Crowdfunding sites brace for main street investors

November 14, 2013

From Crains

Spurred by pending changes in securities regulations, New York crowd funding sites are gearing up to a make it as easy as possible for ordinary folk to buy a stake in a startup. These sites are writing new software and working with young companies looking to raise capital by selling shares. They are also figuring out how to interact with people who may never have heard of the Dow Jones industrial average, let alone purchased a share of stock. Some view the task with an almost missionary fervor. “What I am excited about is allowing anyone to do what accredited investors do,” said Alon Hillel-Tuch, co-founder of RocketHub, a site that crowd funds donations to creative and charitable projects but also plans to help companies sell stock. “[We are] democratizing access to capital.” But sites are also worried that the U.S. Securities and Exchange Commission’s proposed rules for “equity crowd funding”—585 pages of dense directives—are not only too costly for startups but will put small crowd funding platforms at a major disadvantage compared to larger sites and broker dealers.

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