May 26, 2012
Thank you for providing the opportunity for the public to submit suggestions and comments during your drafting of regulations.
I've been an entrepreneur for 45 years. I founded and ran a National Business Management firm in the 60's and 70's. I've founded several high tech firms and written several books on marketing your business through the Internet. Last year, as President and Co-Founder we launched FundaGeek.com a crowdfunding site for technical innovation.
I have followed the consideration of providing exemptions for crowdfunding for equity from the current regulatory requirements with great interest. We are all aware that the major thrust in new jobs comes from our development of NEW businesses. Over my 45 years, through my business management firm and other consulting, I been involved with 100's of new businesses being started. Many proved to be very successful, some growing into very large companies employing 1,000's of employees.
However, in every case of these 100's of businesses that were 'new start-ups' the initial seed money they put together to launch their business idea was well under $100,000. However, had they been required to spend the time and money to go through the requirements that are presently being considered, I don't believe more than 5% of them would have been able to get started. In fact the most successful I know were ones that would have never kicked off.
I appreciate the concerns being expressed and the requirements being considered for crowdfunding projects that exceed $500,000 especially when exceeding $1,000,000. However, PLEASE recognize that for $50,000 or up to $100,000 to place many requirements that require time and money for the entrepreneur to qualify their project will result in reducing the number of NEW BUSINESSES being started by probably 95%.
If you also place a lot of requirements on the crowdfunding site that wants to accept under $100,000 projects then you'll be forcing them to recoup those costs by charging more in fees to the Entrepreneur. A small business start-up that needs only $30,000 to $50,000 to start their business, if it is successful, will most probably come back to a crowdfunding site to do another round for a larger amount to expand the business, and at that time they can afford to meet the requirements to proceed.
Please don't shut out the 10's of thousands of businesses that could be started each year because your focus is on the larger amounts and aren't really thinking of the effect the regulations and requirements would have on eliminating an incredibly large number of new business that otherwise would be started.