Dr. Richard Swart, of UC Berkeley and Crowdfund Capital Advisors, recently addressed the Deep Impact Conference in the UK via video to address the hot topic of crowdfunding and regulation. Swart is a frequent speaker on crowdfunding and is a highly respected researcher on the new form of finance.
Dr. Swart answers the question regarding what is the appropriate form of regulation. He reflects that most regulators today are not fully aware of the “paradigm shift” and disintermediation of traditional finance – especially when addressing SMEs.
Some interesting bullet points:
- By 2020 over 40% of the population will be self-employed
- Most young people today realize their future does not exist inside a large organization
- We (US) do a relatively poor job of training and mentoring entrepreneurs
- Average person in the US has made over 220 pitches before receiving funding for a company
- Most young firms are in need of financing yet bank lending has been on a precipitous decline
- Decline of bank lending to small companies has been on the decline for 28 straight years
- Tax incentives and regulations need to be designed to encourage investing in SMEs
- Most fortunes can be traced to investing in private companies but the wealth must be patient
- There is a fear of private markets and fear of private investments that is unwarranted
- With appropriate portfolio diversification risk in investing in SMEs can be mitigated
- Strong opposition from opponents of crowdfunding has curtailed it for 3 years
- Crowdfunding can act as a rapid job creator
- Crowdfunding enables skill acquisition and workforce development
- We can allow equity crowdfunding to flourish and still protect investors
- If we are smart, we can fashion a regime that creates millions of new jobs
Dr. Swart asks the question; “Is crowdfunding for the 1% or the 99%? This is a false argument. It is for everyone”. That is only if the regulators and politicians let it be so.
The video below is worth 15 minutes of your time.