January 31, 2014
Crowdpassage.com is a website dedicated to expanding education of rewards and equity crowdfunding, as well as encouraging networking of crowds and groups of supporting industries.
REQUEST FOR COMMENT NO. 10
"Should we adopt rules providing for another crowdfunding exeption with different investment limits..."
PUBLIC COMMENTS TO RFC NO. 10
Crowdpassage.com has an executive staff with extensive real-world experience working with every manner of start-ups and inventors.
Title III of the JOBS Act will provide a powerful new tool for folks looking to bridge the fundraising gap underneath Regulation D and other intra-state exemptions. However, it will exclude poor classes of people.
Wealthy people do not need crowdfunding since they can rely on their own resources, their peers and banking relationships. Middle classes are also able to draw on minimal funds to position themselves for either REgulation D, new Title III campaings, or other sources. Poor families, however, are excluded from Title III and other forms since they do not even have the funds to comply with existing securities exemptions.
Even for Title III offerings a person must have starting capital of at least $20,000. The costs to form an entity, arrange for shareholder management, comply with the JOBS Act, protect ideas (such as with patents), and conforming to the audit requirements mandate money that is not available. A new, perhaps more narrow exeption, sould be considered to help include low-income classes.
Consider whether to include, per your RFC No. 10, a limited exception for offerings up to $50,000 where no investment can exceed $250. If possible relax the standards on intermediaries such that this "Mini-Crowd Offering" might simply fill out Form C and provide very basic information. The risks of these early offerings can still be disclosed by a check-the-box form.
We appreciate the consideration. If you need help on a further outline of this concept we can be of assistance on request.
Matthew R. Nutting, Esq.