Swat said the practice is still in its infancy. Wefunder, StartEngine and SeedInvest are the primary crowdfunding platforms, and many founders aren’t aware that equity fundraising is an option.
This, and some people (like me) probably just got tired of waiting for the SEC to do their part, and quit paying attention to the whole thing. When the JOBS Act first passed, I was pretty excited. Then something like 3 years went by and you still couldn't do crowd-fund equity fund-raising. By then, the whole thing had pretty much dropped off my radar.
I think as information about this percolates through the ecosystem, it will become more commmon place. But right now there's a lot of uncertainty and doubt surrounding the whole thing, and I expect that's hurting adoption.
> some people (like me) probably just got tired of waiting for the SEC to do their part
Yeah, same. Last I checked, the rules they did come out with were pretty restrictive. This article almost makes it sound easy, but if you read the full text, it basically comes down to "If you can raise money from any other source, like VC, private equity, institutional investors, or angels--do that instead because it's easier."
The SEC pretty much said to congress, "Nope, we know better" and they've effectively killed the bill by dragging their feet for 5 years and then coming out with guidance that kills the intent.
Maybe there can be a new bill that takes "crowdfunding" out of the hands of the SEC? Not sure how you would word that exactly, but some kind of exception that removes their jurisdiction? Maybe even not classifying them as public companies? (SEC has no jurisdiction over private companies).
Sadly, the SEC is fairly correct on this one. At least in terms of the history of finance.
If you let companies raise either a lot of total money or a lot of money from one person the incentives to make a company are less than simply get good at raising money and then skim as much as possible. Then run for the hills or repeat.
> the incentives to make a company are less than simply get good at raising money and then skim as much as possible
I worry that, with the rules the way they are, the only people who will use them are people that are trying to do this. For instance, the company the OP is about. If you make it actually easier to raise money, more legitimate companies (that want to spend less time on raising money and more time on the company) will use that system.
The internet and reputation effects are enough, I think, to mitigate the valid downsides of past experiments with "very free markets".
I don't think internet reputation effects are enough at this stage. The SEC's fear of everyman investors getting taken advantage of appear well-founded. Just yesterday Kickstarter started a program aimed at addressing the provenance of high profile flops that were funded and then skimmed: https://techcrunch.com/2017/05/18/kickstarter-launches-tools...
This, and some people (like me) probably just got tired of waiting for the SEC to do their part, and quit paying attention to the whole thing. When the JOBS Act first passed, I was pretty excited. Then something like 3 years went by and you still couldn't do crowd-fund equity fund-raising. By then, the whole thing had pretty much dropped off my radar.
I think as information about this percolates through the ecosystem, it will become more commmon place. But right now there's a lot of uncertainty and doubt surrounding the whole thing, and I expect that's hurting adoption.