Crowdfunding bill passes in the House | Hacker News Reader

Crowdfunding bill passes in the House

thehill.com

66 pointsuripom20 comments

Huh. That would be a big change. I'm surprised I haven't seen more advocacy for it from HN.

A question, though: in a post-"crowdfunding" world, what would a "crowdfunded" round do to your prospects of getting venture capital down the line? Wouldn't it gnarl up your cap table? How long will it take to shake the legal intricacies of this out?

On it's face, it sounds like the bill would also remove the accredited investor requirement in <$1m angel rounds.

Anyone who understands this thing have a read on whether that is actually so?

That was my read too (due to what "crowd funding" brings to mind, e.g., Kickstarter). However, this does not seem to be the case. In fact, it only changes the rules about general solicitation.

"the prohibition against general solicitation or general advertising contained in section 230.502(c) of such title shall not apply to offers and sales of securities made pursuant to section 230.506, provided that all purchasers of the securities are accredited investors"

http://democrats.rules.house.gov/112/text/112_hr2940_txt.pdf

There's the second bill, HR 2930, that concerns crowdfunding: http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112...

Ah, cool. If I'm reading that right, you can raise $10,000 or up to 10% of the investors annual income (whichever is less) as long as you're raising less than $1M (or $2M with audited financial statements, whatever that means).

That will open up a lot more people as potential funders.

This makes me wonder what the paperwork is going to look like.

Can you imagine gathering and verifying paperwork on potentially thousands of investors at an early stage? Talk about a time suck that people trying to get a company off the ground won't want or need.

Sounds like a nice niche startup to me

Sounds like a whole bunch of niche startups are on the horizon...

As long as individual investments made are less than $10k: `(B) individual investments in the securities are limited to an aggregate annual amount equal to the lesser of-- `(i) $10,000; and `(ii) 10 percent of the investor's annual income;

http://www.gpo.gov/fdsys/pkg/BILLS-112hr2930rh/pdf/BILLS-112...

Thanks for this (and thanks to 100k, too!)

Pretty interesting -- if this goes through it seems like you could experiment with funding models somewhere between normal angel investing and the tiny bites that Kickstarter usually deals in.

Sweet! I was hoping they would break this part out into its own bill.

This is true economic jet fuel. Most of the jobs package was not terribly exciting but when I came across this bit I truly got jazzed about the possibilities. I hope the SEC doesn't drag their feet after this is passed.

Even if we end up with a ton of failed companies from this and a lot of burned investors the individual risk will be low and the entrepreneurs that come out of the other side will be that much better the next time. It really opens up the game to a huge number of people that otherwise would not have much hope of even getting 'friends and family' seed money.

We will end up with a whole bunch of pyramid schemes advertised on lamp posts that use this as a way of separating idiots from their money

H.R.2940 did pass the House today

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02940:

http://www.opencongress.org/bill/112-h2940/

H.R.2930 (CrowdSourcing one) still making its way

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02930:

http://www.opencongress.org/bill/112-h2930/

So... when can we mere mortals join Yuri Milner et al. in investing in YC companies?

you already can at microventures.com

For a $100 fee, you may fill out a preliminary MicroVenture Marketplace funding application and submit your business plan.

I doubt any YC companies are using this service with these kind of terms...

After actually reading the short article, NO it did not pass in the house. I'm not a legislative expert but it sounds like it passed through the rules committee and will be debated today and tomorrow. Crossing my fingers...

According to Majority Leader Eric Cantor, it passed the House: https://www.facebook.com/ericcantor/posts/10150453309005530

This one is more interesting: Can this be called the Facebook bill? It moves the 500 shareholder limit to 1000.

http://www.opencongress.org/bill/112-h2167

HR 2930 passed today by a count of 407 to 17.

http://clerk.house.gov/evs/2011/roll825.xml

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