Subject: File No. JOBS Act Title III
From: Carl Kelso
Affiliation: Research Engineer, Lockheed Martin

January 7, 2014

The rules need exemptions or a scaling funding tier for projects under 20K - 50K dollars. The current rules do not adequately address this space, and would have crippled about 75% of projects funded through kickstarter alone last year. 98% were in the sub 100K tier.

Given that the proposed rules are focused on crowd funding, and even mention sites like kickstarter by name, why is there so little attention given to the actual amounts of money typically raised by the sites in question.
The dollar ranges of interest are from 0-100K, 100K-500K, and 500K-1M dollars.

According to kickstarter's public statistics, they supported 54660 projects, of which only 1060 exceeded 100K dollars.

According to page 358 of the 585 page release notes on the proposed rules (Release Nos. 33-9470 34-70741 File No. S7-09-13 RIN 3235-AL37), projects under 100K would be expected to pay appx 10K dollars not including the scaling 5-15% fee mentioned. A kickstarter campaign pushing for $2000 would be sunk under 4x their target goal in financial burden if successful.

Considering over 40,000 of the 54,000 projects funded would not have received adequate funding to cover the costs of filing, it's surprising that there are no exemptions for minimum amounts raised.

I would strongly discourage the discontinuities present in the costs at the 100K and 500K tiers, and would like to remind that these funds come in frequently in sub $1000 increments, meaning a barrier breaking contribution which is normally celebrated in these campaigns could be a 10 dollar gift knocking a project down by 14K. Smoothness of the cost function is extremely important. The only mitigation is the provision of an upper bound as mentioned in the document, which I agree with. The biggest issues I've heard of with success stories was having more money than they know what to do with.

Finally, as a suggestion, tiers should be moved off of major "magic number" dollar amounts like $100K, as these values are often targeted by a community of funders, and while not obvious, I would expect this to have an impact on the performance of funds near these goals. This may be a moot point, as with the new rules in place these thresholds would likely be avoided or capped at to prevent small dollar rollovers causing thousands of dollars of additional cost.

Thanks for your time.