Dear Crowdfund Investing Followers,
Our rally in support of crowdfunding & jobs was a HUGE success. How do we know? The regulators have come out in full force against crowdfunding and are trying to derail the process in the Senate. The most obvious example is that Thursday’s Senate hearing on crowdfunding doesn’t include one entrepreneur or one crowdfunding expert. As a matter of fact, it is heavily weighted to vocal opponents of crowdfunding. See what deep pockets and special interests get? Welcome to the entrepreneur’s David and Goliath …
Here’s what you need to know in 3 sections: 1) What you can do now, 2) What’s happening this week and 3) Highlights from the rally:
WHAT YOU CAN DO NOW:
Click this link to identify your Senators, call them and tell them “I support HR2930, the Crowdfunding Act as a solution to getting capital flowing to community entrepreneurs so that we can create jobs.” It may sound crazy but grass roots calls are powerful. Also sign our new petition in favor of crowdfunding which goes to the Senate Banking committee where the Bill currently resides.
We need you to recruit other supporters. Please send this to your friends, family and community and say, “Help me stand in unison with our nation’s entrepreneurs, the job creators, who are looking to crowdfunding to solve the capital crisis facing them so that they can innovate. Crowdfunding is legal in other countries. It should be here as well so that America stays competitive.”
We’ve launched a new campaign and need your financial support to help offset the mounting costs (travel, marketing, additional rallying, etc.) of getting the message to the Senate.
WHAT’S HAPPENING THIS WEEK:
The Senate Banking Committee is holding a hearing on December 1st. We will be there but have not been called to testify. Interesting how you can bring this stuff to Washington and not be included in the hearing on your own subject.
We are working on hosting a luncheon for Senate staffers to walk them through how CFI works and answer any questions/fears they might have about letting entrepreneurs raise capital from their social networks.
We are pushing for a vote before the end of the year. If we do not get a vote by the end of 2011, it is unlikely the laws will change because next year is an election year.
HIGHLIGHTS FROM THE RALLY:
NPR, The Wall Street Journal and Fast Company covered the event. Here’s a great video the Financial Services Committee put together about what crowdfunding means.
We confronted our most vocal opponents at the SEC Small Business Capital Forum. We requested that they take the time to understand how crowdfunding works, how it is based on social networking and community financing and work their concerns through our framework.
Heath Abshure (Arkansas Securities Dept.) told us while they are in favor of crowdfunding their number one concern is ‘investor protection’ and market confidence. (This is also a major concern of ours, which is why it is addressed in our framework).
We can understand their concerns however it leads us to ask the following questions:
If investor protection is so important, why haven’t they brought anyone to justice for the 2008 financial meltdown?
If fraud leads to the collapse of the markets due to lost confidence, why haven’t the financial markets ceased to exist with the 2008 financial meltdown?
We believe the opponents are trying to detract from the subject: entrepreneurship, innovation, jobs and the American economy. Kevin Lawton, author of The Crowdfunding Revolution wrote the following piece about fraud being the bogeyman of crowdfunding. It debunks many of the opponents arguments and shows how crowdfunding has built-in investor protection, greater transparency and investor confidence.
We met with 9 Senate offices as well as the Banking & Small Business Committees
Republicans are in favor of the legislation from a Jobs perspective and cutting the bureaucratic tape which inhibits access to capital for entrepreneurs.
Democrats (including the President) are in favor of Jobs and democratizing the financial market so that not only the rich are allowed to participate.
Both sides say they understand that the Internet has fundamentally changed the way we do business and hence it only makes sense that it should change the way we also do financing in the future.
HOWEVER, State Regulators and Special Interests are trying to derail the progress.
They are using nonspecific cases of fraud to halt our progress because fraud, like sex and war, sells newspapers.
We believe, they are doing this because they think crowdfunding will encroach on their territory and money. In reality, crowdfunding is just an on-ramp to more sophisticated financing which means more business for them once the crowd identifies the winning ideas.
They are detracting from the conversation (JOBS via access to capital) without taking time to understand the advances in technology, the Internet, and how social media has led to transparency and accountability.
They want you to think there will be millions of cases of fraud when the bigger issue is failure. The hedge against failure is portfolio diversification.
Less than 40% of CFI ideas will ever be funded, and those that are funded, will be by people who know the entrepreneur (true investor protection at work).
They want you to focus on fraud because they don’t understand that Crowdfund Investing is based on many-to-many communication between an entrepreneur and many investors in a open dialog as opposed to one-on-one fraud. (Fraud typically takes place in a closed environment where there is one-to-one communication. So you don’t have the benefit of the viewpoint of others. Now imagine you are in an auditorium where, while an entrepreneur is pitching an idea, the audience, consisting of his peers, is expressing their opinions, concerns, and comments during the speech. An entrepreneur must defend his idea and himself or he won’t win over the confidence of the crowd. If he doesn’t win over the confidence of the crowd and hit his funding target, no money will be exchanged and the next entrepreneur will hit the stage and a new audience of people who know the next entrepreneur will show up in the auditorium. If he is funded, a community is formed whereby the entrepreneur is tied to his crowd using social media (eg – linkedin groups) and the crowd can share knowledge, experience and marketing power).
They want to distract you from the benefits of this bill because they know that January 1st starts an election year and this bill could die if it isn’t passed into law before then and focus shifts to election politics.
Entrepreneurs, ideas, capital, businesses and jobs. You can have many entrepreneurs with thousands of ideas but you’ll never have one business or one job without capital. All we are asking is that Americans be allowed to pick up where Wall Street and the Banks have left off. If we believe in America, and believe that together we can pick out and foster those ideas that will be the next job creators, then help us solve the bottleneck to innovating by making Crowdfund Investing legal.
Sherwood, Jason & Zak