Advocacy hosts Roundtable at Boulder Small Business Development Center

By: Lindsay Scherber, Regulatory Economist

A few weeks ago the Office of Advocacy and the Boulder Small Business Development Center (SBDC) hosted a roundtable meeting to talk with small businesses about the Securities and Exchange Commission’s recently finalized regulations governing the use of equity crowdfunding. While many businesses are familiar with the rewards and donation-based crowdfunding models popularized by websites such as IndieGoGo and Kickstarter, fewer people are aware of the fundraising opportunities made possible by the SEC’s newest regulation, Regulation Crowdfunding. Specifically, while the previously mentioned models enable firms to raise money through either (1) donations with no expectation of return, or (2) donations in exchange for a tangible reward, such as early access to an innovative new product or service, the new equity crowdfunding regulation is notable because it permits small companies to raise capital by selling equity in their company in exchange for a monetary investment. While the regulatory requirements associated with Regulation Crowdfunding are rather extensive, the key takeaway is that small businesses may now raise up to one million dollars in capital during a one-year period by offering and selling securities over internet-based platforms known as funding portals. The amount that investors may contribute depends on their income and net worth.

Organized by Region 8 Advocate John Hart and Boulder SBDC Executive Director Sharon King, the roundtable featured welcome remarks by Chief Counsel Darryl L. DePriest and short presentations by Assistant Chief Counsel Dillon Taylor, Regulatory Economist Lindsay Scherber, and Regulatory Economist Jonathan Porat.  Attendees included a diverse group of local professionals and small businesses from the Boulder area: a gentleman in the early stages of founding an educationally oriented IT start-up, a representative from a company developing tools to assist disabled individuals as they navigate difficult life situations, and a young woman who moved to Boulder from Germany with her father in hopes of starting a small gaming company.


Regulatory Economist Lindsay Scherber (first from right) speaking at the roundtable. 

After hearing brief introductions from the attendees, Taylor kicked off the discussion by describing the 2012 legislation (known as the Jumpstart Our Business Startups Act) that led to the Regulation Crowdfunding rulemaking. He then gave a concise and user-friendly overview of Regulation Crowdfunding’s key provisions, including fundraising caps and investor restrictions. Taylor also described the extent of the Office of Advocacy’s involvement in the rulemaking process, and our consistent engagement with small businesses to identify issues of concern.

Following Taylor’s presentation, Scherber gave an overview of the equity crowdfunding activity that has taken place since the rule went into effect on May 16, 2016. Specifically, she spoke about collecting and analyzing of SEC filing data to identify how many businesses have submitted filings to initiate a crowdfunding campaign, where those businesses are located, how many employees they have, and how much money they are attempting to raise. She also provided a snapshot of the funding portals currently facilitating crowdfunding campaigns, namely their relative popularity among businesses and how much they charge for their services. Her publication documenting these findings is forthcoming and will be published on Advocacy’s website.


Small business owners participating in the crowdfunding roundtable. 

To conclude the roundtable event, Porat highlighted the Office of Advocacy’s recent research on rewards-based crowdfunding. Of particular interest was one key finding: the more money entrepreneurs successfully raise in a rewards-based crowdfunding campaign the greater their likelihood of attracting additional financing later on. He also noted the finding that crowdfunding success is positively associated with other important non-financial benefits, such as a greater ability to attract employees, a stronger customer base, and increased publicity.

For more information about the Office of Advocacy’s regulatory engagement and to read other timely research publications, visit