PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SBE Council’s Kerrigan Honored with “Crowdfundie Award” at Global Crowdfunding Convention 2017

By at 27 October, 2017, 8:00 am

FOR IMMEDIATE RELEASE

Las Vegas, NV – The 6th Annual Global Crowdfunding Convention 2017 (GCC 2017) was held in Las Vegas from October 23-24 at Planet Hollywood, where Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan spoke on the topic of what is needed to take equity crowdfunding to the next level following a year of promising activity.  Kerrigan was also presented with the GCC’s “Crowdfundie Award” for her leadership and advocacy work on making equity and debt crowdfunding legal, and advocating for policy and regulatory improvements to make “Title III” crowdfunding more appealing and practical for startups and small businesses.

“The crowdfunding community is very optimistic, and they are passionate about educating people and entrepreneurs about the power and opportunity of raising capital with investors who want to help startups and small businesses succeed. It was an honor to present at this conference and to be recognized among peers I highly respect. I especially thank Ruth Hedges for organizing this annual event and for her strong advocacy and support of crowdfunding,” said Kerrigan.

The Jumpstart our Business Startups Act (JOBS Act) was signed into law by President Barack Obama in April 2011, but “Title III” of the Act, which allows non-accredited investors to invest in startups and businesses on regulated online platforms, only became available in May 2016. It took the Securities and Exchange Commission (SEC) four years to write the rules around Title III (regulated crowdfunding). Title III of the Act was meant to fill a funding gap in the marketplace as small businesses and startups had (and continue to experience) difficulty raising capital from traditional sources.

At the event, Kerrigan addressed some key points about the state of regulated crowdfunding. She noted that:

• Regulated crowdfunding is very young. Even so, and given the regulatory constraints, there is good news from the early results. We are learning a great deal from the early adopters and data from those campaigns can be shared with the entrepreneurial community to accelerate adoption. According to Crowdfund Capital Advisors, over 72,000 backers have invested in Title III crowdfunding campaigns. More than $72 million has been committed, with $54 million going to companies that closed or hit their funding targets.  564 campaigns have launched, 380 have closed, and 215 (or 57%) hit their funding target. The average company is raising $300k and the media raise is $152K.

• Changes need to be made to make regulated crowdfunding more practical, appealing, and cost-effective for startups and small businesses. Kerrigan said those policy changes include:

-Streamlining the regulatory and registration process – Form C and other requirements – to help reduce complexity and cost.

-Allowing issuers to “Test the Waters.”

-Increasing the amount that can be raised from $1 million to $5 million (preferably more).

-Allowing for single purpose vehicles, which may mitigate issuers concerns about a potentially large number of shareholders.

-Allow for lead investors or syndicates to help guide investors.

-Providing legal clarity to platforms regarding potential liability issues involving issuers.

-Making adjustments to how much non-accredited and accredited investors can invest on Title III campaigns.

• Education is vital, in terms of preparing small businesses for crowdfunding and exposing them to this powerful way to raise capital. Education and outreach is also critical to non-accredited investors about the opportunity that exists to invest in small businesses and promising startups. Kerrigan said the Trump White House and Small Business Administration can be very helpful in raising awareness of this vital tool for raising capital, especially as women entrepreneurs have had great success with crowdfunding.

Kerrigan expressed optimism about the growth of crowdfunding and the economic climate that will help fuel more investment.

“Policy winds favor the enactment of needed reforms to make crowdfunding more viable and successful, and stronger economic growth will encourage more people to start businesses and invest,” said Kerrigan.

She noted bipartisan legislation on Capitol Hill, and the fact that a recent report by the U.S. Treasury (as required by President Trump’s Executive Order on regulation) included recommendations by SBE Council on the needed changes (noted above) to leverage the early successes of crowdfunding.

CONTACT:
Karen Kerrigan, kkerrigan@sbecouncil.org
703-242-5840

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years SBE Council has worked to successfully implement a range of policy and private sector initiatives to strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil

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