Home Crowdfunding Moves Closer to Congressional Approval

Crowdfunding Moves Closer to Congressional Approval

In the House of Representatives yesterday we were treated to a rare showing of bipartisanship. The House passed HR 3606 to make changes to our securities laws allowing crowdfunded companies and other early-stage ventures to legally solicit investors. Now it is up to the Senate to pass its equivalent bill SB 1933, which is expected by most legislative analysts. Congress has gotten letters of support from hundreds of VCs and corporate founders over the past several months. We covered some of these issues in an article last December, along with an interesting infographic on the crowdfunding landscape here.

Crowdfunding has been happening despite securities regulation, the wrinkle is that you donate via Kickstarter and Indiegogo and their ilk, rather than actually expect any return on your money. The bills in Congress will help make it easier for new ventures to raise money and not be initially subject to the securities regulations. There are provisions in the legislation for company size (under a billion dollars in annual revenue), time of operations (up to a maximum of five years, but it varies under certain conditions), compliance reporting and other limitations to make it easier to operate what the bill calls “emerging growth companies.” These would help kickstart new ventures without tying them up in red tape, but still provide some modicum for investor protection, such as having independent directors for example.

More detailed analysis of the bills is available from the National Venture Capital Association here.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.