Jumpstart Regulation Crowdfunding: What Is Wrong and How to Fix It

Authors

• Jo Won

Author Details

Jo Won, J.D. 2018, Lewis & Clark Law School.

First Page

1393

Abstract

In 2015, the Securities and Exchange Commission adopted Regulation Crowdfunding, which permitted small businesses and startups to raise capital from the general public online. Unfortunately, Regulation Crowdfunding failed its essential purpose to facilitate capital formation for small businesses and startups due to its high transaction costs and low offering limit. But it turns out that equity crowdfunding in other countries—especially in Great Britain—is highly successful, and in some cases, exceeds venture capital funding. In these countries, equity crowdfunding’s transaction costs and disclosure requirements are much lower than, and issuers may raise more money than, offerings under Regulation Crowdfunding. Furthermore, the increase in equity crowdfunding investment in other countries did not lead to a disproportionate increase in securities fraud. The Securities and Exchange Commission may better fulfill the JOBS Act’s policy goals by amending Regulation Crowdfunding to incorporate a de minimis exception for small businesses, and by raising its offering limit to adequately support startups.

Recommended Citation

Jo Won, Jumpstart Regulation Crowdfunding: What Is Wrong and How to Fix It, 22 Lewis & Clark L. Rev. 1393 (2018).
Available at: https://lawcommons.lclark.edu/lclr/vol22/iss4/8