By Jared Polis
Across Colorado, entrepreneurs are ready to turn great ideas into great, job-creating small businesses. What's holding them back? Not a lack of ingenuity or hard work. The problem is a shortage of capital.
One solution is "crowdfunding," which allows small businesses to accept small investments from friends and neighbors who see promise in their new idea or product.
As odd as it might seem, federal law has prevented small investors from backing a small-business idea with $100 or $1,000, unless you were a multimillionaire "qualified investor." That just isn't fair or good for small businesses and job creation.
It might also come as a shock that Democrats and Republicans actually worked together to fix the problem. We recently sent President Barack Obama a bill that will allow crowdfunding to help start and grow small businesses. That's exactly what we need more of in Washington, D.C.; less politics and more progress that helps small businesses to grow and create jobs.
Thanks to the crowdfunding bill, if you want to start a coffee shop or launch a software or app idea, you can affordably offer shares in the project to friends and neighbors and raise capital to create jobs and make your idea happen.
We know crowdfunding can work for small businesses because it's already done remarkable things for philanthropy and the arts. Websites such as Kiva.com and Kickstarter.com have helped provide millions of dollars to support great ideas. Here in Fort Collins, crowdfunding helped Cynthia Gray film a documentary on inspiring teachers. Local musician Jill Brzezick raised enough to record a new CD. Every week, Kickstarter delivers about $2 million to worthy artistic endeavors. I look forward to working with Fort Collins entrepreneurs to ensure that they are also in the forefront of implementing this new funding mechanism for startups.
Of course, no law can prevent someone from losing money on some harebrained ideas; indeed four out of five businesses fail. Outright fraud exists and rip-off artists should be punished. And no one should ever invest more than they can afford to lose. But there is nothing wrong with honestly trying and failing, and the secret to more fostering small businesses development and job creation is allowing entrepreneurs to take risks and found businesses. We don't prevent gamblers at Blackhawk or Las Vegas from betting their life savings away, so why would we prevent most Americans from making responsible, informed investments in startup companies?
The crowdfunding bill included several other measures that help small businesses, including removing regulations that prevent small and mid-size companies from going public, permitting a greater number of private shareholders before a company is forced to comply with onerous regulations, allowing small businesses raising money to post their business plan on their website, and expanding the number of shareholders for community banks.
Crowdfunding isn't the only change we really need for our economy. We need the same kind of nonpartisan, pro-jobs approach to reforming our tax code, cutting wasteful spending and reducing burdensome regulations. But crowdsourcing is an example of the progress we can make when we focus on common-sense job creating solutions. That must be the focus of Congress until Colorado's economy supports the hopes and dreams of small business people and workers alike.