Let The Games Begin
That was my partner John's email response when the news came across our internal email list that the SEC had finally lifted the General Solicitation Ban as they were asked to do by Congress in Title II of the JOBS act.
What this means is that folks raising capital can now advertise the fact that they are doing so. I have been involved in raising close to ten venture capital funds and every time we do that, we have to be quiet about what we are doing until we've done it. That won't be the case anymore.
But the impact of this on the VC business will be tiny compared to what this means for entrepreneurs. Our investment in CircleUp was in some ways a bet on this kind of change to the funding market. Entrepreneurs that have consumer products, like Rick Field who has built Ricks Picks into a high end pickle brand, can now raise money on the Internet (he is doing just that now on CircleUp) and tell all of his loyal customers about it. Some of them will likely want to invest in a company that makes products they love.
What I just did there, promoting Ricks' raise, would have been a violation of SEC rules until yesterday. It feels good to be able to do that.
My grandmother Dotty Wilson would always buy stock in the companies whose products she used. She believed that if they made great products, they also made great investments. It worked out well for her. I do that myself. Twitter and Disqus would be two examples of that approach to investing.
So get ready for investment pitches on pickle jars, face creams, and bags of coffee beans. Entrepreneurs will be using their products as payloads for their pitches.
But as John's comment that is the title to this post suggests, this will be the wild west. Scams will be easier to execute. Buyer beware. Do your dilgence. Diversify your risk. Prepare to lose money. That's the rules of startup investing but not everyone knows that.
I would bet the SEC is not too excited about what they have just unleashed. But I am. This is a step, just a step mind you, toward the democratization of startup investing. The SEC has not fully implemented the JOBS act and even after they do, there will be more to do to make it possible for everyone to enjoy the risks and rewards of backing entrepreneurs and their dreams.
This is what I do and what I love to do. I dont' believe it should be relegated to rich people and professionals. And slowly but surely it will not be.