How Crowd Funding Solves One of the Biggest Capital Market Gaps in America: Unleashing a Torrent of Growth Capital for Small Private Established Technology Firms
Thomas E. Vass
The Private Capital Market
March 29, 2012
The biggest economic problem in America is the lack of jobs. The rate of job destruction for the past 15 years, mostly in large multi-national corporations, is much greater than the rate of job creation, mostly coming from established technology companies that are over three years old.
If the company can stay alive to age 7, it will need another slug of capital, generally less than $1 million, to get the third generation product out the door. If the company can obtain this subsequent round of capital, the rate of job creation is exponential. The number of jobs increases from about 7 workers to about 20.
This third round of capital creates the Mother-Lode of new jobs in America. And, it is this third round of funding that will be solved by crowd funding allowed under the JOBS Act.
Number of Pages in PDF File: 5
Keywords: crowd funding, technology, innovation, job creation, regional capital markets
JEL Classification: E62working papers series
Date posted: March 30, 2012
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