from Hacker News

New bill to allow $1m crowdfunding rounds

by uripom on 12/13/11, 5:29 AM with 29 comments

• by jedberg on 12/13/11, 2:51 PM

  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?

• by frankydp on 12/13/11, 6:16 AM

  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.

• by dclaysmith on 12/13/11, 12:31 PM

  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.

• by billboebel on 12/13/11, 6:00 AM

  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?

• by DennisP on 12/13/11, 3:41 PM

  Interesting. Here are two similar bills: http://thehill.com/blogs/floor-action/house/191669-bills-eas...

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

• by HistoryInAction on 12/13/11, 6:42 AM

  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:

• by trevor99 on 12/13/11, 8:06 AM

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

• by tbrownaw on 12/13/11, 2:00 PM

  ...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...

• by handelaar on 12/13/11, 12:37 PM

  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.

• by shareme on 12/13/11, 3:09 PM

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