President Barack Obama last night delivered a speech to Congress during which he outlined his American Jobs Act, a $447 billion plan to jump start the sluggish economy and get people back to work. With legislation this large in scope, there are more ins and outs than we care to think about, most of which we will leave to the political press to parse through.
There is, however, one particularly interesting bit of the bill that should have the tech world interested. As stated in a post on innovation and entrepreneurship on the White House website, part of the bill includes exempting small businesses who receive startup money through “crowdfunding” — the act of generating startup capital though many small donations — have to pay to the Securities and Exchange Commission in order to raise money in this way.
“…Gadget-makers are already using crowdfunding platforms to raise hundreds of thousands of dollars in pure donations – imagine the possibilities if these small-dollar donors became investors with a stake in the venture,” reads a post on the matter on WhiteHouse.gov.
Of course, the platform they’re talking about is Kickstarter, which allows people to submit ideas in an attempt to raise a certain pre-set amount of money. Started in 2009 by Perry Chen, Yancey Strickler, and Charles Adler, Kickerstarter has helped more than 10,000 projects — from art installations to iPhone accessories — raise a combined total of more than $75 million dollars in pledges. Out of all projects submitted to Kickstarter, 44 percent go on to meet their fundraising goals.
If Obama’s jobs bill manages to make its way through Congress, crowdfunding would be taken to an entirely new level, with new possibilities for entrepreneurs.
With a Kickstarter project, those who pledge money receive various gifts from the startup, like their name on the company website, or an early-run edition of the product. What Obama’s legislation would allow is for people to buy an actual piece of the company — just as one would buy stock in any publicly traded company — but without that company having to pay prohibitive fees to the SEC.
“We’re looking for ways to reduce the regulatory burden on the ability of high growth entrepreneurs to raise capital and go public,” said Tim Kalil, deputy director of the White House’s Office of Science and Technology, while taking questions from reporters. “We’ll work with the SEC to develop a crowdfunding exemption for companies looking to raise $1 million dollars or less.”
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