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Crowdfunding Capital: SEC Reviews Existing Regulations

Taking a nod from popular "crowdfunding" models like Kiva and Kickstarter, the Securities and Exchange Commission is looking into ways small companies can employ similar social media methods to raise cash quickly and cheaply. Struggling with how to measure the impact of e-commerce and Internet innovations on the everyday business, the SEC is baby-stepping toward loosening "decades-old constraints on share issues." This analysis comes from 150 organizations and individuals petitioning the SEC to examine the impact of crowd-funding share issues up to $100,000. These advocates believe opening up social media fund raising offers huge potential for up-and-comers trying to carve out a lucrative market share through the din of recession recovery.

Of course, not everyone is sold. Wall Street had a mixed response. Ever cautious, SEC chairman, Mary Schapiro noted the analysis is in the "very early stages," and that the SEC is considering countless possibilities, including a $100 cap on individual investments reminiscent of campaign contribution regulations.

Ross Dawson from Trends in the Living Networks offered, "As the global economy is increasingly driven by new ideas and swift execution, it is crazy to have such rigid restrictions on people investing small amounts into companies. Why is it OK to put $50 into your favorite project on Kickstarter when you can never get a financial return, and wrong to put $50 into a project to get a possible financial return?"