Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
early 2012, Congress passed the JOBS Act largely as it was proposed by
President Obama.Politicians love
acronyms.This one stands for Jump Start
Your Business.The provision of the act
aimed at making it easier for private companies to raise capital has not lived up to the title.
JOBS Act called for the SEC to set up regulations and procedures for private
companies to raise up to $1 million per year through so-called crowdfunding.It is a new phenomenon relying on
Internet-based social networking technologies to cast a wide net for investors,
who pledge their support on-line.Rules
were to be completed by the end of 2012.
took until October 2013, to get around to publishing a set of proposal rules
for public comment.That public comment
period ends the first week in February 2014.The SEC staff could decide to extend the comment period or move on to a
final set of rules.
has been quite a bit of wrangling already vis-à-vis the crowdfunding opportunity.Not surprisingly, there are some who might
like to see crowdfunding go away entirely.If small, early stage companies with good prospects can raise capital on
their own, venture capital might lose out on some excellent investment
have noted that proposed disclosure requirements for crowdfunding will be
stricter than under Rule 506 of Regulation D
that has been allowing private companies to raise funds from up to 35
non-accredited individuals.The added
disclosure effort will come with a cost for lawyers and accountants to prepare
materials and file them with the SEC.The idea is that the web-based crowdfunding platforms will be effective
enough to make the added cost worthwhile.
of the crowdfunding regulations could not come too soon.With continued improvement in the U.S. employment
situation, decision makers are likely to feel more confident in the future and
want to execute on new business plans.A
new means to raise capital would be timely. The SEC may not be jumping, but at least it has taken one small step toward getting crowdfunding established.
Neither the author
of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies