Crowdfund Capital Advisors co-founder Sherwood “Woodie” Neiss is tweeting that Reg CF (Regulation Crowdfunding) has now topped $300 million in total funding, providing capital to over 2000 campaigns.
Reg CF, part of the JOBS Act of 2012, is a securities crowdfunding exemption where issuers may raise up to $1.07 million. Funding may take place on either FINRA regulated funding portals or via broker-dealers. Today, there are well over 40 funding portals but the bulk of crowdfunding activity is concentrated in a handful of early leaders. According to CCA, Wefunder, StartEngine, and SeedInvest are the top three.
Much of the funding is finding its way to California followed by New York, which is most likely due to more concentrated startup ecosystems.
Reg CF became actionable in May of 2016 – four years after the JOBS Act became law. It took some time for the Securities and Exchange Commission to publish final rules.
While early results are encouraging, as jobs are being created and smaller companies are gaining access to capital, the exemption could accomplish much more if a few regulatory adjustments were made.
Earlier this week, the US House of Representatives approved by voice vote the Crowdfunding Amendments Act of 2019. You may read more here but the legislation addresses a couple of obvious shortcomings in the existing law.
One pressing, but obvious issue, is the funding cap. Today, seed rounds average $2.2 million in the US. Some higher-profile companies have raised far more. Some advocates believe that Reg CF funding should be capped at $20 million. Others, perhaps $10 million and a few at just $5 million. Regardless, it should go much higher from where it currently sits.
— Reg Crowdfunding (@woodien) October 29, 2019