Newspaper article THE JOURNAL RECORD

Put off by Paperwork? Security Crowdfunding Regulations Could Startle Startups

Newspaper article THE JOURNAL RECORD

Put off by Paperwork? Security Crowdfunding Regulations Could Startle Startups

Article excerpt

OKLAHOMA CITY - Conventional crowdfunding produced five-digit figures to help Brian Gibson launch his Seally Cap business and later expand the Simpliuniik Inc. company product line.

Gibson said he's not ready to approach friends, family members and complete strangers for seven-figure sums yet, even though the Securities and Exchange Commission has made it easier to do so.

In Simpliuniik's latest round alone, which ended in June, nearly 1,000 people pledged a total of $34,784 in exchange for early delivery of the patent-pending, food-preserving kitchen utensil. That's the style of fundraising most comfortably managed by Gibson and other entrepreneurs he's advised, he said.

"I can deliver a product. I can return a good to a person," he said. "But I don't like promising people an ROI - return on their investment. I'm not interested in raising that kind of capital.

"And I see a lot of holes in the idea. It could be something great once it's mapped out, but the SEC isn't there yet," Gibson said. "It's going to take a while for all the regulations to get massaged into shape. I highly doubt we've got the crowdfunding on the first show."

Crowdfunding has been used to raise money on the Internet through portals such as Kickstarter.com for several years. If someone has an idea to make a product but lacks the capital to pay for initial costs of production, they post an outline and promise perks to buyers in exchange for a few dollars up front. Committed funds are returned if the entrepreneur misses his or her target.

A year ago, the SEC adopted rules to permit companies to offer and sell securities through crowdfunding. Officials said the new rules were designed to assist smaller companies with capital formation and provide investors with additional protections. …

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