Aside from raising $70,000 for potato salad, it’s questionable as to whether entrepreneurs should care about crowdfunding from the masses, according to Jack Gravelle of Porter Wright. He bases the analysis on the fact that the U.S. Securities and Exchange Commission still hasn’t issued final crowdfunding rules and the proposed ones he says are burdensome, with limits of $1 million for total raised and investors capped off at $5,000 per investment, when they have only a moderate income.
“Entrepreneurs with great ideas should not settle for these types of investments,” he says, referring specifically to the proposed rules, which include audited financials and limits on advertising. Instead, he suggests turning to crowdfunding for accredited investors. “It may fill an important funding gap for growing businesses that have not attracted angel investors and are not ready for venture capital or private equity,” he explains.
