CHAPTER 2

Understanding the “Crowd”

Karen Kerrigan

SBE Council

Access to startup and growth capital has remained a central challenge for entrepreneurs for the two decades that I have been advocating for their interests. Yes, capital has flowed a little more freely during healthy economic periods, but for the most part, the inability to tap into growth capital—even in good economic times—has hindered many promising enterprises. The past five years or more, in particular, have not been kind to entrepreneurs. The financial crisis followed by the Great Recession, lingering policy uncertainties, and a fragile economic recovery have made it more difficult for entrepreneurs to finance their businesses. However, tremendous change and innovation are emerging in the financing space, which makes this a very exciting time to be an entrepreneur.

Heeding the cries of entrepreneurs and the startup community about the lack of available capital, Congress and President Barack Obama came together to advance a policy solution in 2012—the Jumpstart our Business Startups (JOBS) Act—which allows entrepreneurs to raise investment capital via crowdfunding. President Obama signed the JOBS Act in April 2012, and as of this writing, entrepreneurs and investors are eagerly waiting for the SEC to approve Title III regulations associated with the law that finalize the ground rules for crowdinvesting.

Positive headway was made by the SEC with respect to Title II of the JOBS Act, which lifts the antiquated ban ...

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