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Friday, October 28, 2011

"Crowdfunding" Advances in House Finance Committee

SBE Council lauds bipartisan support for one of its top initiatives

SBE Council is cheering the momentum behind one of its top initiatives to help small business owners and entrepreneurs access capital. On October 27, the House Financial Services Committee passed the "Entrepreneurs Access to Capital Act," H.R. 2930 by voice vote.

SBE Council and its members planted the seed -- and a specific model -- for crowd fund investing. For much of 2011 we have been aggressively advocating for a new regulatory framework that would make this innovative solution a reality. President Barack Obama supports the framework, and U.S. Representative Patrick McHenry (R-N.C.) put forward legislation in mid-September.

Regarding passage of the legislation in the Finance Committee, entrepreneur and SBE Council member Woodie Neiss said: "It is amazing to see members of both parties get behind this important issue. The understanding that small businesses face a critical shortfall in their capital needs runs deep, and crowd fund investing is a common sense solution. Entrepreneurs now have hope that Washington is coming together to address one of their top concerns."

Neiss testified before the House in mid-September where he provided ideas and a crowd funding model for House members. The model includes strong protections for investors, and ways to tap into the power of technology to increase transparency and investor knowledge. Along with Neiss's framework (which was the impetus for H.R. 2930) other elements of his model were adopted by the Financial Services Committee including the thresholds for investment, registration of crowdfunding sites with the SEC, an online investor test, among other provisions.

SBE Council President & CEO Karen Kerrigan said that the quick pace of this legislative initiative demonstrates that members in both political parties understand capital access is a critical issue for both entrepreneurs and our nation's economic recovery.

"We are pleased to see bipartisan support behind this common sense approach. Crowd fund investing will give small business owners and entrepreneurs access to sources of capital they currently cannot tap into without triggering complex SEC rules. With common sense reforms, more Americans will be able to invest in promising small businesses, which means more jobs and greater economic growth. Reformulating outdated rules while maintaining investor protections will help entrepreneurs identify and connect with qualified, potential funders," said Kerrigan.

She added: "We are very excited that Congress and President Obama are seeking intelligent and innovative ways to help small business owners access capital. Technology and the Internet have leveled the playing field in so many other areas for entrepreneurs, and it only makes sense that they are allowed to tap into its power for needed capital."

We are hearing the legislation may get a full House vote by the end of this year. We will keep you posted!

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