the JOBS Act. She claims the White House made a mistake in supporting it. As did 407 members of the U.S. House of Representatives when they first voted "yes" for H.R. 2930, the "Entrepreneurs Access to Capital Act" (the crowdfunding bill), and a second time 390 members for the JOBS Act, H.R. 3606, which includes H.R. 2930 as well as several other capital formation bills strongly supported by SBE Council.
There is no reason why the Senate Small Business Committee couldn’t have held hearings on the current crowdfunding space, how it works, why fraud is nonexistent, etc. so she could better understand this marketplace. Crowdfunding has been one of the hottest issues of discussion among entrepreneurs for several years, yet seemingly no interest from a Committee that is supposed to be keeping up with issues of importance to small business. In fact, the Committee has held only two hearings this year in total (one on March 20), according to the hearing schedule posted on its website.
The various provisions of H.R. 3606 were properly vetted in the U.S. House where, again, it received wide bipartisanship support -- TWICE. Chairman Landrieu needs to get out of the beltway bubble to understand the modern entrepreneurial marketplace and the innovation that is taking place to better serve the needs of America's small businesses. Unfortunately, she is standing in the way of entrepreneurs and small business owners who desperately need capital to startup and grow their businesses.
Karen Kerrigan, President & CEO, SBE Council
Showing posts with label crowdfunding. Show all posts
Showing posts with label crowdfunding. Show all posts
Entrepreneurs and SBE Council Working to Push JOBS Act Through U.S. Senate
The JOBS Act, H.R. 3606 will finally get a vote late today or tomorrow in the U.S. Senate. SBE Council remains confident for passage, but we are not resting on our laurels. Our members and staff are working the Senate to make sure H.R. 3606 passes with a big bipartisan vote. (It will need 60 votes for Senate passage).
Here is a media release SBE Council sent out today:
A vote in the United States Senate is expected today or tomorrow on the Jumpstart Our Business Startup Act (JOBS Act), H.R. 3606, a package of important capital formation reforms supported by President Barack Obama. The legislation passed the U.S. House of Representatives with overwhelming bipartisan support (390-23) on March 8, 2012. Entrepreneurs and small business owners are galvanized about this important legislation, and are working to ensure the package sails through the U.S. Senate.
The JOBS Act includes practical measures to update archaic Securities and Exchange Commission (SEC) rules, and helps to construct a new regulatory framework that leverages technological innovations and practices that will open new pools of capital for small businesses. Besides reforming regulations that will make it less costly and burdensome for small firms to go public and accelerate their growth in the public markets, the legislation allows for crowdfund investing which presents new opportunities for entrepreneurs to access capital.
“Crowdfunding and the JOBS Act need to pass so we can get capital to our nation's job creators. This important piece of legislation addresses the startup and seed-funding gap that was left after the financial meltdown of 2008. It will allow the community to step in and fund fraud-free entrepreneurs and small businesses. Main Street will be able to evaluate becoming investors in our nation's neighborhood shops or the next great startups and will also share in that prosperity,” said Woodie Neiss, founder of StartUp Exemption, who developed a crowdfunding framework upon which the legislation is based upon.
According to Small Business & Entrepreneurship Council (SBE Council) President & CEO Karen Kerrigan, Democrats and Republicans not only listened to entrepreneurs regarding their plight on the issue of capital access, but they also found assurance in solutions that protect investors through new technologies, as well as a modern regulatory framework that will increase transparency and investor engagement.
“The legislation provides a sensible regulatory approach that takes into account the power of technology and the ‘sunshine’ capabilities of social media in protecting investors. Key reforms provide regulatory flexibility and relief, and will enable capital formation. A strong entrepreneurial ecosystem depends on access to capital. Freeing up new sources of capital – as the JOBS Act will do – will strengthen our nation’s small business sector, and add to their job creating capacity,” said Kerrigan
The Senate is expected to vote on H.R. 3606, the JOBS Act, either later today or tomorrow following votds on a Democrat alternative (Reed Amendment) to the JOBS Act and an amendment to fully fund the Export-Import Bank.
For more information and background about the JOBS Act, or crowdfunding and crowdfund investing, please visit www.sbecouncil.org or call 703-242-5840.
Tell your U.S. Senators to vote for the JOBS Act, H.R. 3606! You can contact them at 202-224-3121!
