Friday, March 23, 2012

Crowdfunding passes in the Senate

The U.S. Senate on Thursday afternoon voted overwhelmingly in favor (73-26) of a “crowdfunding” bill, one that would enable private startup companies to turn to social media and websites like Kickstarter to solicit early investments from the general public, a practice currently prohibited by the government...

The amended version also puts tighter restrictions on how much money investors can gamble on the startups: 5 percent of their annual income or $2,000 in the case of those with annual incomes of $100,000 or less, whichever is greater, or 10 percent of income or $100,000 for those making $100,000 or more a year, whichever is less.

So it looks like regular people will soon be able to invest in startups. It seems kind of ridiculous that until now a person would violate the law when investing when there are so many other ways one can lose money without any potential benefits for society. This will help lower the barrier for entry for entrepreneurs, though that may increase the number of lower-quality startups. However, sometimes the crtowds may have more wisdom than professional funds. (They can also help with marketing!) Not sure why people making more than a million dollars cannot invest more than 100(k), its not like they'll suddenly become poor if they lose it all.

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