The election results from Eric Cantor’s district are welcome news for crowdfunding advocates. Cantor’s defeat affects crowdfunding in several ways. First, the race is on for a new chairman of the House Financial Services committee. This is critical, given the delay in the implementation of the JOBS Act. One of the candidates for the Chair is Patrick McHenry, the author of the JOBS Act.
Secondly, McHenry has another bill in the House, HR 4565, that will raise the crowdfunding limit from $1 million to $5 million. The election makes it more likely that this bill will get out of committee, to the full House and onto the Senate.
Finally, Cantor was, according to Politico, a key Wall Street ally, and we know Wall Street is not happy with the potential crowdfunding has to loosen their stranglehold on start-up financing. “Many lobbyists on K Street whose clients include major financial institutions consider Cantor a go to member in leadership on policy debates, including overhauling the mortgage finance market, extending the government backstop for terrorism insurance, how Wall Street should be taxed and flood insurance.” Add delaying the implementation of the JOBS Act to that list.
We will, of course, have to wait and see, but we are betting this is positive news for crowdfunding.
William Michael Cunningham is an economist, investment advisor, researcher and social investing policy analyst. He is author of The JOBS Act: Crowdfunding for Small Businesses and Startups published by Apress.