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

  • 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.