Hedge Funds and Alternatives
November 20, 2012
Equity Crowdfunding an Experiment Waiting to Happen
U.S. start-ups will soon be able to raise capital from the public through online crowdfunding portals such as Fundable.com. This new fundraising model could unlock trillions of dollars in venture capital, but it raises many practical and regulatory questions.
By Gregory Taggart
Call it venture capitalism for the masses. The U.S. Jumpstart Our Business Startups, or JOBS, Act is about to inject new energy into crowdfunding, a web-based approach to raising business capital. Through an amendment to the Securities Act, the JOBS Act lets start-ups raise money from the public via crowdfunding platforms like Fundable and RocketHub, as long as those platforms register with the U.S. Securities and Exchange Commission.
Once regulations are in place, this year or next, that change “will provide an entirely new class of capital and open up trillions of dollars of new funding to small businesses in the U.S.,” says Eric Corl, president and co-founder of Columbus, Ohio–based Fundable. ....