Crowdfunding Becomes more Accessible

By Caroline Lee, fellow at Sustainable Economies Law Center

Good news for the sharing economy: The Securities and Exchange Commission (SEC) just released proposed regulations that would allow businesses to crowdfund by seeking investments or loans through online intermediaries. These proposed regulations, mandated by the 2012 Jumpstart Our Business Startups (JOBS) Act, remove important securities law barriers and take crowdfunding beyond the donation-based model of Kickstarter and Indiegogo. Soon, ordinary people will be able to actually invest in a wide variety of enterprises and receive a return. October 23rd, 2013 commenced a ninety-day public comment period, during which individuals and organizations are invited to offer the SEC feedback on the rules. The rules will hopefully go into effect soon thereafter since the SEC, generally a sharply divided Commission, unanimously approved the proposed regulations.
What exactly does this mean for the sharing economy? Most importantly, it means that an infinitely diverse array of people will now be able to start and finance new enterprises. Starting a capital-intensive business will no longer be a privilege relegated to those with access to bank loans or venture capital. It also means that community members will be able to more easily share in the ownership of local businesses. The legalization of investment crowdfunding is one of the most important steps to date, toward a true sharing economy.

 

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