Title III Crowdfunding, Lendoor's perspective in American Banker
Lendoor's CEO Viktoria Krane talks frankly to American Banker Newspaper about her excitement and her concerns about Title III Crowdfunding rules that were adopted yesterday by SEC.
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The new regulations would seem to impose fewer burdens on small-business owners than the agency's 2013 draft rules contemplated. Still, it remains to be seen if crowdfunding will emerge as a viable source of financing for small businesses.
One problem is that many small businesses looking to raise either debt or equity online have little in the way of money or sophistication, and that can be a problem when trying to navigate complex regulations, said Viktoria Krane, the chief executive officer of Lendoor, a crowdfunding site.
"Not necessarily the next Facebook, but the next local auto mechanic," she said, describing the typical small business that turns to crowdfunding.
For such companies, which may be seeking to raise $20,000 to $50,000 in startup capital, the costs of complying with the SEC's regulations may not make financial sense, she added.
Krane founded New York-based Lendoor in 2013 with plans to become a national crowdfunding portal operating according to the SEC's rules. But as the agency dragged its feet, Lendoor changed its strategy and started operating in Texas, which had adopted its own crowdfunding rules.
Now the company is switching gears again, repositioning itself as a place for entrepreneurs to raise money from friends, relatives and other people in their social networks.
Because those fundraising pitches will not be open to the general public, the company will not be subject to the SEC's new crowdfunding rules.
"After two years of waiting, I would have expected to be a little bit more excited," Krane said. "But my feelings are mixed."
Read the full article here: http://hubs.ly/H01lMTm0.