With the SEC creeping closer to making it legal for any company to crowdfund their own investments, Jessica Jackley looks at how to make a successful crowdfunding project work.
When the president signed the JOBS Act into law a year and a half ago, believers like me rejoiced. This legislation includes an exciting crowdfunding exemption that will fundamentally disrupt how start-ups and small businesses raise capital in the United States.
What will change exactly? It will no longer be illegal for an entrepreneur raising start-up capital less than $1 million to reach out to everyone she knows–from old and new friends to social networks and beyond–and even to people she doesn’t know, to invest. It won’t matter if those investors are accredited or sophisticated, and she can have as many as she wants to contribute. My ProFounder cofounder Dana Mauriello did a great job summarizing what the legislation means for entrepreneurs here.
For the last decade I have been about as pro-crowdfunding as a person can be. My first company, Kiva–which provides microloans–launched in 2005, before we called it crowdfunding. After that, I founded ProFounder, a company designed to give U.S.-based small business entrepreneurs a DIY toolkit to raise investment capital from their social networks. These projects only galvanized my confidence in the potential of this space. ProFounder fought for fairer access to both capital and investment opportunities, regardless of investors’ accreditation or sophistication, and I believe we helped push the crowdfunding conversation forward plus some other Lean In-esque conversations about parenthood/work, including helping to influence the design and passage of the JOBS Act. In the end, ProFounder was too early, and the regulations of a pre-JOBS Act world made it necessary for us to wind things down. But I’m still a believer.