Below is an article by San Diego Source entitled “Crowdfunding: potential vs. regulation”
Crowdfunding: potential vs. regulation
By: Katherine Connor, The Daily Transcript
Jan 30, 2014
An industry with anticipated growth of 140 percent year over year for 10 straight years, expected to reach $300 billion in transactions by 2025. Changes set to open up the financial markets to an entirely new asset class for the first time in 80 years. A multitude of spinoff markets likely to generate jobs across the tech, law and business sectors nationwide. The most significant financial reforms since the Great Depression.
Industry estimates settle on about 500 active investment portals, but Judd Hollas, founder and CEO of EquityNet, said he expects that number to drop significantly in the coming years as winners emerge and overtake weaker firms.
“Our prediction is of the hundreds of platforms and portals worldwide, and you look at these other industries within crowdfunding, there’s probably room for up to 20 percent of the existing platforms and portals out there winning their niche or market,” Hollas said. “I think we’re looking at easily an 80 percent-plus failure rate over the next five or 10 years.”
On the investor-protection side, the proposed rules outline tiers of investment caps based on income. Potential investors earning less than $100,000 a year are capped at investing the higher of $2,000 or 5 percent of their income per year; those earning more than $100,000 are capped at 10 percent of their income.
No one is able to invest more than $100,000 in a 12-month period, and no issuer is able to accept more than $1 million in a single year, under the Title III proposed rules. The purpose of these caps is to ensure that naïve investors don’t get taken for a ride, though regulations on the issuer side serve the same purpose, and some in the field say these limits insult the intelligence of investors.