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Swalwell and Young House Democrats Call for Investment Crowdfunding

October 14, 2015

WASHINGTON, DC – U.S. Representative Eric Swalwell (CA-15) and five House Democrats sent a letter to Securities and Exchange Commission (SEC) Chair Mary Jo White calling on the SEC to release the rules that will finally allow entrepreneurs to use crowdfunding sites to offer equity or debt in exchange for capital. Swalwell was inspired to send this letter after holding town halls with millennial entrepreneurs across the country as part of the Future Forum, a group he chairs of young Democratic Members of Congress. All signers of the letter are Future Forum members.

"Investment crowdfunding should be part of the future, but the SEC is currently holding entrepreneurs back," said Swalwell. "Not all would-be entrepreneurs can turn to traditional venture funding or angel investors when they have a great idea, and investment crowdfunding is an opportunity to democratize the process of raising capital. Congress rightly authorized investment crowdfunding three years ago with the passage of the JOBS Act, but without final rules from the SEC to make the law effective, we are hurting budding entrepreneurs, innovation, and economic growth."

In 2012, Congress passed the Jumpstart Our Business Startups (JOBS) Act, a bipartisan bill addressing that our laws had not caught up with technological advancements that allow people to utilize investment crowdfunding. The law would allow entrepreneurs to raise funds from smaller investors in exchange for equity or debt in their company. Swalwell was joined on the letter by Reps. Derek Kilmer (WA), Seth Moulton (MA), Grace Meng (NY), Ruben Gallego (AZ), and Patrick Murphy (FL).

"Despite the incredible boom in technology we've seen in the past decade, finding adequate startup capital remains one of the biggest challenges entrepreneurs face in launching their businesses," said Evan Engstrom, Policy Director for Engine, a non-profit advocacy organization that supports pro-startup policies. "Investment crowdfunding holds incredible potential for opening up new sources of capital for innovators, particularly non-traditional entrepreneurs that have historically found it difficult to secure funding and participate in the tech sector. We greatly appreciate Rep. Swalwell's efforts in pressuring the SEC to finish the job on investment crowdfunding and the Future Forum's other great work on behalf of the next generation of innovators and entrepreneurs."

"While I understand the need to balance consumer protections with these new innovations, as a representative of Northern Silicon Valley and a millennial, I believe it is long past time to implement the JOBS Act and empower businesses to raise money through investment crowdfunding," added Swalwell.

Swalwell also wrote an op-ed for Venture Beat on the need for investment crowdfunding. It can be found here: https://venturebeat.com/2015/10/11/we-need-investment-crowdfunding-now/. The letter to the SEC Chair can be viewed here.