Friday, May 25, 2012

CROWD FUNDING; a good source of capital for my Business ?

imageThis article was written by Dennis Wright, SCORE Orange County Chairman

That was a question I couldn’t answer when recently asked.

Now I’m not known for being caught without words, but there I was, unable to give that business owner the definitive response he was looking for. Why was that, why couldn’t I answer that question… because the rules have yet to be written. And there will be RULES.

The JOBS Act was passed, certainly, and an element within it is the idea of crowd funding. But now the regulators have at least 270 days to craft language that spells out how it’ll work; from who can apply, the forms that’ll be needed, reporting requirements and procedures, establishing an SRO (Self Regulatory Organization) and intermediaries or funding portals, a source of data that will facilitate SEC (Securities & Exchange Commission) oversight and on to who can invest. Lots to be done yet!

I guess I could have simply said: “that depends”. There is enough uncertainty surrounding the matter this point. But all things considered I think a better response would have been: “we’ll have to wait and see”. Not every business is the same, not every business owner is in the same position, so in spite of the promise Crowd Funding holds it may not be the right solution for all.

So that’ll be my response next time I’m asked: “we’ll just have to wait and see”…