More than a decade after the JOBS Act, equity crowdfunding has found a niche but not yet fulfilled its original promise of democratizing startup investment.

The Original Vision

The framers of Title III of the JOBS Act imagined a world where ordinary investors—not just accredited ones—could buy small stakes in local businesses and promising startups. The SEC’s implementing rules under Regulation Crowdfunding (Reg CF) were supposed to make this vision operational.

What Actually Happened

Regulation Crowdfunding raised the offering limit over time and attracted real activity, but the market has been dominated by a small number of platforms and a relatively small number of successful raises. Fraud concerns and disclosure requirements create compliance costs that many small issuers find burdensome.

Where Do We Go From Here?

The most promising path forward involves simplifying disclosure requirements for small raises while enhancing investor protections for larger ones. A tiered approach—matching disclosure burdens to raise size and investor sophistication—makes more sense than a one-size-fits-all rule.