An equity crowdfunder has praised the Crowd Fund Act notwithstanding the regulatory “burden,” because:
- financial transparency in a startup should be a non-issue;
- potential liability risk from disgruntled investors should be low due to the disclosures required to be made and the required investment limits;
- equity crowdfunding encourages a broader shareholder base that the entrepreneur can tap again at a later stage;
- it permits access to a larger number of potential investors;
- startups can set their own terms (non-voting shares); and
- Congress is working on improvements to the Act now.
Every method has its pluses and minuses. If you have the right mindset and business plan, equity crowdfunding can be a real boost. Especially since it can be used in tandem with other regulatory exemptions.