The Securities and Exchange Commission is finalizing its work on implementation of the Jumpstart Our Business Startups Act, signed into law by President Barack Obama on April 5, 2012. Concerns that common folks will lose money if they invest in crowd funded ventures are one of the main issues.
Let us assume that the proverbial average Joe has a $50 weekly budget for discretionary expenses. He may spend it on a night out, some gadgets he does not need, or lotto, the only high-risk, high-reward investment opportunity available to him. Let’s say that Joe is willing to cut his discretionary expenses at half; hence, he will have at his disposal $50 every other week, or about $100 per month. What is wrong with letting Joe invest this money in a business? For many start-ups or small businesses, anywhere between $10,000 and $100,000 is plenty to get going. With the help of the Internet, a business should have no problem finding hundreds or thousands people like Joe willing to risk their $100.
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