- March 25, 2020
- Posted by: Kirsten Campbell
- Category: Blog
It seems the capital markets aren’t even pretending to be for anyone but the 1% anymore. Stimulus packages bestowed upon airlines, Wall Street and corporations will likely be more generous in comparison to aid for the little guys (and gals). That’s a shame, because in the US, small businesses account for 99.7% of all employers and from 2000 to 2017, they were responsible for the creation of more than 65% of new jobs. Wouldn’t you agree that small businesses deserve more respect and support, now more than ever?
2020 is continuing to unfold with fresh horror at every turn, yet there is one beacon of hope post Covid-19. The SEC is currently proposing to raise the crowdfunding cap for Reg CF from $1.07M to $5M. The average success rate for crowdfunding is 60%, and increasing the cap means even more opportunity for entrepreneurs and their communities. Considering 67% of each dollar spent at a small business stays in the community, cash flow will be a top priority for the decimated small businesses forced to close during the pandemic.
In addition to bolstering small businesses, crowdfunding also creates local investors by allowing everyday people to invest in companies online, without using a broker or being accredited. Want to invest in the new microbrewery or trendy eatery in your city? With crowdfunding, now you can.
We’re all just everyday people
The deep post-coronavirus recession on the horizon can’t be staved off with airline and big business bailouts. Nor with half-baked ‘everybody gets a check’ package that will almost surely still manage to bypass the less fortunate. However, the SEC’s motion to increase the crowdfunding cap is a practical step towards economic recovery (and prosperity) for the 99%. As businesses shutter, crowdfunding brings new opportunities, jobs and hope to struggling communities. The real trickle down economics stems from regular businesses, not mega corporations. This encouraging decision by the SEC couldn’t have arrived at a better time, when small businesses and their communities need it the most.
A possible truism
Maybe, equity crowdfunding shouldn’t be Plan B, but rather Plan A, no matter what Rona does.