Crowdfunding
Floor Speech
Mr. MERKLEY. Mr. President, I rise today to address a promising new idea for investors and small businesses: crowdfunding.
In recent years, small businesses and startup companies have struggled to raise capital. The traditional methods of raising capital have become increasingly out of reach for many startups and small businesses. There is another option, but Congress must act to authorize it and provide for appropriate safeguards.
Low-dollar investments from ordinary Americans may help fill the void, providing a new avenue of funding to the small businesses that are the engine of job creation. The CROWDFUND Act would provide startup companies and other small businesses with a new way to raise capital from ordinary investors in a more transparent and regulated marketplace.
The promise of crowdfunding is that investments in small amounts, made through transparent online forums, can allow the ``wisdom of the crowd'' to provide funding for small, innovative companies. It allows ordinary Americans to get in on the ground floor of the next big idea. It is American entrepreneurism at its best, which is why it has the support of the President and many in the business community.
That said, there are real risks of investment losses at a rate far beyond ordinary investing. Crowd funding, if done without proper oversight, provides significant opportunity for fraud. Indeed, it was not too long ago that our financial regulators were doing daily battle with scam artists pitching huge returns on fraudulent schemes through small, unregistered securities.
That is why the CROWDFUND Act will tap the opportunity of crowd funding while reducing the risks.
The CROWDFUND Act provides a capital-raising alternative for startups and other small businesses, while not undercutting essential investor protections. It allows companies to raise up to $1 million each year from ordinary Americans. It provides more disclosure, more accountability and accuracy, and limits the exposure of any individual investor.
I thank my colleague Senator Bennet for joining me in this effort, and I hope to partner with more of my colleagues to move this idea forward in the days to come.
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