Photo: Chance Barnet
If a proposed crowdfunding bill passes the Senate, it will allow anybody to invest as little as $100 in a startup. Chance Barnett, co-founder of Crowdfunder, has built his startup around the concept of crowdfunding.
But he thinks there’s not enough support in the Senate for the bill to pass.
He told us, “The bill’s not passing because U.S. states want to keep their power (and money). States have traditionally had a big say (and made big money off of) regulating securities activities in their state. It’s a big power and budget resource for states. The crowdfunding bills all provide important sections that make reporting a federal issue, with the SEC.”
While Barnett thinks the crowdfunding bill in the Senate will not pass, it doesn’t mean an end for crowd funding. “I think the JOBS Act will pass. I think the House will then re-approve the JOBS Act with the inclusion of the Export/Import bill. Once all this happens, the SEC has been asked to provide regulation guidelines to allow business to start crowdfunding within 180 days,” Barnett said.
“The more significant limitation created by the Bill is that, in an effort to try and include investor protections, the JOBS Act creates a maximum investment of the lesser… $10,000 or 10% of an individual’s annual income.”
As much as platforms like AngelList have helped democratize funding in startups, it begs a bigger question. While your chances on a return of investment aren’t quite as bad as buying a lottery ticket, the startup failure rate is quite high. With 9 out of 10 startups failing, should anyone be able to invest?