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Bridgefunding: Crowdfunding And The Market For Entrepreneurial Finance, Seth Oranburg
Bridgefunding: Crowdfunding And The Market For Entrepreneurial Finance, Seth Oranburg
Seth Oranburg
Title III of the JOBS Act of 2012 (“Regulation Crowdfunding”) should encourage entrepreneurship by allowing startups and small businesses to sell stock online. Unfortunately, that law applied Depression-era securities-law concepts to peer-to-peer financing in the Internet era; as a result, it got Internet-investor protection wrong. Using Regulation Crowdfunding requires startups to comply with costly and unnecessary anti-fraud requirements. Even after making disclosures, registering with a funding portal, and producing audited financial statements, startups are still not permitted to raise enough money via Regulation Crowdfunding to deploy high-growth strategies without needing more funds from professional Angel and Venture investors.
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