The Social Benefits of Regulation Crowdfunding in America

March 29, 2019
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In the US, small businesses account for 99.7% of all employers and from 2000 to 2017, they were responsible for more than 65% of new job creation. 

Thanks to regulation crowdfunding, it’s now legal for everyday Americans to invest in new and speculative ventures, without having to be considered an accredited investor. The numbers for 2018 regulation crowdfunding have been crunched, and it was a raging success both financially and socially.

Jobs, jobs, jobs!

Successful crowdfunded companies are a “proven jobs engine” which on average, can create and support a total of 54 direct and indirect jobs. This is a proud accomplishment for a new industry, especially as it’s directly assisting Main Street. One entrepreneur is able to include others in his or her vision and give them a job. That’s the spirit of creation that America values.

More equal access to money

Many entrepreneurs do not typically receive startup funding for their business from a traditional bank or credit union. After being turned away from financial institutions, many people rely on their personal network, credit cards, lines of credit and more to fill the financing gap. This is an area in which venture capital funding continually fails the small business entrepreneur. Regulation crowdfunding actually has proven to offer women and minorities better access to capital, with higher success rates to boot.

It’s great for a city’s economic growth

Equity crowdfunding has been responsible for boosting local economies by over $1 billion since its inception. Once a community invests in a business, locals all have a stake and tend to increase their support. When one dollar is spent at a small business, 67% of it stays in the local community. This has had a positive impact on growth in America’s inner cities. With many big box stores closing in the coming years, regulation crowdfunding has proven to be an economic generator, as it offers an entry point for everyday investors and entrepreneurs. When entrepreneurs without previous access to funds can raise up to $1.07M in startup capital through regulation crowdfunding, the community tends to become engaged and reaps benefits. Everyone rallies around the business which has a direct influence on its success.

In fact, regulation crowdfunding has a 60% successful raise rate, while venture capital’s success rate hovers around 6.5%. 

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