Here is a media release SBE Council sent out today:
A vote in the United States Senate is expected today or tomorrow on the Jumpstart Our Business Startup Act (JOBS Act), H.R. 3606, a package of important capital formation reforms supported by President Barack Obama. The legislation passed the U.S. House of Representatives with overwhelming bipartisan support (390-23) on March 8, 2012. Entrepreneurs and small business owners are galvanized about this important legislation, and are working to ensure the package sails through the U.S. Senate.
The JOBS Act includes practical measures to update archaic Securities and Exchange Commission (SEC) rules, and helps to construct a new regulatory framework that leverages technological innovations and practices that will open new pools of capital for small businesses. Besides reforming regulations that will make it less costly and burdensome for small firms to go public and accelerate their growth in the public markets, the legislation allows for crowdfund investing which presents new opportunities for entrepreneurs to access capital.
“Crowdfunding and the JOBS Act need to pass so we can get capital to our nation's job creators. This important piece of legislation addresses the startup and seed-funding gap that was left after the financial meltdown of 2008. It will allow the community to step in and fund fraud-free entrepreneurs and small businesses. Main Street will be able to evaluate becoming investors in our nation's neighborhood shops or the next great startups and will also share in that prosperity,” said Woodie Neiss, founder of StartUp Exemption, who developed a crowdfunding framework upon which the legislation is based upon.
According to Small Business & Entrepreneurship Council (SBE Council) President & CEO Karen Kerrigan, Democrats and Republicans not only listened to entrepreneurs regarding their plight on the issue of capital access, but they also found assurance in solutions that protect investors through new technologies, as well as a modern regulatory framework that will increase transparency and investor engagement.
“The legislation provides a sensible regulatory approach that takes into account the power of technology and the ‘sunshine’ capabilities of social media in protecting investors. Key reforms provide regulatory flexibility and relief, and will enable capital formation. A strong entrepreneurial ecosystem depends on access to capital. Freeing up new sources of capital – as the JOBS Act will do – will strengthen our nation’s small business sector, and add to their job creating capacity,” said Kerrigan
The Senate is expected to vote on H.R. 3606, the JOBS Act, either later today or tomorrow following votds on a Democrat alternative (Reed Amendment) to the JOBS Act and an amendment to fully fund the Export-Import Bank.
For more information and background about the JOBS Act, or crowdfunding and crowdfund investing, please visit www.sbecouncil.org or call 703-242-5840.
Tell your U.S. Senators to vote for the JOBS Act, H.R. 3606! You can contact them at 202-224-3121!
Some Senators Have No Clue
Very interesting debate in the Senate today on the JOBS Act. It is interesting to watch Senators opposed to the capital formation and crowdfunding provisions of the JOBS Act decry a subject they know absolutely nothing about.
These members have a stone-age view of public policy and how the economy works. In addition, they feign "shock" at the speed the bill passed the House (it was about 11 months) claiming "special interests" had something to do with it. Well, it is small business owners and entrepreneurs behind the movement to make these common sense changes.
Please contact your Senators on Friday and early next week and demand that they pass the JOBS Act! Let them know regulations need to be modernized to allow small businesses to raise capital, grow their businesses and create jobs! You can call the Capitol Hill switchboard at 202-224-3121 -- ask to be connected to your U.S. Senators -- tell them small businesses (and President Obama) support the House passed JOBS Act!
Karen Kerrigan, President & CEO
These members have a stone-age view of public policy and how the economy works. In addition, they feign "shock" at the speed the bill passed the House (it was about 11 months) claiming "special interests" had something to do with it. Well, it is small business owners and entrepreneurs behind the movement to make these common sense changes.
Please contact your Senators on Friday and early next week and demand that they pass the JOBS Act! Let them know regulations need to be modernized to allow small businesses to raise capital, grow their businesses and create jobs! You can call the Capitol Hill switchboard at 202-224-3121 -- ask to be connected to your U.S. Senators -- tell them small businesses (and President Obama) support the House passed JOBS Act!
Karen Kerrigan, President & CEO
SBE Council Praises Bipartisan Passage of JOBS Act in House, 390-23
Today, the U.S. House passed the Jumpstart Our Businesses (JOBS) Act, H.R. 3606, with strong bipartisan support (390-23). Passage of the legislation will help expedite U.S. Senate action on this critical capital formation package, according to the Small Business & Entrepreneurship Council (SBE Council).
