Thursday, November 20, 2014

Impact of Mid-term Elections on Crowdfunding

The 2014 Midterm elections were a sweep for the Republicans. What is the impact on crowdfunding?

The breakout of the US Congress post-election is:

House of Representatives -186 Democrats, 244 Republicans
Senate - 46 Democrats, 53 Republicans (shown below):

The Republican majority in the House is significant. In political reality, this means that the Republicans control the government.

Legislative priorities identified so far include:
 ·       Significant tax reform
·        Health care
·        401K reform
·        Obama care repeal
·        Increase in number of visas granted to the high tech industry
·        Copyright protection

Note that crowdfunding is not on this list. Nor is small business. 

Conventional wisdom states that Republican control means a pro-business atmosphere. While this should be good for crowdfunding, the disruptive impact that crowdfunding has on large financial institutions may be a barrier. We know that large financial institutions, with much to lose from crowdfunding, are well represented by the Republican Party. The Republican Party is the party of big, not small, business. These large institutions will seek to slow the adaptation of crowdfunding.

Opinion by William Michael Cunningham

Research by Jing Chen & Jianning Zhang, Masters Candidates in Accounting, Smith School of Business, University of Maryland. They are both Crowdfunding Research and Development Interns, NCS, Fall, 2014. 

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