Salem, MA, Sept. 30, 2019 (GLOBE NEWSWIRE) -- MainVest has announced their recommendations to the SEC regarding changes to Regulation Crowdfunding in response to the SEC’s call for feedback. MainVest, a social investment platform and Regulation Crowdfunding Portal, utilizes these regulations to provide economic value to both entrepreneurs and the large portion of the U.S. populace that, before the JOBS Act of 2016, had no regulatory framework through which to engage in private company investment. MainVest is dedicated to empowering small business entrepreneurs and community members by improving pathways to capital, especially for previously underfunded groups. The goal of the comments, state co-founders Nick Mathews and Benjamin Blieden, is “to help further the dialogue on the differences between startup equity raises and debt raises and where we believe the regulations could be further improved to reflect the differences between these securities (risk profile, timeline to liquidity, historical financial requirements, etc.)” Key feedback includes:
- Distinguishing between debt issuers and equity issuers in Regulation Crowdfunding. For small businesses that wish to crowdfund debt securities, the best way to do that is through Regulation Crowdfunding. However, these regulations were built for equity issuers and can be overly expensive for debt issuers (compared to the typical cost of raising debt capital). MainVest recommends to create an exemption within Regulation Crowdfunding that will make it easier for small businesses to issue debt securities.
- Increasing the limits for issuers under Regulation Crowdfunding. Currently, issuers utilizing Regulation Crowdfunding can only raise up to $1.07 million in a 12 month period. MainVest recommends increasing that limit to $5 million to correspond to early stage capital needs and improve the pool of quality investments for all investors.
- Allowing Investment Funds, SPVs, etc. to invest in regulation crowdfunding without the same caps and limitations duly imposed onto individual investors. Examples of relevant investment funds/SPVs are entities like community banks, governmental economic development agencies, and community-driven nonprofits looking for scalable ways to deploy capital towards economic development in their regions.
- Prohibiting the use of credit cards to invest. MainVest argues that allowing credit cards in investing encourages unnecessary risk taking and will likely lead to investor losses significantly beyond their initial investment. To better protect investors, MainVest argues, investors should only be able to invest in Regulation Crowdfunding investments with money they currently have, rather than by borrowed money from credit card companies with 20%+ interest rates.
- Reducing limitations on issuer communication, both before and during an investment campaign. MainVest believes that businesses should be able to engage in general solicitation and advertising prior to the filing of a Form C, but that some limitations need to be in place to ensure adequate investor protection. Furthermore, businesses currently cannot comment on their offering outside of the Portal, creating uncomfortable situations for brick and mortar business owners who would typically converse openly with loyal customers; therefore MainVest recommends that the SEC allow issuers to discuss their offering more openly.
MainVest is the only Regulation Crowdfunding portal focusing solely on hyperlocal, small business investment. Therefore, Mathews and Blieden believe that they have a unique perspective on the limitations and opportunities associated with Regulation Crowdfunding. They state:
“Working with small business owners and empowering them to access capital through Regulation Crowdfunding has been an incredible and eye-opening opportunity. We are passionate about creating economic opportunities in communities across the United States and are confident that these regulations are a powerful tool for economic growth. However, within the past year of MainVest’s operations, we have uncovered opportunities for improvement within the regulatory framework to better meet the needs of both investors and business owners, especially at a hyperlocal level.”
Further questions about MainVest and their recommendations to the SEC can be directed towards Nick Mathews, MainVest CEO. MainVest’s full comments can be found at https://www.sec.gov/comments/s7-08-19/s70819-6193357-192513.pdf
About MainVest:
MainVest is a community investment platform and Regulation Crowdfunding portal that empowers communities and small business entrepreneurs by allowing everyday Americans to invest in the local businesses they care most about and share in their wealth and success. Through MainVest, individual community members invest in local businesses through financial instruments designed to align incentive and drive successful economic growth. This model encourages investors to become champions of the business, not just supporting it financially but frequenting it and inviting others to do the same. Over $1.4MM has been invested in local businesses on MainVest’s platform to date. MainVest is based in Salem, Massachusetts.