Subject: File No. S7-09-13
From: Mark Harrison, Ph.D.

January 6, 2014

I think that Forbes sums it up well:

"The proposed rules are extremely impractical because of the restrictions and procedural hurdles a crowdfunding issuer, investor and funding portal will have to endure to raise capital. Compared to other forms of crowdfunding and capital raising, equity crowdfunding to the public has the worst bang for your buck in all of corporate finance."

If your goal is to crush equity crowd funding, then congratulations.

A startup has 2 key resources: time and money. This proposal steals all of the time of startup founders in exchange for money. If passed this proposal will crush some crowd funded startups because they have to give up too much time that they could spend building their businesses in exchange for money.

Limiting raise to $1m per year is insane. That prohibits any business that takes more than $1m to get off the ground from doing a significant raise through crowd funding. If people want to give more money, let them.

According to "Average successful crowdfunding campaign is around $7,000". And facebook was started on a 10k - 20k raise. Forcing someone through any regulation that takes more than a couple hours of time and that costs more than $100 for such a small raise is crushing to those businesses.

According to Forbes "To produce an offering disclosure document, enlist a funding portal, run background checks and file an annual report with the SEC year after year might well cost upwards of $100,000." - That destroys the average crowd funding raise to $93,000 in debt for a $7,000 raise.

You need to:
increase the maximum raise allowed

deregulate raises under $20,000 K which are generally just used to create a minimally viable product

significantly reduce regulation on all raises so entrepreneurs can focus on building successful businesses and creating jobs rather than on complicated red tape and legal issues

Seriously reconsider your entire proposal or risk destroying new jobs and start ups.