"Crowdfunding" on the Horizon

I saw another article that I wanted to comment on and I thought I should go ahead and write post before I lose the article. The article is "When 'Friending' Becomes a Source of Start-Up Funds". The article is about legislation [PDF] "To amend the securities laws to provide for registration exemptions for certain crowdfunded securities, and for other purposes."

The article summarizes: "Critics say the idea is dangerous for investors, and even dicey for the entrepreneurs. Yet, it is gaining traction with small-business owners from the Bay Area to New York, who say they eagerly await an opportunity to sell stakes in their businesses through social networking—a process known as crowd funding."

The House Financial Services committee last week backed legislation that would make it possible for small businesses to use crowd funding to raise money from investors in exchange for equity stakes.

Under the proposal, investors would be able to buy stakes of up to $10,000 a year, or 10% of their annual income, whichever is less. Companies would be able to sell up to $2 million in equity—but must provide audited financial statements if the total exceeds $1 million.

I agree with the critics, somewhat, it could be dicey. But it could open up capitalism to the people, which you know, is one of my main interests, and it intersects with my other interests. I am going to be watching this Bill closely and acting upon it if it passes. I think it is a great opportunity, for myself and all Americans.

I'll add more thoughts later, I just wanted to get this "out there" for now. There's another article on the same topic, "A Split in the Crowd-Funding Crowd", and I will post more after I have read the Bill carefully and have done a little more research.