Will the Proposed American Jobs Act Have an Impact on Crowdfunding?

By Rob Scott
September 13, 2011

Part of President Obama’s proposed American Jobs Act includes exempting small businesses that receive startup funds through “crowdfunding” from having to pay the Securities and Exchange Commission.
If the newly proposed $447 billion plan was to pass through Congress, it could impact services such as Kickstarter, possibly turning the “crowdfunding” model into an “investment mechanism for a whole new generation of small business,” suggests Digital Trends.
The plan would allow individuals to invest in a piece of the company (instead of the current model that offers rewards such as an early-run edition of the product), but without the company having to pay SEC fees.
“…[G]adget-makers are already using crowdfunding platforms to raise hundreds of thousands of dollars in pure donations – imagine the possibilities if these small-dollar donors became investors with a stake in the venture,” reads a post on WhiteHouse.gov.
Kickstarter, for example, has already helped more than 10,000 projects by raising more than $75 million in pledges. Digital Trends indicates that currently, “Out of all projects submitted to Kickstarter, 44 percent go on to meet their fundraising goals.”
Details of the plan can be found in a White House website post on innovation and entrepreneurship.

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