Subject: File No. S7-09-13
From: Rebecca Ramsey

October 24, 2013


I believe that a couple of the regulations included in the Crowdfunding Rules are hurtful to independent start-ups and to the lower-middle-class individuals who wish to fund them, and that they should be reconsidered.

In its article previewing the proposed rules, Forbes estimated that the costs of the disclosure documents, background checks, and annual reporting stipulated in the rules could run as high as $100,000 a year, which is an immense and prohibitive sum for independent start-ups who may not even raise that much. This will unfairly discourage many independent projects from even attempting crowd-funding in the first place.

In addition, the annual contribution caps that require people at below $100,000 to contribute no more than 5% of their net-worth and people at $100,000 and above to contribute no more than 10% are problematic for two reasons:

Firstly, it takes the magic element that makes crowd-funding attractive to lower-middle-class individuals (the ability to contribute to the development of goods, products, and services that they want to see developed and marketed) out of their hands by restricting them to meager contributions. Instead of being able to invest heavily in a project they believe in, people with limited incomes and low net-worth will be restricted to giving developers only a small fraction of what they may believe a project is worth to them. It may not be the wisest investment they ever make, but they should still have the right to make it, just as people have the right to go to Las Vegas and gamble their money away or spend it all on clothes or food or household furnishings or whatever. Without the ability to invest whatever they believe a project is worth to them, lower-middle-class individuals will lose the power to individually contribute in a major way to projects that they believe are worthy, and that will significantly reduce the appeal of crowd-sourcing.

Secondly, the contribution caps also take the power for lower-and-middle-class individuals to influence and promote and contribute to the development of goods and services that they want to see developed out of their hands on a universal level because the caps unfairly allow people with greater net-worth the ability to invest far more money than those of more meager financial resources. Not only will this result in individuals of greater net-worth acquiring an inordinate amount of control over the development of crowd-funded products, goods, and services by making those projects dependent upon the donations of the wealthier class, it will also result in crowd-funded projects focusing their investment strategies upon attracting individuals of greater net-worth to the exclusion of individuals with more meager means.

I urge a reconsideration of these proposed rules and regulations. Please take into account the desire for lower-middle-class individuals to be able to directly contribute in a meaningful way to projects they feel passionately about, and don't discourage independent start-ups by unfairly requiring them to spend 100,000 a year just to try and crowd-fund. Crowd-funding is a great tool for the general public to support the creation of things it wants to spend money on, and it enables poor individuals to create independent start-ups while appealing directly to that general public, without needing to acquire the donations of a few wealthy individuals first. This leads to better, more desirable products, a more engaged general public that is passionate about what it spends money on, and a sense of public accountability on the part of the independent start-ups who must take into account the desires of the general public if the general public is able to contribute as much as it wants to projects whenever it wants to.

Thank you and have a nice day.