Weighing in on crowdfunding pros and cons, U.S. Representative David Schweikert warned a group of entrepreneurs that established companies and their lobbyists will fight to keep startup innovations from causing a stir in their markets During a visit to Phoenix-based incubator, Seed Spot, Mr. Schweikert stated, “Legacy manufacturers are scared to death of you because of the chaos the new economy is creating.”
According to the voice of Arizona KTar, Mr. Schweikert noted examples of the situation, including the taxicab companies trying to prevent ride-sharing programs from taking to much off of their business and the hotel industry fighting airbnb.com, which connects travelers with short-term rental offered by individuals.
“Such innovations are quickly creating a new economy based on peer-to-peer commerence which involves sales or services or products without a middleman. Easy access to technology is making it possible for individuals to disrupt traditional business models in this way. Because of your access to information now, literally the world’s library is in your hand. But that speed, that access to ideas, the ability to create, is a real threat to incumbent organizations.”
He also stated that the rollout of the Jumpstarting Our Business StartUps Act, which became a law in 2012, aims to make it easier for startups to get capital through different methods such as crowdfunding, is being hindered by the “regulatory state. “We’re literally two years later and many of the things that should have already been rolled out are still in rule-promulgation. That’s now one of my threats, that I have to change the way the regulatory state slows down innovation.”
CEO and co-founder of Seed Spot Courtney Klein revealed crowdfunding will have a significant impact on how entrepreneurs can raise money. “I think a part of it is a trajectory of how the industry’s changing. When you think about how capital was traditionally raised, and now this whole notion of crowdfunding and what does that mean? What does that look like?”