The Securities and Exchange Commission hosted its annual Small Business Capital Formation forum last Thursday. Crowdfunding under Title II and Title III of the JOBS Act was top of mind. We were hoping for a substantive update – the SEC is well beyond congressionally mandated deadlines for promulgating Title II rules – but Chairman, Mary Shapiro, offered no additional visibility into the SEC’s rule-making progress.
Title II of the JOBS Act lifts the ban on general solicitation and advertising of security offerings, enabling companies to efficiently solicit and raise capital from a large (or small) number of accredited investors online. Effectively, Title II will kickstart crowdfunding from accredited investors (high net-worth individuals). While the SEC is well passed the Congressionally mandated deadline of July for Title II, many in the industry are cautiously optimistic that we’ll see action by the end of this year, or early next. Title III of the JOBS Act (The CROWDFUND Act) on the other hand, which creates a democratized private capital marketplace by allowing investors of all economic classes to participate, isn’t looking so good. Many, including myself, believe that implementation will be delayed until late 2013.