Senate Approves the CrowdFunding Bill

[Original post written @http://startupiceland.wordpress.com] 

It is not law yet, but yesterday the Senate voted 73-26 in favor a bill that loosens SEC regulations in order to permit small businesses easier access to capital. I am not sure if "easier" is the term that I want to use, I think SEC rules were made a long time ago and we need to constantly review them and see if the underlying problems are being resolved through regulation. The capital raising rules as stipulated by SEC are draconian and demanding and is biased towards those with lots of resources and financial institutions (read money and BIG BANKS!). It is counter intuitive because those with money don't really need to raise money, but the system is so biased towards those with resources that it is unbelievable. It was similar to the discussion Muhamed Yunus the founder of Grameen Bank in Bangladesh had when he approached a bank to request them to lend money to the poor people. The bank manager said poor people were not credit worthy, it sparked a fuse in Muhamed Yunus and he got the approval to start his own Micro Lending Bank. He found out that poor people are credit worthy and today that bank serves many million customers. If you want to read the story of transformation go read the story of Mohamed Yunus. If you make it harder then you just prevent those without resources to raise capital, i.e small business owners and entrepreneurs. 

Forbes has an article that I thought was interesting, the article refers to Carl Esposti, founder of a consulting and market research firm Crowdsourcing.org, who is part of a group that has created a Crowdfunding Accreditation for Platform Standards (CAPS) program “to ensure a secure and reliable experience” for investors. I think the thought of something like this is important but I believe they are jumping the gun. I think more credible sources need to do the auditing of the platforms, should be interesting for the Big 4 Accounting Firms as this what they do, gives them a new product line, market and revenue stream. I need to reach out to my Partner friends in Deloitte, E&Y and PWC, if they have not already started thinking about this. I am not even sure if we know all the challenges of CrowdFunding Platforms, I wrote about 3 big challenges, but I a pretty sure there are many. In my perspective are there going to be challenges ABSOLUTELY! will there be fraudsters? CLEARLY will people loose money? WITHOUT A DOUBT. These things should not stop us from trying to solve a problem and enable real, sincere and hardworking entrepreneurs from raising money. We don't follow the rule of Napolean, we say everyone is Innocent until proven Guilty, should that not apply to Entrepreneurs too? No Entrepreneur I know wants to cheat and take money, well 1 maybe :) I digress... I think this is very interesting and precisely the reason I want to devote my energy towards solving this. If it was easy everyone would do it. I will be pushing the team at KarolinaFund.com to align with the movement and make sure they are trying this out in the local market and scale it globally.

Related articles

• Amended JOBS Act Passes The Senate (startupstats.com)
• Crowd funding Startups in Iceland (startupiceland.wordpress.com)
• Senate passes small business start-up bill (vator.tv)
• Crowdfunding passed in the Senate and here's what they changed (scottbrown.senate.gov)
• Soon Even Your Mom can Invest: Senate Passes Crowdfunding Bill 73-26 (with protection) (techcrunch.com)