

New bill to allow $1m crowdfunding rounds - uripom
http://merkley.senate.gov/newsroom/press/release/?id=9E32CE5C-4DF0-4596-BA92-5695F68681F6

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jedberg
Am I the only one on HN who thinks this is a bad idea? I can only see this
going one of two ways:

\- Minimally regulated so that it is easy to get money, but then full of
scams.

\- Heavily regulated so that it is hard to get money, which makes it not much
better than the current system.

I'd love to see smaller investors able to invest in startups, but it just
seems like a bad idea to let any old person invest.

Can someone convince me I'm wrong?

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clavalle
Scams are going to happen.

The accredited investor rules have been around long before the internet and
all of the tools we can now use to follow up on start up companies and the
people behind them.

I am certain that if this bill passes, there will be plenty of services
offered to dig up this kind of information and make this kind of due diligence
easier and more complete.

Sure, grandma and grandpa might be targeted by scammers (not that there is any
shortage of Utah based pyramid schemes and other n'er do wells out there doing
just that) but there should be /severe/ penalties attached to discourage bad
actors.

I don't think we should be protecting people from themselves as much as we do
as a society, and I really think this is going to be a net positive when all
of the wrinkles are ironed out.

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jedberg
> I don't think we should be protecting people from themselves as much as we
> do as a society

That much I do agree with you. This is definitely a case of the government
protecting people from themselves. Just the same, I'm still not sure it's a
good idea because it will give entrepreneurs a bad name, so in a sense, it is
protecting that reputation too.

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frankydp
In what way is crowd funding illegal now? I am assuming that is what the
gentleman was implying with "legalize and regulate."

Doesn't regulation of a 'crowdsourced' anything, kind of defeat the purpose?
The entire idea is that many small failures lead too faster successful
iterations.

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joshu
Crowd donating is legal. Crowd investing is not; currently, investors must be
accredited or qualified.

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dmix
I never really understood the reasoning behind accredited investors.

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geoffschmidt
Imagine those infomercials that run late at night on cable TV, except instead
of selling dubious kitchen gadgets, they're selling equity in dubious social
media startups to your grandmother.

~~~
_delirium
Imagine a world where everyone who thinks they're building "the next Facebook"
can be matched up with regular people who want to invest in "the next
Facebook"...

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dclaysmith
I think this is great but the fraud potential is going to be key. It says it
will require the companies to provide basic financial documentation but it
will be interesting to see what the SEC requires. Also, what legal
responsibility will these crowdfunded companies have to their investors.

I also wonder how this would impact wider disclosure requirements. From what
I've read, you can only have so many private investors (500?) before you are
required to provide enlarged financial statements. Apparently it's one of the
reasons Facebook needs to IPO--too many stockholders. If this law isn't
modified in this bill--you'd have small companies who had to spend tons of
resources to comply at a very young age.

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billboebel
what is a "registered internet website"? Is that just their long winded term
for website or do crowdfunding sites need to register with some government
agency?

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aclements18
I assume in order for it to 'legalize and regulate' there would probably have
to be some form of registration specific to the crowdfunding sites. But I
agree, they should clarify.

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DennisP
Interesting. Here are two similar bills: [http://thehill.com/blogs/floor-
action/house/191669-bills-eas...](http://thehill.com/blogs/floor-
action/house/191669-bills-easing-sec-rules-advance-in-house)

One of them passed the House recently:
<http://www.govtrack.us/congress/bill.xpd?bill=h112-2930>

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HistoryInAction
Not really a new bill, since it's just the Senate equivalent of the House's
HR2930: <http://thomas.loc.gov/cgi-bin/bdquery/z?d112:h.r.02930>:

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trevor99
anyone know how long this might take to pass and become legislation?

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tbrownaw
... _why_?

I thought the way VCs worked is that most of their investments go bust, while
a few percent do absurdly well. How do you "minimize the risk of ... loss" for
people who supposedly can't afford it, by giving them access to something even
professionals usually lose money on?

This is an alternative to the "detailed disclosures" the SEC requires now, the
way that's presented makes it sound like this requires less detail.

Is this because more people want to directly invest in startups, or because
startups have a hard time getting funding the way things are now? Either way
it sounds a bit bubbly...

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handelaar
I think a good sign of when a legislature has stopped being remotely sensible
is when _all_ its new bills have preposterous backronyms instead of names.

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shareme
this is a bad idea on the level of the TSA idea

