Crowdfunding for Internet Stock Sales Approved by SEC

What do you think of the ideas in the bloomberg news article forwarded by Jaime Chua? Please send your comments. Thanks.

Crowdfunding for Internet Stock Sales Approved by SEC
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I came across this article that may be of interest to you and members of the committee and also relevant to the series “From Seed.to Exit”. It hints at what may be the future of business funding for small businesses – investment crowd sourcing over the internet for venture funds.

http://www.bloomberg.com/news/2013-10-23/sec-to-vote-on-crowdfunding-plan-as-white-advances-jobs-act-1-.html

Current crowd funding, is considered a form of sales (incurring an income tax liability) as the contributors do not get equity in the company . However, when the proper legal framework is up, small businesses should be able to get funding over the internet by issuing shares. The cost of venture capital will be lower (cutting out the fund managers), and the terms will be less onerous since funding will be from a big number of venture capitalists investing only HK$20,000 to HK$100,000 each (instead of from one or few investing millions of dollars).

Best regards,
Jaime

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One Response to Crowdfunding for Internet Stock Sales Approved by SEC

  1. hkview says:

    Since equity crowd funding over the internet (ECFI) reaches a global audience, the SEC ruling offers opportunities for both investors and small businesses as well as creates problems for regulators in countries outside where the business is domiciled.

    On the positive side, small businesses can reach a wider audience while small investors can diversify their investment to small businesses with high growth potential in other countries.

    On the negative side, the global nature of ECFI will create some conflict among regulators in different countries. For instance, the HK SFC has the authority to approve the offering of documents of investment products to the public in Hong Kong. U.S. ECFI documents available to Hong Kong investors on the web without SFC approval would most likely constitute a violation of HK law. This, of course, is true the other way around.

    Jaime

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