Senator Scott Brown Gives Vsnap His Full Endorsement
As we reported earlier, startup WeFunder held an event at MassChallenge today on legislation to legalize crowdfunding that featured remarks by Senator Scott Brown. Brown has sponsored a bill in the Senate for that purpose and through his remarks, and in questions posed by BostInno, the Senator illustrated his thinking on the subject both as an economic and a political matter.
Crowdfunding refers to a large number of people donating or investing small sums of money to companies or projects. It has become popular in artistic and charitable contexts through donation sites like Kickstarter, but it is currently illegal for regular individuals to invest in private companies, like startups, in exchange for stock. Legislation to legalize the practice has passed the House of Representatives but not the Senate.
Protection Against Fraud
Brown emphasized the need to prevent fraud or even the appearance of fraud, and noted that his bill requires intermediary platforms like WeFunder to undertake that role (the bill passed in the House requires no intermediary).
"We generally agree that we need to have a check and balance," he said.
A Key Issue for Massachusetts
In an interview with Brown, BostInno asked about why Massachusetts specifically stands to benefit from legalizing crowdfunding.
"We're an innovative state," he replied. "The fact that we are an innovative state and have so many amazing learning institutions and businesses here and ideas it's a perfect opportunity for an idea like this to create that seed money."
Asked following his remarks whether crowdfunding would disrupt current channels of investment, Brown argued that it wouldn't, and that it would merely offer seed funding that would allow entrepreneurs to later raise money from traditional investors.
Brown emphasized the role of startups to getting the country past the recession and back on track to economic growth.
"There are sectors that are doing ok," said Brown. But what we need, he continued, are more innovative companies. "There are sectors that we could actually blow the doors off," he said.
Just Pass a Bill
"The devil is in the details," acknowledged Brown, regarding concerns around crowdfunding, including fraud. But he emphasized the need to pass a crowdfunding bill through the Senate, even if it's not perfect, so that details could be negotiated in a conference committee with the House, which has already passed such a bill.
He suggested the Senate could even pass out both his bill and a similar bill by Senator Ron Wyden, and then let the conference committee hammer out the details.
"Let's just get it out," he said.
Prior to his remarks, Brown toured MassChallenge, stopping by startup cubicles and asking entrepreneurs about their companies. At Vsnap, a platform for sending short video messages in lieu of email, Brown paused to record his own Vsnap with Joe Nigro, a business development manager at the company.