Equity crowdfunding must continue its gains in 2015

Nov 25, 2014Enoch Antwi

Most startups and entrepreneurs have been able to launch capital driven projects through equity crowdfunding resources because of the Jobs Act.

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The lifting ban on general solicitation in mid-2013 by the Securities and Exchange Commission (SEC) recorded a positive era in equity crowdfunding in business development throughout 2014.

$5 billion gains in equity crowdfunding

Nearly $5 billion gains in equity crowdfunding were projected in 2013. This was double what was estimated in 2012.

The gains made by the Jobs Act cannot be overemphasized. Many startups and some entrepreneurs have raised thousands of dollars from various investors. They have been able to launch capital-driven investment projects through equity crowdfunding resources. This impact is expected to add to the nation’s job numbers in the coming years.

The lifting ban of general solicitation by the SEC has recorded a positive era in equity crowdfunding in the private sector, with over $5 million to be raised.

The new campaign

Equity crowdfunding necessary

Institutions founded to provide insight and advocacy to equity crowdfunding, as described in the Jobs Act, have continued to strengthen their platforms. Institutions like the National Crowdfunding Association, Crowd Funding Professional Association, Pave and Upstart have dominated education and advocacy in equity crowdfunding.

In the past, institutions that take a cut off the capital they raise in investment now face fierce competition. The new crusade allows startups to solicit equity crowd-funding publicly from willing investors. This provides a wide net of capital for start-ups and entrepreneurs.

Those who oppose the equity crowdfunding bill have genuine reasons. Their concerns should prompt lawmakers to continue to protect startups and entrepreneurs against fraud in the investment market.

But so far, its implementation continues to help a great number of startups and entrepreneurs. It has been reported that a single investor continues to make over $2.1 million in equity crowdfunding offers to over 160 people since last year. About half of this number are business-oriented individuals starting a new journey in equity crowdfunding capitalism.

Prospects for 2015

As of December 26, 2014, however, news released by the SEC concerning equity crowdfunding might slow down some gains made. The SEC plans to complete Title III of the Jobs Act by October 2015. This title represents the equity crowdfunding rule. The rule also requires 60 days to be published in the federal register to become law.

This means that the earliest small businesses could take advantage of this provision to raise equity crowdfunding capital for their businesses will be in 2016.

The Business Frontal is of the view that it is in the economy's interest for lawmakers to ensure a careful, but a speedy process of this transition; to protect and help finance small businesses on time and meaningfully in 2015 and beyond.

Enoch Antwi

Enoch Antwi is the managing editor at The Business Frontal. He worked as a business and an environmental journalist in the late 1990s with the Business and Financial Times. His passion is to provide on-demand valuable information and insights on business, entrepreneurship, leadership, innovative technologies, and principles for corporate success in today's business world.