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Wefunder Blog

Our Comments to the SEC

on Jan 31 2014
Founder & CEO @ Wefunder

The SEC is working on the final rollout of the JOBS Act, which will allow everyone to invest in startups (current law only allows the wealthy to invest). After two years of delay, it’s finally expected to happen this summer.

As part of this process, the SEC recently requested feedback on 585 pages of draft rules. After re-reading all 585 pages nearly a dozen times (not fun!), we just submitted our official response to the SEC.

You can read it here: http://www.sec.gov/comments/s7-09-13/s70913-179.pdf

The SEC’s mandate is to protect investors while encouraging investment capital to flow to businesses. It’s a tricky balance to achieve, and the SEC has undertaken a good faith effort at getting the rules right.

However, we feel the SEC needs to better understand how high-quality startups currently raise funding, or the worst case scenario will happen: only those that can’t raise funding from professional investors will crowdfund.

Our letters to the SEC are focused on showing the importance of the ‘carried interest’ fund model developed by the “accredited crowdfunding” platforms like AngelList, FundersClub, and Wefunder. It’s the only way to attract high-quality startups, while perfectly aligning the incentives between platforms and investors (we only want to earn a profit if you do!).

We’re hopeful our continued outreach to the SEC will have an impact. We’ll keep everyone up to date as we learn more!