President Barack Obama was supportive of the legislation's passage, and Senate Majority Leader Harry Reid (D-NV) has pledged to move forward on a similar package. SBE Council, a leading advocacy and research organization dedicated to promoting entrepreneurship, has been advocating for many elements of the JOBS Act for the past year. The group praised the bipartisan collaboration that fashioned the legislation and guided it through the House.
"Access to capital remains a daunting challenge for small to mid-size firms at all stages of development and growth. The JOBS Act addresses a number of smart reforms that will boost capital formation and funding opportunities for small businesses. The legislation provides regulatory flexibility and relief from rigid and costly regulations for small firms, while modernizing outdated laws that restrict investment and capital formation," said SBE Council President & CEO Karen Kerrigan.
In a KEY VOTE letter to all U.S. House Members, SBE Council wrote: "Without adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust. Healthy entrepreneurship requires access to capital, yet funding streams remain cautious, locked or tentative. Entrepreneurs need solutions that will create options for accessing capital. The JOBS Act offers such solutions."
The JOBS Act bundled an array of legislative measures focused on helping to increase business startups, and accelerate the growth of existing firms. SBE Council supported all the measures, including the crowdfunding piece of H.R. 3606, which will enable new platforms for raising capital. On these transparent platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses with significant promise. The platforms will operate under a new, and transparent, regulatory framework.
As SBE Council noted in its KEY VOTE letter: "Crowdfund investing will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors. Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural or urban areas where business formation is critical to sustaining those communities." The platforms will protect investors by utilizing proven technologies, sensible regulation and tapping into 'the sunshine' of social media.
On March 6, the Senate Banking Committee hosted a hearing on the capital access bills. SBE Council is encouraging the Senate leadership of both parties to move quickly on package of bills.
"Economic conditions remain fragile, and rising gas prices have the potential to undermine the economic gains that have been made to date. The package of capital formation bills will provide a needed boost to business confidence, while offering meaningful solutions to entrepreneurs who are strapped for capital. We urge the Senate to move quickly," said Kerrigan.
On to the Senate!
President Barack Obama was supportive of the legislation's passage, and Senate Majority Leader Harry Reid (D-NV) has pledged to move forward on a similar package. SBE Council, a leading advocacy and research organization dedicated to promoting entrepreneurship, has been advocating for many elements of the JOBS Act for the past year. The group praised the bipartisan collaboration that fashioned the legislation and guided it through the House.
"Access to capital remains a daunting challenge for small to mid-size firms at all stages of development and growth. The JOBS Act addresses a number of smart reforms that will boost capital formation and funding opportunities for small businesses. The legislation provides regulatory flexibility and relief from rigid and costly regulations for small firms, while modernizing outdated laws that restrict investment and capital formation," said SBE Council President & CEO Karen Kerrigan.
In a KEY VOTE letter to all U.S. House Members, SBE Council wrote: "Without adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust. Healthy entrepreneurship requires access to capital, yet funding streams remain cautious, locked or tentative. Entrepreneurs need solutions that will create options for accessing capital. The JOBS Act offers such solutions."
The JOBS Act bundled an array of legislative measures focused on helping to increase business startups, and accelerate the growth of existing firms. SBE Council supported all the measures, including the crowdfunding piece of H.R. 3606, which will enable new platforms for raising capital. On these transparent platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses with significant promise. The platforms will operate under a new, and transparent, regulatory framework.
As SBE Council noted in its KEY VOTE letter: "Crowdfund investing will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors. Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural or urban areas where business formation is critical to sustaining those communities." The platforms will protect investors by utilizing proven technologies, sensible regulation and tapping into 'the sunshine' of social media.
On March 6, the Senate Banking Committee hosted a hearing on the capital access bills. SBE Council is encouraging the Senate leadership of both parties to move quickly on package of bills.
"Economic conditions remain fragile, and rising gas prices have the potential to undermine the economic gains that have been made to date. The package of capital formation bills will provide a needed boost to business confidence, while offering meaningful solutions to entrepreneurs who are strapped for capital. We urge the Senate to move quickly," said Kerrigan.
On to the Senate!
On Deck in the House: 20% Tax Cut for Small Businesses
The U.S. House will vote on a bundle of capital formation bills on March 8, which includes the crowdfunding measure long supported by the White House. This package is expected to handily advance as it has wide bipartisan appeal, and several of the measures have already passed the House with large bipartisan majorities. In the next several weeks, the House will move to tax issues where it will focus on a major tax relief initiative for small businesses.
The proposal calls for a 20 percent tax cut for small businesses that employ fewer than 500 people. As Majority Leader Eric Cantor (R-VA) announced earlier in the year, "Our pro-growth proposal will provide every small business that employs fewer than 500 people with a 20 percent deduction, helping them retain and create new jobs. I hope every Democrat will join us in passing the small business tax cut by April 15."
Such a tax cut will free up resources for small business owners, which they can invest in their businesses and hire needed employees. With health coverage, energy and other costs on the rise, small business owners and getting squeezed. The business environment remains challenging and accessing capital is difficult. Indeed, with President Obama proposing a major (and SBE Council would argue needed) tax cut for corporations, small businesses also need tax relief. SBE Council looks forward to House action on this tax proposal.
Karen Kerrigan, President & CEO
The proposal calls for a 20 percent tax cut for small businesses that employ fewer than 500 people. As Majority Leader Eric Cantor (R-VA) announced earlier in the year, "Our pro-growth proposal will provide every small business that employs fewer than 500 people with a 20 percent deduction, helping them retain and create new jobs. I hope every Democrat will join us in passing the small business tax cut by April 15."
Such a tax cut will free up resources for small business owners, which they can invest in their businesses and hire needed employees. With health coverage, energy and other costs on the rise, small business owners and getting squeezed. The business environment remains challenging and accessing capital is difficult. Indeed, with President Obama proposing a major (and SBE Council would argue needed) tax cut for corporations, small businesses also need tax relief. SBE Council looks forward to House action on this tax proposal.
Karen Kerrigan, President & CEO
House Expected to Vote on Package of Capital Formation Bills This Week
GOP leaders introduced the Jumpstart Our Business Startups Act (JOBS Act) on February 28-- a package of bipartisan bills that will encourage capital formation, and help businesses grow. Several of these bills - which are strongly supported by SBE Council -- have previously advanced in the House on a bipartisan basis. President Obama signaled his support for the initiative. SBE Council is confident these bills will advance in the House, and remains optimistic that the Senate will take action as well. Senate Majority Leader Harry Reid (D-NV) announced that the Senate will move forward on these capital access bills, and the Senate Banking Committee is hosting a hearing on March 7.
As SBE Council President & CEO Karen Kerrigan noted in a recent Politico.com article regarding Reid's announcement to move on the bills, "Access to capital continues to be a major struggle for small businesses and entrepreneurs. It is a no-brainer for the Senate to move forward with this package of capital formation bills."
The JOBS Act -- which includes provisions to modernizes existing regulations, update thresholds or provide compliance relief - is bundling the following provisions:
(The following information is provided by Majority Leader Eric Cantor, R-VA)
REOPENING AMERICAN CAPITAL MARKETS TO EMERGING GROWTH COMPANIES ACT (H.R. 3606): Approved by Financial Services Committee 54-1
H.R. 3606 reduces the costs of going public by providing companies with a temporary reprieve from Securities and Exchange Commission (SEC) regulations by phasing in certain regulations over a five-year period. The bill creates a new category of issuers called an "Emerging Growth Company" (EGC), which would retain its status for five years or until it exceeds $1 billion in annual gross revenue or becomes a large accelerated filer. H.R. 3606 ensures investors are protected by requiring the EGCs to provide audited financial statements as well as establishing and maintaining internal controls over financial reporting.
THE ACCESS TO CAPITAL FOR JOB CREATORS ACT, H.R. 2940: Approved by the House 413-11
H.R. 2940 removes an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. H.R. 2940 allows small companies offering securities under Regulation D to utilize advertisements or solicitation to reach investors and obtain capital. The SEC's ban on solicitation, first adopted in 1982, limits the pool of potential investors and severely hampers the ability of small companies to raise capital and create jobs.
