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WASHINGTON U.S. equity crowdfunding platforms
are providing entrepreneurs with a new way of raising capital,
though the number of companies taking advantage of it and the
amount of money being raised are still relatively small, a new
U.S. government study has found.
The findings in the study, unveiled by the U.S. Securities
and Exchange Commission at a crowdfunding conference on Tuesday,
found that from May 2016 through December, a total of 156
companies did 163 deals. Since the SEC’s new crowdfunding rule
went into effect last spring through mid-January, a total of $10
million has been raised.
“The initial evidence is consistent with crowdfunding
providing a new source of capital for entrepreneurial and small
businesses that may not otherwise have had access to capital
through alternative capital raising channels,” the study
The 2012 Jumpstart Our Business Startups (JOBS) Act
empowered the SEC to write new rules to create a regulatory
regime for crowdfunding, which lets small businesses tap new
retail investors by raising up to $1 million through Internet
However, Republicans in Congress, as well as many small
business and venture capital entrepreneurs, have criticized the
rule because it imposes strict regulations on crowdfunding that
they say make it too costly and create barriers that may deter
companies from using it.
The rule, for instance, requires crowdfunding portals to
register with the SEC, and companies that use crowdfunding to
raise funds are subject to various financial reporting
Securities lawyers say the JOBS Act restricts the SEC from
loosening the rules without new legislation from Congress to
facilitate greater use of crowdfunding.
Findings in the new study could help spur lawmakers into
In the meantime, Acting SEC Chairman Mike Piwowar indicated
Tuesday he would be interested in exploring whether the
regulator might be able to use its broad exemptive powers to
liberalize the crowdfunding requirements until Congress can act
to make more permanent changes.
“I have concerns as to whether the final rules are too
restrictive or too burdensome,” he said.
“The commission should consider whether any further steps
should be taken to improve our crowdfunding regulations,
including the use of exemptive authority,” he added.
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