Regulation Crowdfunding could Jump Start LENR Industry
A new kind of financing called Regulation Crowdfunding could provide an important new source of money for low energy nuclear reaction (LENR) research and development. Regulation crowdfunding could also make it far easier for average people to invest in LENR and profit from it.
Crowdfunding is the use of the internet to raise small sums of money from large numbers of investors. Current US law allows organizations such as the Martin Fleischmann Memorial Project to raise funds through crowdfunding but it doesn’t allow them offer to offer equity (stock or ownership) to those who put up money.
The JOBS Act passed by Congress in 2012 allows a company to raise up to $1 million in a year by selling equities to the public through Regulation Crowdfunding. That would allow companies such as LENUCO, NANORTech and Brillouin to offer average people equity in a cold fusion venture in exchange for funding. It could help an inventor raise the money he needs to build an LENR prototype.
One advantage to this is that small investors would be able to get equity in exchange for their money. A person might be able to get a share of an LENR enterprise for as little as $10. Crowdfunding investments would be limited to $2,000 under the SEC requirements.
That could open new sources of financing because average people have a hard time investing in such companies. Companies also face limits because current US law requires up $2 million worth of paperwork to issue stock through an initial public offering.
That’s the good news for LENR entrepreneurs and inventors in the US. The bad news is that Regulation Crowdfunding cannot go into effect until the Securities and Exchange Commission (SEC) approves a set of rules for it. The SEC is considering those rules which have generated some controversy.
The controversy is over accounting requirements. The current rules would require that a company seeking up to $100,000 in funding submit two years of financial statements and a tax return. Companies raising $100,000 to $500,000 will have to provide financial statements reviewed by a certified public accountant (CPA). Companies that raise between $500,000 and $1 million will have to submit to an audit.
Some critics believe that these regulations will make it too expensive for some companies to take advantage of regulation crowdfunding. Even with these limitations, regulation crowdfunding will be a tremendous opportunity for LENR entrepreneurs.
The biggest challenge facing many LENR and cold fusion inventors is getting start up financing. Regulation Crowdfunding could allow such companies to get that financing. The crowdfunding rules have been finalized but it isn’t clear when they will go into effect. Another advantage to regulation crowdfunding is that it could allow inventors to keep control of their LENR technology.
Even with its limitations, Regulation Crowdfunding could play an important role in the development and commercialization of LENR. One hopes that entrepreneurs will take advantage of it.
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