Here are Some Key Quotes from Our Letter
“We believe that regulation must scale to fit the size of a business and that an issuer that is not the same in terms of revenue (i.e. millions vs hundreds of millions), complexity (i.e. local operations vs national or international), tax practices (domestic vs international), etc should not be held to the same standards as a public company. This would be overly burdensome for them without providing additional benefit. In essence, the larger the corporation the more complex. The smaller the less complex. We feel that Regulation Crowdfunding does a fair job in terms of trying to balance the needs of the business with the needs of the investor.”
“In the 4 years since Regulation Crowdfunding went into effect, there have been no media stories about fraud. Rather there has been unspoken coverage of the benefit these locally supported businesses have provided.”
“Because companies must disclose how a valuation was determined and potential investors can discuss this on the forum part of an offering page, it provides investors a means to determine whether they agree with that valuation or not (prior to investing). It cannot be stressed enough how this transparency is unique investor protection in the private capital markets.”
“There has been no fraud. Nor has there has also been no systematic perversion of retail or accredited investors.”
“In interviews conducted with both issuers and portals, it was discovered that the majority of the investors in these offerings had a first or second degree relationship to the issuer and/or industry knowledge about the company’s product, services, IP or technology. Any of these creates a degree of trust that doesn’t exist between investors and public companies, which is why public companies must file detailed disclosures.”
“Based on the crowdfunding data from the last 4 years, the average investment is currently approximately $715. This is an investment quantum that does not appear to raise immediate concerns of undue concentration risk for most individuals with the appetite and ability to make early stage investments.”
“Finally, the system doesn’t benefit one class of investors over another in an offering as they are all presented the same information which is available from one central location the online investment platform, as opposed other exemptions where individual offering memorandums can be amended over time from one group of investors to another.”
“Put simply, the Regulation Crowdfunding disclosure framework improves issuer conduct and accountability.”
Increasing the cap to $5 million will:
