The crowd-funding measure that the U.S. Senate passed last week as part of the Jobs Act could help level the playing field for “the 99 percent who don’t have five- to six-figure amounts” of money to invest in startups, suggests Tom Szaky, chief executive of Trenton, N.J.-based TerraCycle, in a New York Times blogpostÂ today. The ability to attract small amounts of capital from many different investors through crowd-funding platforms could lessen the pressure from larger investors that entrepreneurs often have to balance against the long-term interests of the company. Crowd-funding “would result in a diverse spread of investors who are focused as much on the companyâ€™s impact as on financial returns,” assisting social entrepreneurs in particular, Szaky says.
The Senate version of the bill stipulates investment caps based on individuals’ annual income of 2 percent for those earning up to $40,000 a year to a maximum of 10 percent for those earning more than $100,000 a year, according to the Boston Business Journal. Startups could raise as much as $1 million a year through crowd-funding sites, under to the Senate version of the bill, which now goes to the House for review.