Kickstarter, the fantastic platform where pledges can be made to fund projects across the creative fields (a recent example - REM enhancing Lucid dreaming mask that raised more than $570,000) has been a phenomenal success - raising more than $200 million from more than 2 million backers.
A new site, Fundable, that launched on Tuesday works in a similar way to Kickstarter, offering a crowd-sourcing platform to fund projects. A key difference of Fundable is their plans to allow startup companies to source money from unaccredited investors. This has been made possible by the JOBS act bill introduced in the US by Obama. The bill makes it easier for startups to raise funds through online crowdfunding by easing regulation around the process and allowing non-accredited investors to fund projects.
The hope is that the legislation will deliver a generation of emerging growth companies and AOL co-founder Steve Case highlighted the significance the bill could have in facilitating the entrepreneurial attitude of American citizens:
It’s a sign that folks in D.C. came together in a bipartisan way to focus on the role that entrepreneurs play in innovating and creating jobs and putting policies in place that will maximize the likelihood of the U.S. remaining one of the world’s most entrepreneurial countries”
Rules around the JOBS legislation are set to come in on 4th of July and Fundable will have to wait for these to be in place before they can roll out this key offering on their site. They will also need to receive approval by the Securities and Exchange Commission to act as broker or dealer. Fundable's CEO Wil Schroter has stated that the aims of Fundable are different to that of Kickstarter's. Whilst the majority of Kickstarter projects are creative in nature, Fundable wants to support companies to build products and reach business goals. They are hoping to do this by establishing relationships with distributors, retailers and brands.
It will be interesting to see whether the UK will adopt similar legislation to the JOBS bill to encourage growth and boost jobs through small business. There has been harsh criticism of the bill, including belief that it presents an opportunity for fraud. In addition there are concerns over the risks associated with weakening the regulation around highly complex business transactions. These concerns could prove to be a barrier to the adoption of a similar model in the UK.