Crowdfunding Is About Creating Jobs For The Right People

Crowdfunding is not just about creating jobs, it is about creating jobs for the right people. In April of 2012, President Obama signed the JOBS Act into law, authorizing crowdfunding of equity and debt for the sake of creating jobs. The more time I spend studying crowdfunding and working with the leaders in the crowdfund community, the clearer it becomes that not only will crowdfunding create jobs, it will create jobs in the right places.

Recently, I sat down in a hidden valley near Park City, Utah with Candace Klein, CEO of Somolend and founder of the nonprofit Bad Girl Ventures, who explained that overwhelmingly, the people were polled about crowdfunding indicating a desire to raise capital are women, African Americans and Hispanic Americans. In other words, crowdfunded capital will flow to entrepreneurs in the communities that have been most disadvantaged in America.
According to Klein, women own over 50 percent of the businesses in the United States but receive less than 5 percent of “traditional capital” and less than 3 percent of venture capital. Klein notes that she founded Bad Girl Ventures specifically to address this problem. BGV has funded 45 women-owned businesses with a total of $5 million, but also had to turn away thousands of women. This inspired Klein to launch Somolend so that she could provide capital to thousands of women owned businesses. This also allows “women investors to build their own wealth,” she notes.

Furthermore, according to Klein, Somolend is already doing lending, matching both banks and individuals to small borrowers, 40 percent of whom are nonprofits. The pricing for debt is set on an individual basis between the borrower and lender. The rates range between 3 and 22 percent. Multiple lenders may participate in the same loan to one borrower at different rates. The borrowers send the payment to Somolend, which then remits the corresponding payments to each of the borrowers.

Klein’s Somolend exemplifies the potential of crowdfunding to allocate capital more efficiently to the very people who are locked out of current capital markets, creating jobs in communities that have not been participating in the growth of the U.S. economy since 2000. In addition, the capital being allocated to nonprofits expands the good they can do.

Yesterday, I reconnected with Candace in Washington, DC. She joined her peers from the Crowdfund Intermediary Regulatory Advocates to lobby for implementation of crowdfunding anticipated in the 2012 law—which still awaits SEC and FINRA regulations. Rumors are rampant that the draft regulations are ready—and have been for months—but that the politics of the appointment of the new head of the SEC has led to a delay in issuing the regulations for comment.

Jason Best and Sherwood Niess, of Crowdfund Capital Advisors, who led the lobbying effort for the JOBS Act and were recognized by President Obama in the Rose Garden ceremony last year, were there to lead the effort to call for action from the SEC. They were joined by their partner, Judy Robinette; Vincent Molinari, CEO of GATE Technologies; Karen Kerrigan, CEO of the Small Business and Entrepreneurship Council; Doug Ellenoff, partner at Ellenoff, Grossman and Schole; Sara Hanks, CEO of Crowd Check; Kim Wales, CEO of Wales Capital, Chance Barnett, CEO of Crowdfunder; Chris Tyrell, Principal of Nehemiah Investments, Ryan Feit, CEO of Seed Invest and, of course, Klein, who helped draft the JOBS Act.

The group met with congressional staff on Capitol Hill and later met with a coterie of senior staff and Senators in the White House to press the issue.

Some notable remarks from the group include:
Robinette said, “Crowdfunding is not just an economic issue, it is a women’s issue. It is also an African American issue. In fact, crowdfunding represents the greatest democratization of small business capital in history. While venture capital is allocated almost exclusively to businesses owned by men, crowdfunding is already being allocated in nearly perfect proportion to the composition of our population.”

Neiss said, “In the 320 days since the President signed the JOBS Act into law a vibrant crowdfunding industry has formed to live up to the promise of Title III – access to capital with prudent investor protections. We are here today to showcase for Washington how we are ready to embark on Web 3.0, where social media meets community financing. We hope the demonstration of this robust trade association will give the SEC the confidence it needs to release the proposed rules so America’s Job creators can get the capital they need to innovate and grow.”

Kerrigan said, “The capital needs of entrepreneurs remain just as critical as when the JOBS Act was signed last April. The build out and investment that has gone into creating an efficient, transparent and accessible marketplace for small businesses to find needed capital and protect investors is extraordinary. Now, the SEC must take the next step and finalize its rulemakings so the JOBS Act can fulfill its promise of helping fund promising businesses, creating jobs and bringing the economy back to robust levels of growth.”

Feit said, “I am excited to demo SeedInvest’s crowdfunding platform on Capitol Hill in order illustrate the massive potential the JOBS Act has to transform early-stage financing. We need to ensure that lawmakers are proud of the burgeoning industry they spawned and that they do not lose sight of how crucial crowdfunding is for startups and small businesses.”

Best and Niess, for their part, are taking their show on the road. They are traveling the world helping other countries to implement reasoned laws for doing crowdfunding. Of course, Australia and the UK, among a handful of countries, have already implemented crowdfunding, allow the U.S. to analyze their experiences to determine best practices.
SOURCE: FORBES – Devin Thorpe

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise FeesNPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it wou [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

Bitcoin News (press release)Crowdfunding Giant Indiegogo Joins the ICO BandwagonBitcoin News (press release)Crowdfunding Giant Indiegogo Joins the ICO Bandwagon Indiegogo is a popular crowdfunding platform headquartered in San Francisco that was founded in 2008 by Eric Schell, Slava R [...]

HuffPostIs Crowdfunding Really a Good Idea for Innovation?HuffPostHere's a head-scratcher for you: according to new research, if you refer to your product or idea as both “novel” and “useful” in your crowdfunding campaign, your funding will be lower than it would if you just decl [...]

Coindesk (press release) (blog)Crowdfunding Giant Indiegogo Opens to ICOs - CoinDeskCoindesk (press release) (blog)The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services to projects seek to use the blockchain funding model. [...]

FortuneWant to Hold Your Own ICO? Indiegogo Can Help You With ThatFortuneCrowdfunding sites like Kickstarter (kickstarter, +0.00%) and Indiegogo raised start-up cash for a generation of online entrepreneurs, but one increasingly visible method of internet-sourced financing seemed to h [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

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 |