THE ENTREPRENEUR ACCESS TO CAPITAL ACT, H.R. 2930: Approved by the House 407-17
H.R. 2930 removes SEC restrictions that prevent "crowdfund investing" so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered "accredited" by the SEC. H.R. 2930 allows companies to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides investors with audited financial statements. Individual contributions are limited to $10,000 or 10 percent of the investor's annual income, whichever is less.
THE SMALL COMPANY CAPITAL FORMATION ACT, H.R. 1070: Approved by the House 421-1
H.R. 1070 makes it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million. The SEC has the authority to raise this threshold but has not done so for almost two decades. Amending Regulation A to make it a viable channel for small companies to access capital will permit greater investment in these companies, resulting in economic growth and jobs.
THE PRIVATE COMPANY FLEXIBILITY AND GROWTH ACT, H.R. 2167: Approved by Financial Services Committee Voice Vote
H.R. 2167 removes barriers to capital formation for small companies by raising the shareholder registration requirement threshold from 500 to 1,000 shareholders. Many small businesses are forced to file as a public company because of an obscure regulation that requires companies with 499 shareholders and $10 million in assets to file with the SEC. This current shareholder threshold rule was originally adopted in 1964 and has not been modernized since. This regulation restricts the number of shareholders and assets these companies can have. In turn, this severely limits the growth stages for companies, which need time and flexibility to develop.
THE CAPITAL EXPANSION ACT, H.R. 4088: House Version of S. 1941, Referred to Financial Services Committee
H.R. 4088 increases the number of shareholders permitted to invest in a community bank from 500 to 2,000. This bill would enable banks to better deploy their capital to make loans and create jobs rather than comply with burdensome SEC requirements.
It looks like the House will vote on the JOBS Act on March 8, and SBE Council will KEY VOTE this important legislation, as a vote for small business, in its Ratings of the 112 Congress.
Karen Kerrigan, President & CEO
As SBE Council President & CEO Karen Kerrigan noted in a recent Politico.com article regarding Reid's announcement to move on the bills, "Access to capital continues to be a major struggle for small businesses and entrepreneurs. It is a no-brainer for the Senate to move forward with this package of capital formation bills."
The JOBS Act -- which includes provisions to modernizes existing regulations, update thresholds or provide compliance relief - is bundling the following provisions:
(The following information is provided by Majority Leader Eric Cantor, R-VA)
REOPENING AMERICAN CAPITAL MARKETS TO EMERGING GROWTH COMPANIES ACT (H.R. 3606): Approved by Financial Services Committee 54-1
H.R. 3606 reduces the costs of going public by providing companies with a temporary reprieve from Securities and Exchange Commission (SEC) regulations by phasing in certain regulations over a five-year period. The bill creates a new category of issuers called an "Emerging Growth Company" (EGC), which would retain its status for five years or until it exceeds $1 billion in annual gross revenue or becomes a large accelerated filer. H.R. 3606 ensures investors are protected by requiring the EGCs to provide audited financial statements as well as establishing and maintaining internal controls over financial reporting.
THE ACCESS TO CAPITAL FOR JOB CREATORS ACT, H.R. 2940: Approved by the House 413-11
H.R. 2940 removes an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. H.R. 2940 allows small companies offering securities under Regulation D to utilize advertisements or solicitation to reach investors and obtain capital. The SEC's ban on solicitation, first adopted in 1982, limits the pool of potential investors and severely hampers the ability of small companies to raise capital and create jobs.
THE ENTREPRENEUR ACCESS TO CAPITAL ACT, H.R. 2930: Approved by the House 407-17
H.R. 2930 removes SEC restrictions that prevent "crowdfund investing" so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered "accredited" by the SEC. H.R. 2930 allows companies to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides investors with audited financial statements. Individual contributions are limited to $10,000 or 10 percent of the investor's annual income, whichever is less.
THE SMALL COMPANY CAPITAL FORMATION ACT, H.R. 1070: Approved by the House 421-1
H.R. 1070 makes it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million. The SEC has the authority to raise this threshold but has not done so for almost two decades. Amending Regulation A to make it a viable channel for small companies to access capital will permit greater investment in these companies, resulting in economic growth and jobs.
