I really need to pay more attention to the Internet. Sorting through the musings of six billion people all of whom seem to have decided that they need to “speak out” is often so daunting that’s it’s hard to bring myself to do it. Yet the unavoidable truth of the electronic age is that buried within all that noise is information that is both interesting and, sometimes, important.
I made such a discovery yesterday, while reading Melanie Waddell’s June 29 AdvisorOne story of the SEC and NASAA warning that equity “crowdfunding” is not legal yet. Equity what? I know, I’m out of touch here, but with the help of Melanie’s story and a couple of reconnaissance missions onto the Web, I was able to discover that “crowdfunding” is: a) an online vehicle for nonprofit programs and business startups to attract grassroots financing; and b) that the federal JOBS Act that passed in April included a provision known as Title III, which is intended to expand “crowdfunding” to finance small businesses.
Melanie quoted NASAA president Jack Herstein explaining the idea this way: “…the crowdfunding concept has the potential to provide legitimate small, innovative enterprises with access to capital that might not otherwise be available.”
Now that got my attention. To my not-getting-any-younger mind, “providing access to capital” for business has traditionally been the purview of banks (when it’s pretty much of a sure thing) and brokerage firms (when there’s a bit more risk involved). And on balance, with a few hiccups along the way, they’ve been pretty good at it: we each have our own cars, fly to all points of the globe in airplanes, have CAT scanners on seemingly every medical corner and of course, now have multiple devices that enable us to connect with the Internet 24×7.