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


The ColumbianCrowdfunding raises $12000 to help Vancouver Safeway workerThe ColumbianCrowdfunding raises $12,000 to help Vancouver Safeway worker. Wayne Hudson was diagnosed with a life-threatening infection and will be hospitalized for at least three months. Popular Cascade Park Safe [...]

Entrepreneur5 Ways to Learn the Nuts and Bolts of CrowdfundingEntrepreneurCrowdfunding is a multibillion dollar worldwide industry that continues to disrupt the traditional world of corporate finance, as well as change the way products go to market. Companies new and old, small and la [...]

Forbes6th Annual Global Crowdfunding Convention Sponsored By ForbesBooksForbesIn 2012, crowdfunding raised $1.7 billion in capital – but last year, total capital raised using crowdfunding reached over $60 billion. This represents a seismic shift in the way that startups, non-profits, [...] couple set up crowdfunding campaign to raise £50,000 for kinky couple who want to raise money to open a sex club in the heart of a city centre look set to provoke outrage. Business partners Lee Magnetic and ...and more » [...]

Small Business Professor: Use crowdfunding to raise capital for your small businessCircleville HeraldA few of the more popular websites offering crowdfunding services include Kickstarter, Indiegogo and GoFundMe, all of which will walk you through the process of setting up a funding pa [...]

Forbes5 Crowdfunded Side Projects That Became Million-dollar CompaniesForbesCrowdfunding has also given many side projects a fighting chance, when no one else would. Many startups that originally launched on crowdfunding platforms have gone on to build $100 million businesses from the [...]

Fast CompanyHow Crowdfunding Site Patreon Is Helping Artists Build Media EmpiresFast Company(Yam, who built the original version of the site from scratch in three months, is CTO.) Like other crowdfunding platforms, it allows creators to solicit money from their audiences and share upd [...]

Will Crowdfunding Become a Big Deal in India?Knowledge@WhartonCrowdfunding — the practice of raising small amounts of capital from a large number of people to fund new ventures — is finally gaining traction in India. The question is: Will it deliver like it has in other markets? India [...]

5 Things That Can Make or Break Your Online Crowdfunding CampaignHuffPostWhen it comes to hot, new ideas, crowdfunding is one of the fastest-growing methods of raising startup cash. Like an informal brand of ABC's “Shark Tank,” the pages of crowdfunding sites range in everything [...]

BNNChanges to start-up crowdfunding exemption will increase access to capital for BC issuersMarketwired (press release)VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 21, 2017) - The British Columbia Securities Commission (BCSC) today announced improvements to crowdfunding rules tha [...]

CFB Finance


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

Press Release

CrowdFund Beat Media “The Future of #Blockchain Digital Currency” #bitcoin “Game Changer” 2017 Fintech World Workshop Series…

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 |