April 13, 2012
We are considering becoming a funding portal.
Under the discussed crowd funding law just passed we find it almost impossible to economical carry out all the requirements and make a profit or even break even based on 5% transaction fee as the only income for our business. Let us explain.
Since the fundings on each funding portals' website are an all or nothing program, let's say out of 10 companies on our website, one gets funded 100%.
We must undergo our due diligence on all 10 companies to comply with your regulations, yet we can only be compensated by one funding.
We believe that we should be allowed to charge enough in our transaction fee to make a profit, but under this formula, it won't work.
We believe there are many functions a crowd funding site should offer besides just a place to advertise a clients funding.
First is all, the consulting and assistance we could supply to each client regarding how to prepare their presentation to investors which could include help with their business planning and forecasting. Plus help with their presentation materials including their video presentation. As we now understand your regulations, we cannot offer these services because we cannot charge for these necessary services.
On top of all that is the services we would like to offer our clients after they get funded. Those services are management skills for our clients to help them use their capital wisely so that these companies can succeed.
Our main responsibly is really to investors who have invested in companies on our website. We should be able to make sure to make their investments succeed.
Under your regulations as we understand them, we are not allowed to offer these services.
Both the upfront services and after funding services would more than offer us the opportunity to increase our revenue to make our business profitable even with a limit of a 5% transaction fee.
If you understand your rules, these services can only be offered by an arms length other company. That is wrong. These services should be allowed to be offered by the funding portal, whose responsibility is really to its investors who invest on its site.
WE URGE YOU THE PEODPLE ASSIGNED TO WRITE THE FINAL REGUATIONS CONSERNING THE JOB ACT TO CONSIDER THE ABOVE MENTIONED POINTS