House Bill Could Make Crowdsourced Funding Much Easier

Many scrappy returns – A new plan to allow ordinary investors to bet on start-ups, Economist

“On November 3rd, surprisingly, a bill was passed by the House of Representatives with strong bipartisan support. The Entrepreneur Access to Capital Act aims to make it easier for small businesses to raise money through “crowdfunding”. For the first time ordinary investors would be allowed to put up to $10,000 in small businesses that are not registered with the Securities and Exchange Commission, enabling Joe Schmo to win big if the company becomes the next Google.”

H.R.2930 Entrepreneur Access to Capital Act

“Entrepreneur Access to Capital Act – Amends the Securities Act of 1933 to exempt from the prohibitions against use of interstate commerce and the mails for sale or delivery after sale of unregistered securities, including unregistered security-based swaps, any transactions involving the issuance of (crowdfunded) securities for which: (1) the aggregate annual amount raised through such issue is $5 million or less; and (2) individual investments in the securities are limited to an aggregate annual amount equal to the lesser of $10,000, and 10% of the investor’s annual income. Authorizes an issuer to rely upon certifications provided by investors. Amends the Securities Exchange Act of 1934 to exclude persons holding crowdfunded securities under this Act from application of “held of record” requirements with respect to mandatory registration of securities. Amends the Securities Act of 1933 to exempt such crowdfunded securities from state regulation of securities offerings.”

Is Crowd-Funding Coming to a Small Business Near You?, Wall Street Journal

“The U.S. House advanced legislation this week that would make it easier for smaller companies to raise money from investors. House lawmakers, in overwhelming bipartisan votes, completed work Thursday on four bills as the measures drew interest in the Senate. President Barack Obama also signaled support for at least one of the bills. Among other things, the House by a vote of 413-11 approved a bill to make it easier for companies to advertise private offerings with wealthy investors and voted 407-17 to allow startup companies to raise up to $10,000 from individuals over the Internet.”