5 ms·

Crowdfunding bill passes in the House

66 points by uripom 15y ago

clavalle 15y ago
Sweet! I was hoping they would break this part out into its own bill. This is true economic jet fuel. Most of the jobs package was not terribly exciting but when I came across this bit I truly got jazzed about the possibilities. I hope the SEC doesn't drag their feet after this is passed. Even if we end up with a ton of failed companies from this and a lot of burned investors the individual risk will be low and the entrepreneurs that come out of the other side will be that much better the next time. It really opens up the game to a huge number of people that otherwise would not have much hope of even getting 'friends and family' seed money.
- nobody31 15y ago
  We will end up with a whole bunch of pyramid schemes advertised on lamp posts that use this as a way of separating idiots from their money
Lukeas14 15y ago
After actually reading the short article, NO it did not pass in the house. I'm not a legislative expert but it sounds like it passed through the rules committee and will be debated today and tomorrow. Crossing my fingers...
- HistoryInAction 15y ago
  According to Majority Leader Eric Cantor, it passed the House: https://www.facebook.com/ericcantor/posts/10150453309005530 https://www.facebook.com/ericcantor/posts/10150453309005530
phil 15y ago
On it's face, it sounds like the bill would also remove the accredited investor requirement in <$1m angel rounds. Anyone who understands this thing have a read on whether that is actually so?
- 100k 15y ago
  That was my read too (due to what "crowd funding" brings to mind, e.g., Kickstarter). However, this does not seem to be the case. In fact, it only changes the rules about general solicitation. "the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors" http://democrats.rules.house.gov/112/text/112_hr2940_txt.pdf http://democrats.rules.house.gov/112/text/112_hr2940_txt.pdf
  - HistoryInAction 15y ago
    There's the second bill, HR 2930, that concerns crowdfunding: http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112hr2930rh.pdf http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112...
    - 100k 15y ago
      Ah, cool. If I'm reading that right, you can raise $10,000 or up to 10% of the investors annual income (whichever is less) as long as you're raising less than $1M (or $2M with audited financial statements, whatever that means). That will open up a lot more people as potential funders.
      - clavalle 15y ago
        This makes me wonder what the paperwork is going to look like. Can you imagine gathering and verifying paperwork on potentially thousands of investors at an early stage? Talk about a time suck that people trying to get a company off the ground won't want or need.
        danbmil99 15y ago
        Sounds like a nice niche startup to me
tptacek 15y ago
Huh. That would be a big change. I'm surprised I haven't seen more advocacy for it from HN. A question, though: in a post-"crowdfunding" world, what would a "crowdfunded" round do to your prospects of getting venture capital down the line? Wouldn't it gnarl up your cap table? How long will it take to shake the legal intricacies of this out?
dashr 15y ago
H.R.2940 did pass the House today http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02940 http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02940: http://www.opencongress.org/bill/112-h2940/ http://www.opencongress.org/bill/112-h2940/ -- H.R.2930 (CrowdSourcing one) still making its way http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02930 http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02930: http://www.opencongress.org/bill/112-h2930/ http://www.opencongress.org/bill/112-h2930/
dashr 15y ago
This one is more interesting: Can this be called the Facebook bill? It moves the 500 shareholder limit to 1000. http://www.opencongress.org/bill/112-h2167 http://www.opencongress.org/bill/112-h2167
ph0rque 15y ago
So... when can we mere mortals join Yuri Milner et al. in investing in YC companies?
- billclark 15y ago
  you already can at microventures.com
  - ph0rque 15y ago
    For a $100 fee, you may fill out a preliminary MicroVenture Marketplace funding application and submit your business plan. I doubt any YC companies are using this service with these kind of terms...
Gladrobot 15y ago
HR 2930 passed today by a count of 407 to 17. http://clerk.house.gov/evs/2011/roll825.xml http://clerk.house.gov/evs/2011/roll825.xml

66 points by uripom 15y ago

Sweet! I was hoping they would break this part out into its own bill. This is true economic jet fuel. Most of the jobs package was not terribly exciting but when I came across this bit I truly got jazzed about the possibilities. I hope the SEC doesn't drag their feet after this is passed. Even if we end up with a ton of failed companies from this and a lot of burned investors the individual risk will be low and the entrepreneurs that come out of the other side will be that much better the next time. It really opens up the game to a huge number of people that otherwise would not have much hope of even getting 'friends and family' seed money.

nobody31 15y ago
We will end up with a whole bunch of pyramid schemes advertised on lamp posts that use this as a way of separating idiots from their money

Lukeas14 15y ago

After actually reading the short article, NO it did not pass in the house. I'm not a legislative expert but it sounds like it passed through the rules committee and will be debated today and tomorrow. Crossing my fingers...

HistoryInAction 15y ago
According to Majority Leader Eric Cantor, it passed the House: https://www.facebook.com/ericcantor/posts/10150453309005530 https://www.facebook.com/ericcantor/posts/10150453309005530

phil 15y ago

On it's face, it sounds like the bill would also remove the accredited investor requirement in <$1m angel rounds. Anyone who understands this thing have a read on whether that is actually so?

100k 15y ago
That was my read too (due to what "crowd funding" brings to mind, e.g., Kickstarter). However, this does not seem to be the case. In fact, it only changes the rules about general solicitation. "the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors" http://democrats.rules.house.gov/112/text/112_hr2940_txt.pdf http://democrats.rules.house.gov/112/text/112_hr2940_txt.pdf
- HistoryInAction 15y ago
  There's the second bill, HR 2930, that concerns crowdfunding: http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112hr2930rh.pdf http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112...
  - 100k 15y ago
    Ah, cool. If I'm reading that right, you can raise $10,000 or up to 10% of the investors annual income (whichever is less) as long as you're raising less than $1M (or $2M with audited financial statements, whatever that means). That will open up a lot more people as potential funders.
    - clavalle 15y ago
      This makes me wonder what the paperwork is going to look like. Can you imagine gathering and verifying paperwork on potentially thousands of investors at an early stage? Talk about a time suck that people trying to get a company off the ground won't want or need.
      - danbmil99 15y ago
        Sounds like a nice niche startup to me

tptacek 15y ago

Huh. That would be a big change. I'm surprised I haven't seen more advocacy for it from HN. A question, though: in a post-"crowdfunding" world, what would a "crowdfunded" round do to your prospects of getting venture capital down the line? Wouldn't it gnarl up your cap table? How long will it take to shake the legal intricacies of this out?

dashr 15y ago

H.R.2940 did pass the House today http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02940 http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02940: http://www.opencongress.org/bill/112-h2940/ http://www.opencongress.org/bill/112-h2940/ -- H.R.2930 (CrowdSourcing one) still making its way http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02930 http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02930: http://www.opencongress.org/bill/112-h2930/ http://www.opencongress.org/bill/112-h2930/

dashr 15y ago

This one is more interesting: Can this be called the Facebook bill? It moves the 500 shareholder limit to 1000. http://www.opencongress.org/bill/112-h2167 http://www.opencongress.org/bill/112-h2167

ph0rque 15y ago

So... when can we mere mortals join Yuri Milner et al. in investing in YC companies?

billclark 15y ago
you already can at microventures.com
- ph0rque 15y ago
  For a $100 fee, you may fill out a preliminary MicroVenture Marketplace funding application and submit your business plan. I doubt any YC companies are using this service with these kind of terms...

Gladrobot 15y ago

HR 2930 passed today by a count of 407 to 17. http://clerk.house.gov/evs/2011/roll825.xml http://clerk.house.gov/evs/2011/roll825.xml