THE PRIVATE COMPANY FLEXIBILITY AND GROWTH ACT, H.R. 2167: Approved by Financial Services Committee Voice Vote
H.R. 2167 removes barriers to capital formation for small companies by raising the shareholder registration requirement threshold from 500 to 1,000 shareholders. Many small businesses are forced to file as a public company because of an obscure regulation that requires companies with 499 shareholders and $10 million in assets to file with the SEC. This current shareholder threshold rule was originally adopted in 1964 and has not been modernized since. This regulation restricts the number of shareholders and assets these companies can have. In turn, this severely limits the growth stages for companies, which need time and flexibility to develop.
THE CAPITAL EXPANSION ACT, H.R. 4088: House Version of S. 1941, Referred to Financial Services Committee
H.R. 4088 increases the number of shareholders permitted to invest in a community bank from 500 to 2,000. This bill would enable banks to better deploy their capital to make loans and create jobs rather than comply with burdensome SEC requirements.
It looks like the House will vote on the JOBS Act on March 8, and SBE Council will KEY VOTE this important legislation, as a vote for small business, in its Ratings of the 112 Congress.
Karen Kerrigan, President & CEO
Small Business Groups Urge U.S. Senate Leaders to Advance Crowdfunding Legislation
A coalition of the nation's most influential organizations representing small business owners and entrepreneurs is urging U.S. Senate leaders to work together to bring crowdfund investing legislation to the Senate floor for a vote. In a letter addressed to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY), the groups note that crowdfund investing legislation passed the U.S. House 407-17, and President Barack Obama has expressed his support for the legislation through a Statement of Administration Policy as well as in his Startup Legislative agenda recently delivered to Capitol Hill.
(READ THE LETTER BY CLICKING HERE.)
Crowdfund investing platforms will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors through regulated, online platforms. As the groups note in the letter, "Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural areas where business formation is critical to sustaining those communities." The letter points out that capital access remains a serious challenge for startups and growth-oriented businesses, and without "adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust." Funding streams "remain cautious, locked or tentative," write the groups.
Two crowdfund investing bills have been introduced in the U.S. Senate. Majority Leader Reid announced yesterday that the U.S. Senate will address the package of capital formation bills that overwhelmingly passed the U.S. House. With respect to crowdfund investing legislation, state regulators have engaged in a campaign of "fear and fraud," which has deprived Senators from learning the facts about how crowdfunding currently works through gift-based platforms, and how technology -- and a new regulatory framework - will play a central role in rooting out potentially bad actors on crowdfund investing platforms.
As the groups note in their letter:
"On these platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses that have significant promise. Crowdfund investing platforms will be open and transparent, and operate under a new regulatory framework. The platforms will protect investors by utilizing proven technologies and tap into 'the sunshine' of social media. This is what has made gift-based crowdfunding so successful, and why crowdfund investing has been a major success in other parts of the world. Entrepreneurs looking to raise capital will be required to provide significant financial information to potential investors, as well as withstand the scrutiny of the crowd in regards to the feasibility of their business plans and models."
The small business groups are optimistic about the legislation's fate. In the letter, they communicate a belief that "a consensus is achievable for advancing legislation that enables effective crowdfund investing platforms for small businesses while protecting investors." Majority Leader Reid said the Senate Banking Committee will hold an additional hearing on the package of capital access bills next week, which the groups hope will include expert witnesses on crowdfunding so that Senators can be properly informed about existing platforms, and how the new space will protect investors.
The groups underscore the importance of the need to work together to enact solutions that will help small business owners invest, grow and create jobs "Capital is the lifeblood of our economy, and without it small business owners and entrepreneurs simply cannot generate the new jobs, breakthrough innovations and economic impact that are necessary for bringing our nation back to sustained growth," the groups conclude in the letter.
The letter was signed by Harry Alford, President & CEO, National Black Chamber of Commerce; Kristie Arslan, President & CEO, National Association for the Self-Employed; Roger Campos, President & CEO, Minority Business Roundtable; Allen Gutierrez, National Executive Director, The Latino Coalition; Barbara Kasoff, President & CEO, Women Impacting Public Policy (WIPP); Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council; and Todd McCracken, President, National Small Business Association.
Karen Kerrigan, President & CEO
(READ THE LETTER BY CLICKING HERE.)
