Crowdfunding Entrepreneurs: New Laws Could Make Funding Startups Easier

October 13, 2011

Crowdsourcing has moved from ideas to money, allowing entrepreneurs to tap into the power of a wider audience to provide funding options for startups and businesses. The concept of crowdfunding is simple – by allowing a larger audience to help fund projects, businesses can raise the funds they need to exist, especially as options for funding startups have been limited by the economy and disappearing lines of credit.

A host of websites dedicated to crowdfunding have popped up. Crowdfunding sites like Kickstarter and IndieGoGo are popular ways to launch a project through small donations. These crowdfunding sites offer access to another source of capital. And with them, anyone can invest in ideas.

Removing Crowdfunding Restrictions Could Help Startups and the Economy

While these sites are great, the casual donors who use them are not enough alone to spark a major economic turnaround. That requires investors, not donors, but for the last 75 years the Securities and Exchange Commission has forbidden crowdfunding for businesses.

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Obama supports it – he’s even mentioned crowdfunding through platforms such as Kickstarter as a means to spur economic recovery. Obama called for a lifting of the SEC ban as part of his jobs plan. The White House believes access to equity capital and fundraising through crowdfunding platforms, like Kickstarter, will help fuel innovation and entrepreneurship.

By removing current SEC legal restrictions, entrepreneurs can essentially be their own banks. Crowdfunding can be a potential source of capital for high-growth companies and social startups.

Startup companies create jobs and stimulate the economy. On October 18, Reset San Francisco and mayoral candidate Phil Ting are hosting a panel discussion with local entrepreneurs and city officials on how City Hall can help local entrepreneurs “Start Up in San Francisco” – and how these entrepreneurs can get access to capital. You can find out more information and RSVP for the event online.

At Reset we understand that one of the key steps to addressing civic challenges like a better Municipal Railway, stronger schools and safer neighborhoods is generating the funding required to turn plans into reality. And the fastest and fairest way to generate those funds is to grow our economy – starting with removing Gov 1.0 barriers that limit innovation and growth.

 

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Paid for by Phil Ting for Assembly 2012. FPPC ID# 1343137