This morning I testified in front of a Washington State House sub-committee in favor of a proposed crowdfunding law. The law does much of what the JOBS act promised to do; by making equity crowdfunding accessible to entrepreneurs. I won’t go into the nuances of the law, but suffice it to say it would allow entrepreneurs to raise capital from non-accredited investors in small amounts with mild regulation. In the current system, raising early stage capital often comes down to having access to millionaires (AKA accredited investors). Crowdfunding laws should help democratize capital so that companies succeed based on their ability to solve customer problems rather than if they know millionaires.
I was asked to give my perspective as a Washington entrepreneur. I’ve started businesses in Washington. I’ve raised money here and hired folks here. My testimony focused on my entrepreneurial story. I talked about the various businesses I have started, ran, and sold. I talked about my experience raising angel and institutional capital in Seattle very recently. The thrust of my testimony was to tell my story and talk about how these proposed crowdfunding laws could have helped me at every step of the way. As a twelve year old with a popular website, I could have raised money from friends and family. As a college student generating 7 figures for my gaming services company, I could have also raised money from customers and vendors. As a grad student launching a startup with a talented team, a big vision, and a sexy space, I could have raised funds from the general public. I could have benefited from these laws at each step of the way, had they been enacted.
After thinking deeply about these laws and moving past my initial reaction of “more capital = good,” it really occurred to me that these proposed laws would not actually help those of us who learned to play by the old rules. Those entrepreneurs who spent years meeting millionaires and building a network don’t need crowdfunding to launch a business or raise money. To succeed under the old system, this network was a necessity. This system that many of us have found a way to succeed in is inefficient and biased. Knowing millionaires should not be the bar for entrepreneurs. Crowdfunding laws democratize fundraising. They help give entrepreneurs access to capital without forcing them to be networked with the high net worth individuals.
I support crowdfunding laws because they will help future entrepreneurs. Those who stand to gain the most from a democratization of capital are not those who already have access to it. Crowdfunding will put more capital in the hands of entrepreneurs. It will enable more young people to create their own job rather than hope that someone else gives them one. Equity crowdfunding will democratize capital. I support efforts to enact state laws to enable equity crowdfunding. You should too.