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Crowd Funding News

on Venture Boom:

 

Buy & sell small company securities: HR 2930 & the Entrepreneur Access to Capital Act

Pending legislation in Washington D.C. may allow non-millionaires (more precisely, non-accredited investors) to buy stock in small companies, such as start-ups or other small business seeking to grow. It has been basically illegal for non-millionaires to buy these small stocks in the U.S. for about 80 years.

Outdated securities (stock & bond trading) laws, put in place in the Great Depression to protect naive investors, make it effectively illegal for a non-millionaire (i.e. the poor and middle class) to invest in new business start-ups and other small companies trying to grow. How unfair is that? As usual, laws meant to protect the poor end up discriminating against them, putting them at a disadvantage to the rich and privileged. Current laws effectively allow millionaires the very best investment opportunities, but forbid those with less from taking part. How’s that for government regulations making the rich richer and the poor poorer? Legislators always rush to make laws without thinking through the ultimate, real consequences, often doing more bad than good.

Congress may pass the 'Crowd Funding' bill, HR2930, Entrepreneur Access to Capital Act.
Can Congress possibly pass something useful?
We shall see.

Fortunately, it’s possible that this could change for the better soon. A couple of bills in congress, dubbed the “Entrepreneur Access to Capital Act” may make it possible for small investors to invest in small companies for the first time since the 1930’s. Done properly, this could be good for small companies, small investors and the economy overall.

Buying securities vs. donation crowdfunding
Sometimes, this new possibility of buying securities is referred to as “crowd funding“, though the legal and in-practice crowd funding model in the US has so far been simply organized donation campaigns. So, it’s legal to for a blue-collar worker to donate to a business, but not to potentially benefit by buying a stock or bond from that business? That’s right, as crazy as that sounds, it’s the best thing your government could think of. Even the donation crowd funding model is a move in the right direction, but the less wealthy are long-long overdue for actual investment opportunity.

For certain, there are some next Microsofts or Apples out there. While most will not be, and many companies will go under, a few will become epic stories of success and wealth-building. Why not let regular citizens judge for themselves if a company has potential and possibly watch their investment bring them a small fortune over the years?

As for buying and selling stick in large, publicly-traded companies, that’s easy. But it’s time to level the playing field and allow small investors access to early-stage start-ups. The current law greatly favors large companies and millionaires and directly discriminates against those less well off.

Profit isn’t the only reason people might invest in small business. Some just like to help, to make a difference, to make their mark on history, by being a part of something potentially huge. Friends, family and the whole local community may be looking for a system to help out your business already, and the existing donation type of crowd funding shows that even total strangers are willing to contribute sometimes. If people are willing to contribute already, why make it illegal for them to benefit?

Check back frequently, as we’ll have the latest news on HR 2930 / Entrepreneur Access to Capital Act and updates on what we can offer. VentureBoom.com seeks to be prepared in case websites will be legally allowed to offer an online platform for the selling of small business stocks and bonds. I would be a bit surprised if something really great and actually useful comes out of Washington D.C. on this matter, but we will prepare, just in case!