Advocate for Small Businesses and Startups Praises SEC Actions to Enhance Investment Crowdfunding

By at 2 November, 2020, 1:07 pm


For Immediate Release

Washington, D.C. – Today the Securities and Exchange Commission (SEC) took important and needed steps to improve access to capital by enhancing investment crowdfunding. According to Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan, these smart reforms advanced by the SEC will serve to boost regulated crowdfunding and unleash a significant level of capital that is needed by local businesses across the United States.

“Investment crowdfunding is playing a critical role in helping small businesses access the capital they need to pivot, reinvent themselves and succeed in the COVID-19 economy. Local investors are actively providing capital to local businesses, which is helping entrepreneurs better navigate the ups and downs of this very challenging period. These rule changes adopted by the SEC will greatly expand the availability of capital, and help many local economies and jobs remain intact during the pandemic and recovery period,” said Kerrigan.

Specifically, the rules the SEC advanced today include:

● Increasing the maximum, a company can raise from $1.07 million to $5 million;

● Amending the investment limits for investors in Regulation Crowdfunding offerings by not applying any investment limits to accredited investors while revising the calculation method for investment limits for non-accredited investors to allow them to rely on the greater of their annual income or net worth when calculating the limit on how much they can invest;

● Permitting issuers to “test-the-waters” prior to filing an offering document with the Commission;

● Permitting “demo day” communications that would not be deemed general solicitation or general advertising;

● Permitting the use of Special Purpose Vehicles to facilitate investing in Regulation Crowdfunding issuers;

● And extending for 18 months the existing temporary relief providing an exemption from certain Regulation Crowdfunding financial statement review requirements for issuers offering $250,000 or less of securities in reliance on the exemption within a 12-month period.

As Kerrigan noted, regulated crowdfunding has truly democratized access to capital and there has been NO FRAUD reported in this method of raising capital. The reforms advanced by the SEC are ones that SBE Council has advocated for over the course of several years, and Kerrigan praised SEC Chairman Jay Clayton for his leadership.

“Chairman Clayton has been listening closely to small business advocates and the crowdfunding community, and we are thrilled that he has moved forward with these important reforms that are especially needed during this challenging period of time. Capital is needed to fuel the recovery and is greatly needed to help many small businesses weather the uncertain months ahead. There is no doubt that these actions to enhance investment crowdfunding will play a critical role in funding local businesses and startups immediately, and during the recovery period and beyond,” added Kerrigan.

According to Crowdfund Capital Advisors (CCA), SEC regulated crowdfunding platforms have already raised $712 million from over 710,000 Americans in every state.  A report co-published by SBE Council and CCA finds that almost every U.S. House congressional district has had a regulated crowdfunding raise, and capital has been delivered to companies in 450-plus industries across 850 cities. The average regulated crowdfunding raise is $342,000.

“More local businesses are turning to investment crowdfunding, and today’s rule changes – followed by recent SEC actions to provide temporary relief – will fuel opportunity by deploying capital to both existing businesses and to the significant number of new businesses that are being started in the wake of COVID-19. These improvements to investment crowdfunding could not have come at a more critical time,” add Kerrigan.

Next Steps

SBE Council would like to see the Federal Reserve launch a Main Street Recovery Co-Investment Fund, which utilizes the power and protection of regulated crowdfunding to supercharge local investment. A co-investment fund is a proven and successful model that has been utilized in the U.K., and offers a turn-key approach for the Fed to put to use some of the hundreds of billions of capital that is currently sitting idle. SBE Council is asking the Fed to set aside $20 billion of that unused capital – a tiny fraction of what is available – to launch a co-investment fund.  You can learn more about the co-investment fund by watching SBE Council’s recent webinar on how it works here, or watch Kerrigan’s appearance on FinTech television below.

CONTACT: Karen Kerrigan,

SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit for additional information. Twitter: @SBECouncil

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