I heard from someone who’s close to the SEC that there’s “no doubt” that SEC chair Mary Schapiro will be leaving, as has previously been rumored — it may happen soon, but will certainly be after tomorrow’s Small Business Forum, which will have a breakout session devoted to crowdfunding. New SEC commissioners and chairs are appointed by the President, with the advice and consent of the Senate, and no more than 3 SEC commissioners can be from the same party. Without Schapiro, that leaves two each Democratic and Republican– so a new appointee could be from either party.
I’m sure that Obama will appoint a new commissioner and designate a chair who is friendly to investment crowdfunding, because the White House been behind the cause from the very beginning. Many people credit Rep. Patrick McHenry (R-NC) for introducing the $10K/$1M crowdfunding exemption idea to DC via H.R. 2930. But that formula came out of the White House’s Startup America initiative much earlier; it was originally proposed by Woodie Neiss and his Startup Exemption pals, and it earned far more online votes than any other proposals (the second and third place Startup America ideas were also crowdfunding exemptions).
Informed by their Startup America outreach, and one week before McHenry introduced H.R.2930, the White House Office of Science and Technology Policy (OSTP) proposed a $10K/$1M exemption in on an on-the-record call with Aneesh Chopra and Tom Kalil immediately after Obama’s major address on Sept 8, 2011. This wasn’t reported on at the time, possibly because the idea was unfamiliar to most reporters on the call. Several weeks later, the day before the House voted on McHenry’s bill (and passed it overwhelmingly), the White House issued a statement declaring it consistent with their own proposal.
This is review is all just to say that, if the White House indeed needs to appoint a new SEC commissioner and chair soon, it will surely be someone who wants to make the crowdfunding exemption as workable as possible. Combine this with the fact that the new crowdfunding legislation gives the SEC broad authority over how it should be interpreted and implemented, and I think there’s reason to be optimistic.
UPDATE: One reader notes that crowdfunding is far from the SEC’s top priority right now. Several initiatives are currently more pressing for both the SEC and the White House, with money market reform probably at the top of the list.
Mobile App for Launch Event Investing
At next year’s LAUNCH festival, a startup unveiling event taking place next March 4-5 in San Francisco, the organizers will distribute a mobile app that will allow attendees to invest on the spot, as compliant with current law at that point in time. I predict great success for an app like this, not just at LAUNCH, but at countless other launch/funding events in the future.
The turn-based horror game Haunts: The Manse Macabre was funded back in July and had hoped for a Halloween release, but the presumed programmers needed to leave the project. Now the project is on hold (or dead), but hopefully it will be taken up by the small studio Blue Mammoth Games.
The alt band Animal Collective raised money back in 2009 to enable band member Deakin to play at a benefit music festival in Mali. As perks, they offered CDs and other documentation of the trip. But Deakin later decided that all of the money raised should go to the concert’s benefit charity (TEMEDT) rather than towards his own travel expenses, and that he feels that he doesn’t yet have any new music that’s good enough to send to his backers, which must be frustrating to both him and them.
Italy has passed its own crowdfunding exemption. It’s similar to what’s in the JOBS Act, but it targets high-tech ventures, and it is likewise now waiting for Italy’s SEC-analog (CONSOB) to write the specific rules.
DIY Platform Options
GrowVC recently announced Crowd Valley, “The Crowdfunding Infrastructure,” which lets you build your own crowdfunding platform. Add it to Selfstarter, the IgnitionDeck plugin for WordPress, Launcht, and Invested.in as ways you can create your own crowdfunding site. Note that Selfstarter is free and open-source, unlike the others, and that it’s designed to support a single project rather than serve as a shared platform.
Wefunder – Cheap Offerings Open to CA, MA, NY
Like other platforms, Wefunder is waiting for the SEC rulemaking. Meantime, they’ve templated an inexpensive way for small businesses to legally offer private equity investments now (under Reg D, Rule 506) to residents of California, Massachusetts, and New York, with a maximum of 35 unaccredited investors.
Lessons of Insurance Regulation
Writing on Bill Carleton’s blog, finance and securities lawyer Robert Weiss proposes insurance regulation as model for crowdfunding regulation, rather than corporate law, because insurance regulations are designed to protect relatively unsophisticated consumers while permitting competition.
Early Christianity’s Crowdfunding Spirit
The Christ and Pop Culture blog discusses how crowdfunding today recalls the community spirit demonstrated by the 3000 new Christian believers touched by the first Pentecost. ???And all who believed were together and had all things in common. And they were selling their possessions and belongings and distributing the proceeds to all, as any had need??? (Acts 2:44-45, ESV).
Trendwatching proposes the term “Presumers” to refer to the growing numbers of consumers, such as crowdfunders, who engage with products and services pre-launch. I always get a kick out stuff like this, marketing consultants trying to create new buzzwords.