Portals Will Start Equity Crowdfunding in the Late Summer of 2013

I am optimistic about the outlook for equity crowdfunding, as I expressed in my speech at the Senate Mini-Summit on Crowdfunding on July 13th. I am optimistic because the parties that need to work together are working together and there is clearly Regulatory Puzzlemomentum at the SEC and FINRA to get the necessary regulations made. Given much of the overstated pessimism I’ve heard of late about the crowdfunding rulemaking, I think it’s worth reminding folks of this momentum. We didn’t sign up for a quick process when we won the fight to add an exemption to long-standing securities doctrine. The process is moving and I have witnessed the SEC and FINRA deliberating in good faith. For now, that’s about as much as I could hope for.

That said, I would like to put on my project manager hat for a minute and highlight why we won’t see crowdfunding portals, as defined separately from broker/dealers in the act, start conducting equity crowdfunding offerings until about this time next year. Here’s the gist, as it became clear in Washington back on July 13th:

  1. The SEC will create its rules to elaborate on the crowdfunding provisions in the JOBS Act. The SEC has called the deadline at the end of 2012, “aggressive.” They are trying to hit that deadline, but let’s build in a project manager’s cushion and estimate that we get it a few months late, in say February of 2013.
  2. Then FINRA will start drafting their rules that pertain mostly to what Broker/Dealers and Funding Portals have to do to register and operationally comply with the SEC rules. I’m not totally clear on their required timeline for drafting and public comment periods, but let’s say that takes three to four months, until perhaps late May 2013.
  3. Then FINRA submits these rules to the SEC for approval. Let’s hope they get it right on the first try and don’t have to iterate. Let’s block that out at one and half months and then we’re into the middle of July 2013.
  4. Then portals will begin the registration process. Let’s assume that will take at least two months and we’re into the middle of September 2013.

I’ll presume that the portals will be lining up potential clients with loose sign-ups and be ready to go live as soon as they get their registration completed. So, that means that the first crowdfunded offerings are going to go online around September of 2013. I intend for this timeline as an overestimate and it is quite general, but it’s certainly in the ballpark. I’m still optimistic and I think this is what we knew we were going to get all along, but have only recently really understood. As optimism is more a trait than an observation of the facts, I can understand why others are not so upbeat about this outlook.

I can also acknowledge that this is not inline with the rhetoric and politics behind the JOBS Act. It may take a year or so for the crowdfunding provisions of the JOBS Act to lead to increased capital for growing businesses that they can use for hiring Americans. The opening up of general solicitation under Title 2 of the JOBS Act will probably become a reality this fall, that will lead to increased investment by accredited investors and related jobs growth. That’s timely, both for America and for the presidential election.

As for what this all means for Launcht, I can tell you we are quite happy that perks based crowdfunding software and white label crowdfunding platforms are in demand. We’re elated that this model has received as much attention as it has and that people like what we’re offering. For example, check out our client’s site at ThreeRevolutions.com. The revenue we generate from our current work continues to fuel us as a company and provide for our development of a similar offering to support equity crowdfunding. We’ll continue to grow with the current model of crowdfunding and look forward to when we can offer our clients the software they need to run equity crowdfunding platforms.

About Freeman

The CEO and Co-Founder of Launcht is living his dream.
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6 Responses to Portals Will Start Equity Crowdfunding in the Late Summer of 2013

  1. Brian Knight says:

    Freeman, good article, though I think you are being a bit pessimistic. One big area where I think we are likely to see time savings is that the SEC and FINRA can operate in parallel with each other, rather than the SEC having to finish before FINRA can start. Also, FINRA is soliciting public comment now but isn’t held to the same notice and comment requirements the SEC is, which means two things: 1. They are starting to move on their rules now, before the SEC proposals are out; and 2. they can go from proposed to final much faster than the SEC.

    This isn’t to say that we will be live on January 1st, we almost certainly won’t. But I would be surprised if it took until Q3 for securities-based crowdfunding to go live.

    • Freeman says:


      Thanks for giving this a read and sharing your perspective. The last time Sara Hanks and I were together in Washington on 7/13/2012, FINRA representatives made it pretty clear that they would have to see what the SEC’s rules were before they could move on theirs. I agree their process will be much shorter than the SEC’s, when it starts. I do believe that FINRA is working already, but they are not moving in lock-step with the SEC, as we once hoped they would.

      Have you heard otherwise?

  2. Freeman- I’d love to see whether you think the timeline is still doable or if you’d extend it out?

    • Samuel,
      Thank you for your comment. At this point per our last meeting with regulators in Washington and the SEC regulation process and then the subsequent FINRA process we expect the timeline to be pushed out to the 3rd quarter of 2013 at the earliest. It should also be noted that at that point will platforms will be able to apply to become a registered portal which will add time as well. Stay tuned for the most up to date information.

    • Freeman says:


      As Spencer said, August at the earliest. I can see the sense in a number of the estimates that put it at the end of 2013 or 2014. At this point the speculations all have a +/- of about 3 months, and I don’t have any more information the rest of the insiders you know. So, we build and we wait.

  3. I am waiting for this with out of breath anticipation. I have a breakthrough in energy delivery and am waiting to be one of the first organizations to prove the crowd funding process works. My data remains in my notebook, my pockets are not lined with the cash needed to move forward. June 2013 is acceptable. As an innovator, I heartily look forward to it. As my invention will cause much stress to the oil industry, I need this thousands of investors to sustain an organization from takeover attempts. I am waiting, and waiting, and waiting. If Global Warming is real, and Sandy is one indication it might be, my invention cannot wait.Maybe someone should invite me to the SEC to tell them of what I am doing, and tell them to hurry up.

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