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Crowdfunding Cocktail Night

Alexandra Chou, CPA of Infin8 Enterprises hosted a Crowdfunding Cocktail Night last week.
4 Crowdfunding Platforms were featured:
Smallknot: Invest in the small businesses that you love in your neighborhood. Browse Local Businesses. Sign up to learn when new campaigns are in your neighborhood.
Funding Community  is a crowdfunding platform for small business loans. Individuals make loans to support small businesses in their community and are repaid principal and interest every month. These supporters also receive “rewards” like store discounts from the borrowers they have supported.
Return on Change (“RoC”) was created to make crowdinvesting a readily available and easy method for high-impact startups to raise capital. Its mission is to provide an online medium by which startup companies can connect with passionate investors to pool capital through crowdsourcing.
Crowdzu: crowdfunding meets crowdsourcing. Think Etsy but exactly what you want or you hope so.
All of these startups in their initial phases are similar to the initial funding provided to new ethnic business by their ethnic communities. Shut out by banks and other lenders for an assortment of reasons, the community would fund one anothers ventures. Today, many feel alienated by the banks and conventional lenders and they are going at it alone, finding those having a common interest in supporting local and small business.

Although on Wednesday the SEC lifted a decades old ban on publicizing any share offerings that aren’t registered with the SEC and limited to accredited investors. My initial reading of the proposed regulations limited investment to those who were accredited investors, net worth in addition to their residence in excess of $1mm, they could only invest 10% of their annual income in these types of deals.

We don’t know the final regulations but knowing the SEC they will create in their rules a big damper on the flood of investment capital into these new crowdfunding deals. This may further disenfranchise government regulation in the investment area. My feeling is that anyone should be able to invest 10% of their income in any deals they wish, accredited investor or not.

The next question is how are they doing to spread the risk. IMHO no one should put more then 10% of their risk capital pool into more then one investment opportunity. Few will make fortunes, most will lose their money. Such is capitalism, such is America.

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