Quickly, Congress passed the JOBS Act this year with a provision allowing companies to solicit investments from “unsophisticated” investors. Previously, solicitations could only be made to high net worth investors. The provisions were to become effective on January 1, 2013 pending rules to be written by the SEC.
The SEC has not written the rules yet and probably won’t by January 1. (I don’t know if that is a permanent link.) This delays everyone and everything related to crowdfunding. DISCLOSURE – I plan both selling crowdfunded investments and providing consulting to businesses wanting crowdfunding. I believe it will help boost the economy.
PROS: Small businesses requiring up to $1,000,000 in capital will have a new source for funds. Owners can cash out of companies without having to sell their entire interest. Ordinary investors can find new revenue streams and investment opportunities.
CONS: There will probably be a lot of con-men involved in crowdfunding. Most business ventures fail and ordinary investors may not be able to handle the failure and loss of investment. Congress will probably overturn the law once some crying Grandma appears on 60 Minutes with a sob story about losing her life savings.
Obviously, I’m in support of the law. I signed a petition here in support of it. I live in a depressed area that could use a capital infusion. I’m sure there are plenty of local businesses that would get a boost from crowdfunding. There are also plenty of local investors looking for a better rate of return than CDs and Money Market accounts. There will be plenty of hucksters (see .com bust and real estate bust). More importantly, there are plenty of good businesses and good business ideas that will benefit from this law.
Strategy for innovation – Society and Culture – AEI.
I think this is all crap. Innovation shouldn’t be affected by government. While I agree that government should get out of the way, I believe that innovation needs more private capital.
Let’s go outside the box. Let’s introduce a 3% annual wealth tax on all accumulated wealth over $10 million. At the same time introduce a new R&D wealth tax credit that offsets the new wealth tax dollar for dollar with each dollar invested in R&D, software development excluded.
Private capital has been misallocated for decades now. Job growth and real GDP growth will depend on actual, tangible production.
I must be crazy. On April 16th, I posted an offer on Craigslist for a free business plan review. I wouldn’t write it for you but give you creative criticism from the point of view of a potential investor or loan officer while also testing the feasibility of the plan. There were NO takers. I didn’t promote it and Northwest CT doesn’t get much traffic.
So, as part of my goal to help 1000 businesses in 2013, I’m reopening my offer to review your business plan for free. I will sign any confidentiality agreement that you’d like. I will review it for both feasibility – do the numbers make sense – and the likelihood of getting funding for your business.
This isn’t an offer to write a plan. It isn’t an offer for funding. I just want to help you be successful. I won’t try yo sell you anything. Email me at email@example.com for more info.
Embrace the Executive Summary – The Accelerators – WSJ.
This is horrible advice for 99% of small business startups. If you’re blessed with coding skills and an incubator, go ahead and follow this advice. If you are starting any other kind of business, with YOUR money on the line, you need to build a budget/plan. Check out the 3rd paragraph. He admits his advice is for a very narrow range of businesses. Except, skip SCORE. These guys are retired for a reason and starting a successful business isn’t it.