Wednesday, November 02, 2011

Obama Administration Supports House Crowdfunding Legislation

In a policy statement, the Obama Administration said it supports House passage of the Entrepreneurial Access to Capital Act, H.R. 2930. Sponsored by Rep. Patrick McHenry (R-NC), H.R. 2930 would allow crowdfunding, with appropriate investor protections, to finance new businesses by allowing companies to accept and pool donations of up to $1 million, or $2 million in some cases, without registering with the SEC. Crowdfunding describes a form of capital raising whereby groups of people pool money, typically comprised of very small individual contributions, to support an effort by others to accomplish a specific goal.

In the President’s September 8th Address to a Joint Session of Congress on jobs and the economy, he called for cutting away the red tape that prevents many rapidly growing startup companies from raising needed capital, including through a crowdfunding exemption from the requirement to register public securities offerings with the SEC. This proposal, which would enable greater flexibility in soliciting relatively small equity investments, grew out of the President’s Startup America initiative and has been endorsed by the President’s Council on Jobs and Competitiveness. The policy statement notes that H.R. 2930 is broadly consistent with the President’s proposal. The legislation would make it easier for entrepreneurs to raise capital and create jobs. The Administration said that it looks forward to continuing to work with the Congress to craft legislation that facilitates capital formation and job growth and provides appropriate investor protections.

The House may possibly consider HR 2930 on Friday. A number of amendments have been filed.

No comments: