On WSJ.com under The Accelerators, the pose the question:
Should average Joes and Janes be allowed to buy shares in private companies through online investment platforms known as crowdfunding sites? Or should this be restricted to only wealthy, “accredited” investors? What are the advantages and disadvantages for startups and investors?
This question is frequently discussed and debated amongst industry participants, regulators and policy makers. In looking across the Atlantic in the United Kingdom, and watching how equity crowdfunding is quickly evolving, their experience should help in answering the question. Anyone who understands the risk should be allowed to invest in crowdfunded offerings.
In a world over-populated with ways to frivolously spend money, investing in small businesses should be further down the list of important concerns. From trips to the local Casino to the voluntary tax known as “the Lottery”, investing in companies which have been vetted by the crowd should be deemed a more beneficial objective. Allowing small investors to participate in investments previously only available to the elite few, small companies may now gain access to much needed capital for growth and expansion – which has been blocked by years of over-regulation and inefficient markets.
There will certainly be instances of fraud, but fraudsters always find ways around regulations. History has proven as much. But the economic benefit gained by all in job creation and a growing, vibrant economy will always outweigh the downside of companies or offerings which are not successful. And that is how it should work.