OPINION: Will Equity Crowdfunding Laws Be the Death of Kickstarter?

Wednesday, January 29, 2014

There have recently been some angry grumblings from the blogosphere about the government wanting to stick its fingers in the crowdfunding pie. The concern across the internet seems to be that new regulations will destroy the rapidly-growing crowdfunding industry that brought us the Pebble Watch and theVeronica Mars movie.

I am here to paraphrase Mark Twain and assure you that the rumors of Kickstarter’s death have been greatly exaggerated.

The JOBS Act and the proposed SEC rules have nothing to do with Kickstarter or any rewards-based crowdfunding site. The SEC rules only apply to equity crowdfunding, where a company is selling stock or equity from an online crowdfunding site. In fact, Kickstarter has already said it will not participate in equity crowdfunding, and most rewards-based crowdfunding sites will not do so either, primarily because of the extremely high cost of compliance.

Source: Reuters (link opens in a new window)

Categories
Entrepreneurship
Tags
crowdfunding, financial innovation, governance, SME finance