While venture capital is highly concentrated, crowdfunding and other online tools have the potential to drive innovative funding sources to entrepreneurs throughout the American heartland. To spur more online financing activity, policymakers should:
- Raise the Regulation Crowdfunding offering limit so new businesses requiring larger amounts of capital may utilize this tool.
- Create tax incentives for investors purchasing securities offered by new businesses through qualifying crowdfunding channels.
- Improve regulatory flexibility and reduce compliance burdens in crowdfunding.
- Expand the nation’s investor base by updating accreditation standards to allow more investors with high financial sophistication to participate.
- Create standards that ensure transparency and fair treatment of new and small businesses by online technology-based lending firms.
- Early evidence from the U.S. securities crowdfunding market indicates that crowdfunding is a promising new way for high-quality, early-stage companies to find funding.
- Between May 2016 and December 2018, the median Regulation Crowdfunding offering amount was $107,367.