I spoke to the Greater Austin Chamber of Commerce about equity crowdfunding in a panel discussing the recently proposed Texas rules. Laura Lorek of Silicon Hills News has a good report covering the event.
Austin companies received $626 million in venture capital, or 49 percent of the venture capital dollars for Texas, said Michele Skelding, senior vice president of global technology strategies at the Greater Austin Chamber of Commerce. “That still represents just 2 percent of the nation’s venture capital,” Skelding said. “So we’re hungry for capital.”
Much of the discussion focused on how companies currently raise capital, including from angel networks and rewards based crowdfunding such as Kickstarter. Securities Commissioner John Morgan laid out his expectation for the new Texas rules and how companies could take advantage of these new regulations. “The great thing about the rulemaking process is it’s flexible,” Morgan said. “There’s time to tweak these rules to get the exact right product we want.’’
Sometimes lost in the excitement of the startup world is that intrastate Texas crowdfunding isn't just for startups and social media companies.
The legislation isn’t just aimed at tech companies, said Nathan Roach, an attorney with the RAM Law Firm. It’s designed to help all small and medium sized businesses statewide that need access to capital to expand, he said. The crowdfunding portals help standardize the process of raising money from investors.
Of course, there is always a healthy dose of skepticsm. Rick Timmins, chairman of the Central Texas Angel Network, said his members would not invest in equity-based crowdfunding ventures because of the regulations and disclosure requirements.
On the other hand, "Crowdfunding is one more tool in the arsenal of tools that are being provided to small and medium sized business throughout Texas", said Amir Mirabi, director of the governor’s office for small business economic development.
update: 8-19-2014 Conservative sentiment stands in contrast to some reports from VC activity in the products space, such as reporting from CB Insights stating:
Today, it’s apparent the crowdfunding phenomenon has indeed affected the VC ecosystem – as a complementary force. With thousands of consumer-oriented hardware campaigns looking for financing for everything from smart watches to beacon technologies, crowdfunding platforms such as Indiegogo and Kickstarter have provided VC investors with a valuable source for dealflow.