Small businesses and disabled access?

What kind of reporting and transparency would be reasonable to expect of small businesses raising money under HR 2930, The Entrepreneur Access to Capital Act?

• HR 2930, The Entrepreneur Access to Capital Act, is currently under consideration by the US House of Representatives. This would be great for entrepreneurs, but it is getting heavy criticism in major newspapers. Critics are focusing on problems instead of solutions, claiming it would expose many non-professional investors to fraud. Any article from the SF Gate, even pulled out the Enron scandal as a straw man. As far as I know, when congress passed a law many years ago requiring Investment Banks and other financial institutions to keep phone records in discoverable form for 6 years, there weren't really any products on the market that provided such transparency. However, within a few years the market responded to the new bill with technology that could meet the demands of that bill. With this in mind, what kind of reporting and transparency would be reasonable for entrepreneurs to provide, but would not be onerous or prohibitively excessive? While I'm certain some people would argue against burdening an entrepreneur, who needs to focus on building a business, it seems to me that requiring some degree of transparency early on would provide some necessary fiscal discipline and habits to make sure the entrepreneur is spending wisely. It would also pave the wave for moving the $1 million per limit upwards until all capital can be crowdfunded, since there needs to be some degree of continuity in a firms financial reporting to keeping moving up the funding chain linearly instead of stepwise (e.g. funding rounds). JIT capital is dependent on reporting. ref: http://www.govtrack.us/congress/billtext.xpd?bill=h112-2930 http://mchenry.house.gov/crowdfunding/ http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fc%2Fa%2F2011%2F11%2F11%2FBUKH1LSL96.DTL&type=tech http://www.baltimoresun.com/business/money/bs-bz-hancock-crowdfunding-danger-20111112,0,1311905.column http://www.paulgraham.com/future.html

• Answer:

  Not much.   Folks who will be using this form of funding will be entrepreneurs who could not raise funds from their families, friends, or traditional angels.  I suspect they will be overwhelmed with entrepreneurship.  Personally, I wouldn't expect them to have the skills to do a lot in the way of shareholder relations, putting aside the time issue.  In California, companies with 100 or more shareholders are required to provided unaudited financials and a very limited annual report.  Skimming the proposal, looks to me like if you were a CA resident, that would still apply.