Crowdfunding set to make mark on investing landscape

For $100, Micah Lubens bought a share of a vacant, two-story brick building that was promoted as the next up-and-coming hot spot along Washington D.C.’s bustling H Street corridor.

Through food blogs, Lubens learned of plans to transform the building into a minireplica of Asian night markets, with food stalls and at least one clothing shop. The developers were offering shares of the property online for $100 a pop. In return, investors would get a cut of the profits and rent generated by the market, called Maketto.

‘‘I figured I easily spend $100 a month on silly things, so why not try this?’’ said Lubens, 25, a project manager at a district communications firm. ‘‘I don’t have a ton of money to invest, but I’m into the food scene and this intrigued me.’’

Gathering small sums of money from a large number of people online — known as crowdfunding — is poised to take off in the investing world, with backing from Washington policy makers who see it as a chance to involve the masses in an arena dominated by big Wall Street firms and the super-wealthy.

A law signed by President Obama a year ago enables small businesses to offer a stake in their firms via the Web to anyone who wants one, a ‘‘game changer’’ that gives them ‘‘access to a big, new pool of investors — namely, the American people,’’ as he put it. Companies can raise up to $1 million a year this way once the law is implemented.

The concept is not entirely new. For years, crowdfunding has been a popular way to seek financial support for a new album, a smartphone app or a worthy cause.

But given its potential to upend the nation’s investment landscape, critics are worried that crowdfunding will leave unsophisticated investors vulnerable to fraud or big losses, especially since small businesses generally suffer high failure rates and the firms involved in crowdfunding will have to make only limited financial disclosures.

Those fears have played a role in delaying new regulations from the Securities and Exchange Commission, which was supposed to adopt rules nearly a year ago to put the crowdfunding law into effect. Now, all eyes are on Mary Jo White, the agency’s new chairwoman, who has come under pressure by lawmakers to crank out a plan. During her confirmation hearings, White suggested that the rules are high on her priority list, and agency observers expect them to come out soon.

But while the SEC hashes out the details, investors and businesses are racing to get a piece of the action.

Several state legislatures have proposed allowing this type of crowdfunding within their borders. Internet domains with ‘‘crowdfunding’’ in their names are getting snatched up. And businesses are moving forward with their own plans, using exemptions in existing regulations that allow for some limited crowdfunding.

Among them is WestMill Capital Partners, the developer behind the H Street Project. The firm’s cofounders, Ben and David Miller, had bought several vacant storefronts in Northeast Washington in the past three years with plans to develop them for retail use. They dug into their own pockets, took out loans, and tapped wealthy people to fund the deals.

But they were frustrated by what Ben Miller described as a ‘‘disconnect.’’

‘‘The people most excited about what we were doing, the ones in the neighborhood, weren’t allowed by law to invest,’’ said Miller, 36. ‘‘We started thinking: How do we close the loop? Is there a new way?’’

They learned they could raise money from anyone as long they qualified with the SEC and registered with the localities in which they wanted to raise cash — the District of Columbia and Virginia, in their case. Nearly a year later, they got the necessary approvals.

Pages: 1 2


AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

WTTV CBS4IndyCrowdfunding effort to save Dorothy's iconic ruby red slippers from 'Wizard of Oz' raises $300000WTTV CBS4IndyThe Smithsonian has launched a campaign on Kickstarter aimed at raising $300,000 to preserve the ruby red slippers worn by Judy Garland in the belo [...]

Crowdfund InsiderMassive Rule 147 Amendments May Be On The Horizon Impacting ...Crowdfund InsiderAlmost a year ago, the SEC proposed certain amendments to the current Rule 147 which were intended to help foster, and increase the viability of, Intrastat.and more » [...]

Mountain XpressFaces in the crowd: WNC crowdfunding initatives | Mountain XpressMountain XpressEach week, Xpress highlights notable WNC crowdsourcing initiatives that may inspire readers to become new faces in the crowd. This week features a feature ...and more » [...]

MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

Android Authority (blog)Crowdfunding project of the week: Remix IO is an Android 4K set-top ...Android Authority (blog)The 'Crowdfunding project of the week' series is where we highlight some of the hottest campaigns from sites like Kickstarter and Indiegogo. There's pl [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

WestwordProgressive-Rock Band Marillion Pioneered CrowdfundingWestwordThat was the beginning of crowdfunding for us — and for every band, really.” When it came time for the recording and release of the followup to the 1999 record, Kelly and the band realized that one of [...]

BBC NewsNHS trust 'relies' on crowdfunding to equip wardBBC NewsAn NHS trust has launched a crowdfunding appeal to buy equipment for a new hospital unit because "it cannot get started without donations". The Royal National Orthopaedic Hospital (RNOH) in Stanmore, n [...]

CFB Finance

Press Release

CrowdFund Beat News

Hello @CrowdFundBeat's 17330 followers - thank you so much for following! Wishing you all a happy Monday! >>

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |