Title III Frustrations

Title III Frustrations

This is more of a “vent” than my usual regulatory updates. As many people know, although I’m considered one of the early movers in the securities crowdfunding space, I haven’t been the biggest evangelist for Title III due to the oppressive restraints in the SEC’s proposed rules (continuous filings of Form C’s, audit requirements, ongoing financial reporting requirements, etc). The rules, I believe, set up small business owners to fail, as many of them will forget to file forms since their main focus is on building their company. And the proposed rules set up next-generation portals for problems as the majority of them will have zero experience in dealing with, and operating under FINRA and other regulators.

However, that said, I’d rather have the rules as proposed than not at all.

Why does this matter to me?

A guy reached out to me this morning, referred by a friend of mine in LA. He has a nicely profitable business selling custom golf carts in resort/retirement communities and operating a repair service. His business is booming and he needs $300,000 to open new locations and continue to grow. It’s a GREAT small business. And he’s offering what I think are very fair terms; very reasonable risk/reward. And he has no way to use the JOBS Act to help raise the capital, as there aren’t any platforms, broker-dealers or investment advisers (yet) helping these kinds of small businesses raise capital via 506b/c reg’s.

This is a story that’s repeated countless times across this country. Fantastic small businesses, profitable, looking to grow and hire people, yet unable to get capital.

Accredited investors and the platforms that cater to them are, by and large, focused on real estate (for what many investors consider “conservative” investments) and technology (for “swing for the fences” investments). There isn’t much in between except for a few niche platforms serving alternative energy (e.g. CollectiveSun) and consumer goods (e.g. CircleUp). And the platforms accepting wider deals are either targeting expensive Reg A filings (e.g. StartEngine) or aren’t operating in compliance with regulations (my opinion, and I’ll refrain from listing them here).

So what’s a growing golf cart business to do? Or machine shop? Or warehousing & shipping firm? Or medical device mfg? Or plumbing supply company? Or tens of thousands of others?

I’m the CEO of a company that’s dedicated to servicing the technology-driven capital formation industry. And it kills me that I can’t help these people. We just don’t have the rules yet that will let them to raise the money they need from the people who are willing to pitch in to help them.

Rant-off…now back to my regular updates and articles on regulatory rules and platform operations



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