Crowdfund investing platforms will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors through regulated, online platforms. As the groups note in the letter, "Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural areas where business formation is critical to sustaining those communities." The letter points out that capital access remains a serious challenge for startups and growth-oriented businesses, and without "adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust." Funding streams "remain cautious, locked or tentative," write the groups.
Two crowdfund investing bills have been introduced in the U.S. Senate. Majority Leader Reid announced yesterday that the U.S. Senate will address the package of capital formation bills that overwhelmingly passed the U.S. House. With respect to crowdfund investing legislation, state regulators have engaged in a campaign of "fear and fraud," which has deprived Senators from learning the facts about how crowdfunding currently works through gift-based platforms, and how technology -- and a new regulatory framework - will play a central role in rooting out potentially bad actors on crowdfund investing platforms.
As the groups note in their letter:
"On these platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses that have significant promise. Crowdfund investing platforms will be open and transparent, and operate under a new regulatory framework. The platforms will protect investors by utilizing proven technologies and tap into 'the sunshine' of social media. This is what has made gift-based crowdfunding so successful, and why crowdfund investing has been a major success in other parts of the world. Entrepreneurs looking to raise capital will be required to provide significant financial information to potential investors, as well as withstand the scrutiny of the crowd in regards to the feasibility of their business plans and models."
The small business groups are optimistic about the legislation's fate. In the letter, they communicate a belief that "a consensus is achievable for advancing legislation that enables effective crowdfund investing platforms for small businesses while protecting investors." Majority Leader Reid said the Senate Banking Committee will hold an additional hearing on the package of capital access bills next week, which the groups hope will include expert witnesses on crowdfunding so that Senators can be properly informed about existing platforms, and how the new space will protect investors.
The groups underscore the importance of the need to work together to enact solutions that will help small business owners invest, grow and create jobs "Capital is the lifeblood of our economy, and without it small business owners and entrepreneurs simply cannot generate the new jobs, breakthrough innovations and economic impact that are necessary for bringing our nation back to sustained growth," the groups conclude in the letter.
The letter was signed by Harry Alford, President & CEO, National Black Chamber of Commerce; Kristie Arslan, President & CEO, National Association for the Self-Employed; Roger Campos, President & CEO, Minority Business Roundtable; Allen Gutierrez, National Executive Director, The Latino Coalition; Barbara Kasoff, President & CEO, Women Impacting Public Policy (WIPP); Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council; and Todd McCracken, President, National Small Business Association.
Karen Kerrigan, President & CEO
Crowdfunding Legislation: Time to Move Forward!
Everybody seems to be onboard with crowdfunding. Well, almost everybody.
Using the Internet and social media, crowdfunding allows entrepreneurs to raise limited amounts of capital from a wide array of micro-angel investors. In this common-sense way of expanding the universe of potential investors, transparency and a large population - the crowd - wind up evaluating each investment opportunity.
Making crowdfunding legal makes sense given the capital needs of small firms, and the tremendous opportunities opened for small investors via the Internet and social media. And rare bipartisan support exists for this important economic measure.
For example, on November 3, the U.S. House of Representatives passed the Entrepreneur Access to Capital Act (H.R. 2930), which again allows small businesses and small investors to get together via the Internet, by a vote of 407-17. Specifically, the legislation allows crowdfunding when the total amount of capital to be raised is $2 million or less, with individual investments limited to $10,000, or 10 percent of an investor's income, whichever is less.
President Barack Obama has embraced crowdfunding. On November 2, the administration released the following in a "Statement of Administration" policy: "In the President's September 8th Address to a Joint Session of Congress on jobs and the economy, he called for cutting away the red tape that prevents many rapidly growing startup companies from raising needed capital, including through a ‘crowdfunding' exemption from the requirement to register public securities offerings with the Securities and Exchange Commission. This proposal, which would enable greater flexibility in soliciting relatively small equity investments, grew out of the President's Startup America initiative and has been endorsed by the President's Council on Jobs and Competitiveness. H.R. 2930 is broadly consistent with the President's proposal. This bill will make it easier for entrepreneurs to raise capital and create jobs."
Steve Case serves on the President's Council of Jobs and Competitiveness, and also is chief executive of investment firm Revolution and heads up the public-private Startup America Partnership. Speaking at the Washington Economic Club on February 23 about the importance of entrepreneurship in the U.S., as the Washington Post reported, Case "underlined the importance of improving access to capital by allowing entrepreneurs to tap into modern financing alternatives like online crowd-funding platforms."
