The portals, consultants and other service providers of the nascent crowdfunding industry came together to form the National Crowdfunding Association
Online PR News – 02-April-2012 – Washington, DC – There is a new excitement on Main Street, USA, as hundreds of thousands of entrepreneurs may now, through crowdfunding, find the financial resources they need to succeed. That means millions of new American jobs, a surge in innovation, and increased financial security for families coast to coast. In addition, crowdfunding gives rise to new hope in our individual and collective pursuit of happiness and the fulfillment of realizing entrepreneurial dreams.
Today a collection of over fifty companies and individuals dedicated to the nascent CrowdFunding industry announced that they have come together and established their professional organization: the National Crowdfunding Association (NCFA). These companies and individuals, including funding portals through which crowdfunding is offered, consultants and vendors to the industry, are united in the common purposes of promoting crowdfunding in America, educating the public and their members about crowdfunding, establishing best practices for the industry, and providing the many networking opportunities availed by such an association.
In addition to its formation, the group chose David Marlett JD, CPA and filmmaker, as its first Executive Director, as well as filling other initial officer/director positions. The group also decided to host the first annual National Crowdfunding Conference in July of this year, and to launch the association’s to-be-robust website: www.NationalCrowdfundingAssociation.org (temp page presently).
The White House has announced that President Obama will sign the JOBS Act, which includes provisions authorizing investment crowdfunding, on Thursday of this week. Marlett said, “It is fitting that our members come together to officially launch the professional association, binding ourselves to the common cause of the success of crowdfunding, simultaneous with the President signing the very law that allows for us to exist.” Marlett added that he is hoping the NCFA will be present at that signing as it is the organization most benefited by the legislation.
“We are grateful to the various individuals who fought to keep crowdfunding on the legislative agenda,” said Marlett, “and to those visionary, bipartisan political leaders who brought investment crowdfunding into existence.”
Asked to define crowdfunding, Marlett responded, “Overall, crowdfunding is hope. It represents the hope of entrepreneurs that they now have an opportunity to prove to the world what they can accomplish. That is powerful stuff.” He went on to explain that crowdfunding is the method through which a company can acquire the capital it needs through offering interests in the company to hundreds or thousands of small online investors. "We have put a more full definition of the term on our site...ready for Websters will use it," added Marlett.
Prior to the JOBS Act, raising funding for small entities was tricky water -- full of sink holes. Generally speaking, only wealthy investors and companies seeking millions of dollars were able to undertake investment activities. Small businesses and start-ups were practically precluded from entering the system. “It was inherently unfair,” said Marlett. “That changes now as legalized investment crowdfunding removes those barriers.”
The gist of the crowdfunding provisions of the JOBS Act is that now companies (called ‘issuers’ under the new law) can raise up to $1 million per year through issuing securities in exchange for small online investments from anyone (including non-accredited investors). To do so, investments must be made through an SEC registered 'funding portal' or website. Investors are limited in their total crowdfunding investments in all issuers, through all portals, in any single year based on their income or net worth.
The crowdfunding bill has been somewhat opposed (though it was overwhelmingly approved by Congress) due to concerns for the protection of investors. To that end, provisions were added by the Senate, placing significant disclosure and reporting requirements on the issuer and the portal, and allowing for liability to reach deep into the issuer’s company, all the way to the senior accountant. “That will sure put a chill in the coffee of hucksters,” Marlett added. “The NCFA applauds these restrictions, and we look forward to working with the SEC in their promulgation of regulations in furtherance of this law.”
Under the JOBS Act, the SEC has up to 270 days to implement regulations for the crowdfunding industry and provide protections for non-accredited investors. “This is a great opportunity for the NCFA and its members to get geared up for full operations," Marlett said, "and to assist the SEC in creating deliberate, vetted regulations that reflect the spirit of entrepreneurial freedom found in the JOBS Act.”
Some of the key mandates for the National Crowdfunding Association include:
1. Educating the public, media and regulatory bodies regarding crowdfunding;
2. Guiding issuers and investors into crowdfunding and on to success;
3. Educating its members as to best practices in compliance with applicable federal and state laws and regulations;
4. Educating its members and the public in identifying and reporting fraud in the crowdfunding industry;
5. Representing the crowdfunding industry to federal and state regulatory authorities;
6. Representing the crowdfunding industry to the media and the public;
7. Providing networking opportunities throughout the industry;
8. Building mutually beneficial relationships with the venture capital and investment banking industries; and
9. Developing and encouraging fund-seeding with leading companies in the entertainment, software, health, energy, manufacturing and finance industries.
“This is a great moment. Our members are undertaking the birth of a new industry, a tremendous boost for the American entrepreneur,” said Marlett. “We welcome investors, portals, entrepreneurs, venture capital firms, law firms, investment banks, academic faculty and students, and of course companies and individuals who may wish to use crowdfunding, to join the National Crowdfunding Association at www.NationalCrowdfundingAssociation.org. We will get you plugged in.”
The National Crowdfunding Association is the professional organization of all companies and individuals with an interest in crowdfunding. The NCFA is charged with "supporting, educating and protecting the American crowdfunding industry."