Crowdfunding gets big boost in Congress

A bill that would let entrepreneurs sell ownership stakes in their companies through crowdfunding websites and other online social networks has been overwhelmingly approved by the U.S. House.Earlier this month, members of the House voted 407-17 in favor of HR 2930, a bill with the stated goal of making it easier for entrepreneurs, startups and small businesses to get access to early-stage capital.Two of those “aye” votes came from New Hampshire Republican Reps. Frank Guinta and Charlie Bass.Under the bill, entrepreneurs would be allowed to raise up to $2 million from an unlimited number of investors without having to register their firm with the Securities and Exchange Commission. (Any entrepreneur raising more than $1 million would have to provide audited financial statements to potential investors.)Who would the investors be? Pretty much anybody with money to invest. Anyone who wanted to throw their financial support behind the entrepreneur’s venture — be it his or her parents, next-door neighbor, or a total stranger — would be allowed to buy a stake in the business without becoming an accredited investor through the SEC. To help lessen the risk for them, individual investments would be capped at either $10,000 or 10 percent of their annual income, whichever is less.Given its strong bipartisan support, it looks likely that the bill — or at least some version of it — may soon become law.If it does, experts say it could be a major boon for New Hampshire entrepreneurs who are struggling to launch their businesses using traditional methods of financing.The crowdfunding exemption would be an “enormous opportunity” for average Americans to support job creation, said Tom Elliott, founder of the Idea Greenhouse, a business incubator in Durham.”A lot of Americans are not expecting the political system or Wall St. to solve the jobs crisis. If there are entrepreneurs in New Hampshire or Mozambique who can figure out how to put people back to work, they’re going to support it. Crowdfunding is the ultimate way to vote with your wallet to support entrepreneurs.”U.S. Sen. Kelly Ayotte said through her office that she will co-sponsor of a version of the bill in the Senate, along with Massachusetts Sen. Scott Brown.A spokesperson for Sen. Jeanne Shaheen said she is “looking at this legislation” but hasn’t taken a position on it yet.Jamie Coughlin, entrepreneur-in-residence at the abi Innovation Hub, a Manchester business incubator, said he was surprised by the wide margin with which the bill passed the House, given that crowdfunding is such a new method of financing.”That they would be willing to embrace the unknown factor of crowdfunding is … remarkable,” he said. “What it points to is the reality that the traditional capital markets are tight and probably are going to be tight for the next several years, so in order to spur innovation, the government must allow for creative, innovative ways to access the capital.”Crowdfunding could help the close the huge gap that exists in New Hampshire between entrepreneurs, their ideas and funding, said Elliott.”The existing methods of getting capital for entrepreneurs in New Hampshire are not working, or at least are not working fast enough,” he said. Crowdfunding “would speed that up and get people thinking about reinvesting in our own entrepreneurs.” — KATHLEEN CALLAHAN/NEW HAMPSHIRE BUSINESS REVIEW