So, what's the hold up? The U.S. Senate has yet to take action.
Senate bills would have different funding levels and tighter regulations. As reported by CNBC.com on February 14, "Karen Kerrigan, CEO of the Small Business & Entrepreneurship Council says she thinks it has an 80 percent chance of passing the Senate when it does come up for a vote. ‘It has deep bipartisan appeal and President Obama's support,' she says. The only roadblock seems to be state regulators, who fear massive potential unregistered securities fraud. ‘They're spreading fear and slowing the process,' she says."
In particular, state regulators want to prevent the preemption of state law, and are seeking to severely restrict the maximum amount that can be invested by an individual.
The effort to over regulate in the Senate, in response largely to this lobbying from state regulators who in the end are seeking to protect their turf (as government regulators and bureaucrats do), places this common-sense, pro-entrepreneur crowdfunding measure at risk. With transparency and basic safeguards, as proposed by the House and the President, crowdfunding can be a tremendous opportunity for entrepreneurs to find the capital needed to start up and/or grow. It would be a clear plus for U.S. economic growth, competitiveness and job creation.
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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Using the Internet and social media, crowdfunding allows entrepreneurs to raise limited amounts of capital from a wide array of micro-angel investors. In this common-sense way of expanding the universe of potential investors, transparency and a large population - the crowd - wind up evaluating each investment opportunity.
Making crowdfunding legal makes sense given the capital needs of small firms, and the tremendous opportunities opened for small investors via the Internet and social media. And rare bipartisan support exists for this important economic measure.
For example, on November 3, the U.S. House of Representatives passed the Entrepreneur Access to Capital Act (H.R. 2930), which again allows small businesses and small investors to get together via the Internet, by a vote of 407-17. Specifically, the legislation allows crowdfunding when the total amount of capital to be raised is $2 million or less, with individual investments limited to $10,000, or 10 percent of an investor's income, whichever is less.
President Barack Obama has embraced crowdfunding. On November 2, the administration released the following in a "Statement of Administration" policy: "In the President's September 8th Address to a Joint Session of Congress on jobs and the economy, he called for cutting away the red tape that prevents many rapidly growing startup companies from raising needed capital, including through a ‘crowdfunding' exemption from the requirement to register public securities offerings with the Securities and Exchange Commission. This proposal, which would enable greater flexibility in soliciting relatively small equity investments, grew out of the President's Startup America initiative and has been endorsed by the President's Council on Jobs and Competitiveness. H.R. 2930 is broadly consistent with the President's proposal. This bill will make it easier for entrepreneurs to raise capital and create jobs."
Steve Case serves on the President's Council of Jobs and Competitiveness, and also is chief executive of investment firm Revolution and heads up the public-private Startup America Partnership. Speaking at the Washington Economic Club on February 23 about the importance of entrepreneurship in the U.S., as the Washington Post reported, Case "underlined the importance of improving access to capital by allowing entrepreneurs to tap into modern financing alternatives like online crowd-funding platforms."
So, what's the hold up? The U.S. Senate has yet to take action.
Senate bills would have different funding levels and tighter regulations. As reported by CNBC.com on February 14, "Karen Kerrigan, CEO of the Small Business & Entrepreneurship Council says she thinks it has an 80 percent chance of passing the Senate when it does come up for a vote. ‘It has deep bipartisan appeal and President Obama's support,' she says. The only roadblock seems to be state regulators, who fear massive potential unregistered securities fraud. ‘They're spreading fear and slowing the process,' she says."
In particular, state regulators want to prevent the preemption of state law, and are seeking to severely restrict the maximum amount that can be invested by an individual.
The effort to over regulate in the Senate, in response largely to this lobbying from state regulators who in the end are seeking to protect their turf (as government regulators and bureaucrats do), places this common-sense, pro-entrepreneur crowdfunding measure at risk. With transparency and basic safeguards, as proposed by the House and the President, crowdfunding can be a tremendous opportunity for entrepreneurs to find the capital needed to start up and/or grow. It would be a clear plus for U.S. economic growth, competitiveness and job creation.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
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