NEW YORK, Aug. 29, 2012 /PRNewswire/ -- In response to today's ruling by the Securities Exchange Commission (SEC) to relax general solicitation for accredited investors under the Sunshine Act, GATE Global Impact has announced a strategic alliance with online platform Crowdfunder to open securities-based crowdfunding between qualified U.S. business owners and accredited investors. The alliance makes investor protection paramount by utilizing the regulatory framework of GATE's broker dealer division – GATE US, Member FINRA, SIPC – to oversee and facilitate all securities-based transactions across Crowdfunder's community of 9,000 investors and entrepreneurs and 1,100 registered companies.
Through this alliance, the two companies are launching a joint technology initiative to create a democratized funding and innovation platform that aims to:
- Address investor protections and SEC rulings on relaxation of general solicitation to accredited investors;
- Accelerate capital formation between qualified business owners and accredited investors;
- Apply an asset-based approach that includes education, mentorship and best practices to help grow and sustain job growth once the funding is over; and
- Support communities of high-need business owners who are committed to social enterprise goals and outcomes.
"GATE has always embraced industry regulations and worked with the SEC to keep investors safe," said Vince Molinari, CEO of GATE Technologies, parent company to GATE Global Impact. "We looked long and hard at the existing regulatory landscape as well as the complexities of technology and social media through the lens of investor protection. And while there's no silver bullet, we're confident this solution addresses the critical need for investor protection while also opening access to funding for qualified business owners who stand ready to begin hiring employees."
"We see crowdfunding as a very important component to expanding the deliverance of social good and the availability to create jobs, even at the smallest level," added Molinari.
Today's announcement comes at a pivotal time as the SEC continues its extensive deliberation of solutions to protect investors and govern the business crowdfunding industry. Because the GATE-Crowdfunder alliance relies on an existing registered broker-dealer for transaction oversight and implementation, questions about how the SEC will define and regulate intermediary crowdfunding portals (as called for in the JOBS Act) may become unnecessary if formal arrangements like this become mandate.
"Our country is at its best when bright and thoughtful people come together to rally towards an audacious goal and solve big problems that can't be solved alone. After the JOBS Act passed with flying colors, the real work began to align and implement business crowdfunding within legislative and regulatory requirements. Our alliance with GATE epitomizes the spirit and essence of today's collaborative economy: Innovative market-based solutions that, over time, go on to become established best practices," said Crowdfunder CEO Chance Barnett.
"We're thinking beyond traditional Wall Street solutions. In addition to elevating established best practices in the private investment marketplace, we're also applying innovative tools and resources that increase transparency, improve access to capital and accelerate a powerful social network to build meaningful relationships between business owners and their investors," added Barnett. "With thousands of entrepreneurs and small business owners standing at the ready on Crowdfunder, this alliance is a timely reminder about what 'the crowd' can do to help move our country forward at a time when we really need it."
The GATE-Crowdfunder alliance marks a significant step toward realizing the vision and intent of the JOBS Act, which passed with overwhelming bipartisan support in Congress last March and was signed into law by President Obama on April 5, 2012. Molinari, along with Crowdfunder Chief Strategy Officer DJ Paul, worked closely with Congressional lawmakers, the U.S. Small Business Administration, financial service stakeholders and thousands of American small business owners, entrepreneurs and investors to help frame and pass the historic legislation that opens access to capital formation.
"We've worked shoulder to shoulder for the last year to help lead extensive discussions with policymakers, regulators and thought-leaders about how to build this new ecosystem," said Paul. "GATE and its management knows the market and brings decades of transparency and investor protection expertise to the table. This alliance addresses one part of a larger set of rules and guidelines. We hope it helps to shape and inform the SEC's important work as they continue deliberating in preparation for their December 31 rulemaking deadline."
"An overwhelming majority of elected leaders from both sides of the political aisle are in favor of business crowdfunding. They also said that investor protection should be front and center. We agree. Our alliance with Crowdfunder validates the SEC's careful deliberation on this issue and sets a standard for how it can be done," said Molinari.
Gate US LLC is a New York-based broker dealer and a member of FINRA and SIPC. GATE Global Impact LLC is an impact investing-focused electronic regulatory compliant marketplace that provides market infrastructure and related services for the emerging impact investment industry -- public and private investments with a sustainable social and/or environmental component that also generate a healthy rate of financial return.
Launched to the public in May 2012, Crowdfunder puts the American Dream back within reach for people who historically have been shut out of the investment or funding process. Pending SEC rulemaking on crowdfunding for both accredited and non-accredited investors, the company's online platform will enable U.S. startups and small businesses to raise funds by selling equity, debt and revenue-based securities to ordinary Americans. Crowdfunder combines offline startup contests with online community to help small businesses locate the funding, education and guidance they need to be successful. www.crowdfunder.com