National Crowdfunding Association Endorses Standards for Crowdfunding Portals
Seeing the need for managing investor expectations, as well the integrity of crowdfunding portals, the National Crowdfunding Association today announced its support for the CAPS accreditation system
NEW YORK, April 16, 2012 /PRNewswire/ -- Today the National Crowdfunding Association (www.NLCFA.org) expressed its support for Crowdfunding Accreditation for Platform Standards (CAPS), which establishes best practice standards for the operation of crowdfunding portals globally. www.crowdsourcing.org/caps
David Marlett , Executive Director of the National Crowdfunding Association, said, "It is essential that the burgeoning American crowdfunding market have a common thread of consistent, efficient, high-integrity expectations for everyone who wishes to participate." The dynamics of opening early-stage financing to the general public through investment crowdfunding is as fraught with potential danger as it is with possibilities of amazing success. Thus a key element of the NLCFA's mission is to protect the market, starting with encouraging and supporting a robust accreditation program for the portals. "We think the internationally-conceived CAPS is an ideal platform on which to build an exacting American standard that protects both investors' money and the industry's integrity," added Marlett.
According to the CAPS website, www.crowdsourcing.org/caps, as led by Kevin Grell , CAPS Program Director, CAPS is "designed to protect both crowdfunders (people pledging or investing capital) and fundraisers (people raising capital)." The CAPS program's mission is to foster the sustainable growth of the crowdfunding industry to provide much needed capital for projects and initiatives, start-ups and small businesses.
The need for standards and transparency is nothing new. "Crowdfunding is an ancient means by which humanity has lifted itself for the common good," said Marlett. "From cooperative farming and barn-raisings, to community-supported merchants and employee-owned manufacturing, people have time and again thrived on collaborative ownership. Crowdfunding is simply taking that to the Internet, democratizing it for everyone to participate." He added that when it has historically failed was commonly due to failed expectations, whether arising from malfeasance or simply miscommunicated standards.
In crowdfund-speak, a "portal" is a dynamic, web-based site where entrepreneurs post their offerings in search of capital. There are numerous American portals looking to go live and/or launch their investment crowdfunding divisions once the SEC's regulation drafting period is completed. (Some portals are already doing so via donation, peer-to-peer lending, or accredited-investor-only crowdfunding.) The SEC has just begun its 270-day window for drafting regulations to implement the crowdfunding provisions of the 2012 JOBS Act.
One of the first American crowdfunding portals to receive the CAPS certification is the innovative SoMoLend, www.SoMoLend.com, led by its founder, Candace Klein . In addition, there are numerous other rising-star American portals, such as RocketHub, www.RocketHub.com, led by Brian Meece , and Early Shares, www.EarlyShares.com, led by Maurice Lopes , which appear likely to meet the new accreditation standards. Klein, Meece, and Lopes sit on a council of industry representatives helping shape CAPS to American crowdfunding laws and regulations. (For an unofficial directory of American crowdfunding portals, see www.CrowdFundAdvisors.com.)
"These are heady times," added Marlett. "Crowdfunding is the land of innovation, ingenuity, and amazing creativity, with a unifying character-trait of most of the men and women involved being one of cooperation and seeking the common good. The National Crowdfunding Association believes, by early-establishing standards of practice, we serve both our exploding market, and the common desire for the common good. We are very pleased CAPS is leading the way."
David Marlett is an attorney, CPA, writer and producer, with degrees in economics, finance and accounting. He lives in Dallas, Texas. He blogs about crowdfunding on Crowd9, http://david-marlett.blogspot.com.
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SOURCE National Crowdfunding Association
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