The Early Stage

Jeremy Schwartz's thoughts on business development, current events, sustainability and seasons.

Creative Financing: Neither an oxymoron nor a euphemism

Who do you believe when it comes to the prospects for equity crowdfunding in the US once the JOBS Act comes on line in the next few months?

Do you believe Fred Wilson, who has predicted that the crowd will invest $300 billion?

Do you believe the venture capitalist that I spoke to last week who was a seed investor in a prominent rewards-based crowdfunding platform and/but thinks that the JOBS Act will be a bust?

Do you believe Ernst & Young, which thinks that companies might start thinking creatively when it comes to their fundraises and will take the crowdfunding option more seriously?

They all may be right and they all may be wrong but my sense is that each of them is making predictions on not easily justified assumptions: Assumptions about whether and how people will shift their investment dollars; Assumptions about what rules SEC will write; Assumptions about how difficult market conditions might affect a small number of companies.

Here’s my early take: This capital market is evolving faster than the SEC is managing to draft its rules. I’ve seen first-hand that small but reasonably well-known companies are seriously considering having the crowd fund their next capital expenditure, which suggests that blue-chip issuers might soon be on the scene. [Coinage: Aqua chip company.] And judging from the turnout at last night’s Crowdfunding Cutting Edge meetup there is a community here in the financial capital of the world that is thinking deeply about how this capital market will evolve in the months and years to come and, indeed, will be driving that evolution.

A post on that coming soon.