It seems a bit odd that a background in lobbying could be a key strategy in launching a technology startup.
Former lobbyist and current start-up founder Candace Klein is garnering political support for a newly-proposed U.S. House of Representatives bill (HR2930) that would allow any business in the United States to use crowdfunding to raise funds. The Republican-sponsored bill, called the Entrepreneur Access to Capital Act, passed the House 407-17 a few weeks ago. It also has the endorsement of President Barack Obama.
If passed in the Senate and signed into law by President Obama, the bill would help Klein take her new startup company, SoMoLend, and several others, including iSellerFINANCE.com, nationwide.
The online platform, launched this week, allows any small business to use social media sites like Twitter, Facebook and Linked In to raise small amounts of money for their business. Those could range from restaurants and jewelry stores to landscapers and accountancies.
But current laws require that borrowers be licensed with the U.S. Securities and Exchange Commission (a $20,000 filing fee per state, aka $1,000,000) in order to accept funds from sources other than traditional banks, accredited lenders or friends and family. That adds significant cost to any of the P2P lending site borrowers who’d like to accept funds from strangers.
“The law was meant for businesses raising millions in capital, and for wealthy investment banks like Goldman-Sachs” says Klein, also founder of Bad Girl Ventures. “It doesn’t make sense if the business is raising $1,000 or $50,000.”
For Klein, the bill’s passage is the difference between SoMoLend completing 10,000 loans in a year and a million.
“We could still operate, but it would be so cumbersome and expensive that very few people will ever utilize the technology,” she says.
Klein met with Ohio Congresswoman Jean Schmidt in recent weeks and asked her to sponsor the bill. Next week, Klein visits Washington D.C. to appear before the U.S. Senate’s banking and finance committee, where the bill lands next. Ohio Congressman Sherrod Brown is a member. She’s also scheduled meetings with Ohio Congressman Rob Portman and Congressman Patrick McHenry of North Carolina, who introduced the House bill.
“For one Cincinnati business, this is the difference between success and failure,” Klein says.