Crowdfund Act to allow start-up IPO’s in 2013
Buried in the JOBS Act that Obama signed in 2012 and will become law beginning in 2013 is a little known provision called the Crowdfund Act. According to an article in Popular Science magazine (January 2013), this will be one of the truly grand things that is going to make 2013 “rock”. Once the SEC completes setting the guidelines, expected by years end, it will make it possible for any American to offer equity stake in an enterprise over the Internet.
Garage inventors, chefs,. or anyone with a dream, will then be able to receive payments for investments in their companies from all over the world. Once they have set up their business they will be able to issue IPO’s just like big corporations and small investors can act as venture capitalists.
Scholars warn of possible fraud and litigation
Legal scholars point out the possibility of investor losses, big disappointments, litigation, and fraud, just to mention a few, that could throw a monkey wrench in some investors dreams. However, the crowd-sourced-equity model has proven to be very successful in places like Australia where close to 130 million was transferred into these ventures back in 2007. The SEC will set investor guidelines as part of their consumer protection policy, allowing a limited amount of a persons income to be invested in such companies. An example is a person making less than $100,000 could only commit $2,000 or 5% of their annual income, whichever is greater.
So, if you’ve been tinkering in your kitchen or garage with some new idea but not able to get on the Shark Tank to get some funding, this may be your chance to move up to the next production level. Maybe you have the designs for an inexpensive electric bicycle or a recipe better than Neuman’s original pasta sauce. We’ve all had dreams about mass-marketing an idea we have but never could get the financial backing of our local banks. I’m willing to bet that somewhere in the Round Lake Area there is a garage, a basement, an attic, or a kitchen, bursting with some great ideas that the world is just waiting to get their hands on. Your time may have arrived!
Want to share your inventive idea from the past?
I can remember back to the 60’s when my first house had those old fuses that were always popping when there was a surge on the line. At the time I thought it would be great if there was a fuse that you could screw in the same receptacle and merely reset it like the new breakers that were just coming on the market in newer installations. Lo and behold, it was only a couple of years before someone came to market with fuses that could be reset by simply pushing a little button in the middle of them. I didn’t have the knowledge of what type of bi-metal material would have been required, only an idea. If I had the same opportunity that many of you will have beginning in 2013 I wouldn’t be sitting here typing this post. I would be on a big ship sailing to parts unknown.