The startup industry rejoiced last year when President Barack Obama signed the JOBS Act, a small business-friendly law that relaxed some old regulations and made it much easier for startups to raise money from investors. One of the most popular changes legalized equity crowdfunding, in which startups can raise up to $1 million from shareholders via a Kickstarter-style platform — a radical change from the past, when it was technically illegal for companies to ask anyone but "accredited investors" for money.
Hundreds of equity crowdfunding sites started popping up as soon as the law was passed. However, it's still not possible for just anyone to invest in the next Facebook. That's because the Securities and Exchange Commission has to come up with the specific rules for how this will all go down: what the fundraising companies required to disclose, what kind of due diligence an equity crowdfunding portal is obligated to do, and so on.
It's still not possible for just anyone to invest in the next Facebook
Once those rules are set, we'll start to see Kickstarter-esque campaigns promising shares in companies instead of T-shirts and backstage passes. The JOBS Act gave the SEC nine months to write these rules, which means the agency is already three months late. Most people in the industry expect the rules won't come out until late 2013.
However, there is some encouraging news for equity crowdfunding startups like CrowdIt, just one of many companies anxiously awaiting the day when they can open their doors to everyone. Part of the delay was due to uncertainty about the agency's direction due to a pending change in leadership as the President's nominee for SEC chair, Mary Jo White, waits to be confirmed. It looks like White will get the job soon after the Senate comes back from spring recess on Monday. Her position on equity crowdfunding is unclear — advocates are cautiously optimistic — but at the least she'll get things moving again.
Clarification: the SEC does have a sitting chair