As public comments on proposed equity crowdfunding rules begin to become available, here are a selection of interesting quotes from these comment letters. Of course, not all are 100% happy with the proposed rules coming out of the SEC.
One very important feedback/comment I would like to provide is about the proposed maximum limit ($1M) of money that can be raised. This shall be higher and a maximum range of $2-3M would be more appropriate. There are lot of manufacturing companies that can bring/create lot more jobs back in America, however, these manufacturing companies have significant capital investment needs in equipment and labor to get products “made in USA” and $1M will not enable these companies to pursue this promising channel.
On the other hand, a $2M raise will allow a company to put together a production plant for goods that we keep importing from China. It can allow company like mine to sustain a bigger team to grow and market our products. So I would strongly urge to make this maximum limit as high as $2M or even $3M.Dileep Agnihotri, Ph.D – Entrepreneur and CEO of Advanced Hydro Inc.
The five percent contribution limit for net worth and income less than $100,000 and a ten percent contribution limit for amounts over $100,000 is arbitrary and discontinuous. Intuitively the amount of money you can invest should be continuous, otherwise undesirable consequences may result as people inflate their income by taking normally undesirable risks to attain an income over $100,000, to enable a larger contribution limit. Simply allowing people to invest five percent of their income or net worth up to $100,000 and ten percent of amounts afterword would fix this issue.Trevor Vossberg
If I can spend my entire salary on penny stocks or at the casino, why can’t I spend it on a project I believe in? I think these rules are good except for the limits.Ryan S. Taylor, Crowdfunder
I believe the proposal will overall benefit many start-ups and the idea of financial audit after reaching $500k through crowd-funding may be a challenge because it will require small start-ups to spend more time conducting financial audit instead of focusing on developing their products and operations.Ubon Isang – Executive, Generation Enterprise Corporation
What if an investor wants to contribute more? Who are you to say where someone can put their money?
I have a moral problem with the principal behind this rule. It is like mandating the amount someone could spend on a new car. What if you said people are not allowed to spend more the 5% on a car? Or a house? On education? What kind of society does that sound like? Its worse than communism. Charles J Hamman
Based on the 585 pages that the SEC took to write how a start-up can raise $1,000,000. What the SEC has written is a document that increases costs to start-ups, that goes against the intention of Congress.Robert C. Guinto, Jr – President, Non Profit Capital Management, LLC
In its article previewing the proposed rules, Forbes estimated that the costs of the disclosure documents, background checks, and annual reporting stipulated in the rules could run as high as $100,000 a year, which is an immense and prohibitive sum for independent start-ups who may not even raise that much. This will unfairly discourage many independent projects from even attempting crowd-funding in the first place.Rebecca Ramsey