June 4, 2013
This afternoon, the White House is honoring 12 entrepreneurs who’ve used crowdfunding to launch tech startups and Main Street businesses, make microloans, and explore ocean floors and outer space.
The recognition of the entrepreneurs calls attention to a conspicuous absence. More than a year after President Obama signed the JOBS Act into law, predicting it would be a “game changer,” the Securities and Exchange Commission has yet to finalize rules that would make it legal for companies to sell equity stakes to anyone over crowdfunding platforms (right now they can only sell to accredited investors).
Is the wait really that big a deal to most companies seeking funding? The JOBS Act requires those raising more than $500,000 from non-accredited investors to provide audited financial statements. That’s a likely turn-off. Of course, there are plenty of businesses that would leap at the chance of selling shares in their companies once the rules are finished.
For those that can’t wait, there are already a variety of proven ways companies can tap friends and strangers to raise money, as the White House list of honorees makes clear: Aurora Anaya-Cerda used donations made over Indiegogo to open an independent bookstore in East Harlem, N.Y. Max Hodak sold stakes to accredited investors through AngelList and SecondMarket for his biotech startup Transcriptic, which is working to automate lab research. Watsi crowdfunds donations for medical care in 13 countries. Mosaic raises equity for solar projects within the framework of New York and California securities laws.