Tonight I attended an educational seminar hosted by Atlanta Tech Angels on crowdfunding. There were four really great and knowledgeable speakers:
- Dara Albright of NowStreet
- Ed Brown of Burr & Forman
- Gene Wright of Northstar Consulting
- Sean Rosario of Smith, Gambrell & Russell
These speakers are pioneers in crowdfunding, and shared a wealth of knoweldge about the beginnings of the movement to democratize equity investing and other more technical aspects of the JOBS Act, including:
- An update on accredited investor crowdfunding under Rule 506(c)
- When can we expect the launch of unaccredited investor crowdfunding under Title III of the JOBS Act?
- Have the new rules impacted the interpretation of the requirements for the traditional “quiet” offering under Rule 506(b)?
- Updates on intrastate crowdfunding allowed in Georgia and a number of other states
- Update on AngelList, FundersClub and other online investment platforms
I was very intrigued to hear a lot of detailed information about crowdfunding from experts who have been involved in the space for many years; however, there was one point in the meeting that got everyone’s attention. The point was when one of the speakers noted that, since the Invest Georgia Exemption, only one Georgia company has conducted a successful crowdfunding campaign under the law: Bohemian Guitars.
Why only one company, one campaign? After hearing 2 hours of expert discussion on the subject, my opinion is that, as great as crowdfunding, the JOBS Act, Invest Georgia, and Rule 506(c) are, nobody knows what the hell any of it means. Most of the Angels in the room know a good deal, but even some of them did not. So it’s unreasonable to expect entrepreneurs in the throws of a startup to know, understand, and execute a successful crowdfunding campaign based on rules that nobody understands except high priced attorneys.
Furthermore, think about who the main targets of crowdfunding are: people. People like you and me. I’m not an angel investor. I don’t know jack about crowdfunding legalities. I get the concept completely, but there’s no way I could conduct a crowdfunding campaign. Then think about who my supposed investors would be: more people who don’t know anything about crowdfunding or any of these laws. And if I were to conduct a campaign for a startup, I would be the one “selling” the stock of my company to these people who don’t know anything about crowdfunding, and I don’t know anything about crowdfunding.
I may be pretty far off, but I think there must first be a massive, large scale, long term educational campaign to teach the world the intricacies of crowdfunding so that every man and woman who has the resources to make small scale investments in small cap companies can understand what it means, and how they do it. Education will be the key to crowdfunding. Until that happens, there’s just the Bohemians.