Equity crowdfunding platform SeedInvest, which currently offers investments in startups for accredited investors, has put together an estimated cost spread sheet if Title III Crowdfunding regulations were applied today. The results show a detrimental process for small companies attempting to raise capital. In fact for a $99,999 equity crowdfunding round the results are a negative cash flow in the amount of around $38,000. So small crowdfunding offers are effectively dead on arrival.
Their model shows that a $1 Million crowdfunding raise the company (which means the shareholders) will net only $750,000. Incredible.
Hopefully over the coming months the proposed regulations will be moderated so startups may be able to raise funds at a reasonable cost and the JOBS Act is actually allowed to do what it was intended to accomplish.
Shout out to the entire SeeedInvest team and special shout to Kiran. You guys are the best!