There have now been more than 10,000 Kickstarter projects funded, with more than $75 million dollars pledged and a 44% success rate. This lightweight model for "crowdfunding" has caught the attention of the White House, which specifically highlighted how entrepreneurs are using Kickstarter to access capital -- and how President Obama's new "American Jobs Act" could extend that access to more high-growth companies.
In a post on fueling innovation and entrepreneurship on the White House blog this morning, U.S. chief technology officer Aneesh Chopra and OSTP deputy director for policy Tom Kalil formally described the crowdfunding proposal from the White House:
America's most innovative companies need equity capital to grow and hire faster. As part of the President's Startup America initiative, the Administration will work to unlock this capital through smart regulatory changes that are consistent with investor protection. This means reducing the disproportionately high costs that smaller companies face when going public, as well as raising the cap on "mini" public offerings (Regulation A) from $5 million to $50 million. It also means responsibly allowing startups to raise money through "crowdfunding" - gathering many small-dollar investments that add up to as much as $1 million." Right now, entrepreneurs like these bakers and these gadget-makers are already using crowdfunding platforms to raise hundreds of thousands of dollars in pure donations - imagine the possibilities if these small-dollar donors became investors with a stake in the venture.
Crowdfunding as a platform for agile investment
Kalil explained more about the proposal in a call with reporters after the president's speech. "We're looking for ways to "reduce the regulatory burden on the ability of high growth entrepreneurs to raise capital and go public," he said. "We'll work with the SEC to develop a crowdfunding exemption for companies looking to raise $1 million dollars or less."