Scott Shackford on Oculus Rift vs. SEC Regulations

The makers
of Oculus Rift, a virtual reality 3D headset, raised $2.4 million
on Kickstarter in 2012 after asking for just $250,000 to help get
the headset from drawing board to factory. As with all
Kickstarters, the terms of the deal clearly state that donors don’t
get their money back; the payoff is the warm fuzzy feeling you get
from supporting a cool project. Later that year, Facebook
bought Oculus for $2 billion, leaving many funders feeling
betrayed. But, the way investment regulatory structure is run,
small Kickstarter donors are simply not allowed to be
offered a piece of a fledgling company in exchange for their early
infusion of cash. That’s a problem supporters of crowdfunding are
trying to fix. Some are hoping a massive 585-page set of rules by
the Securities and Exchange Commission (SEC) will help. Scott
Shackford warns that, obviously, the SEC wants to attach a few
strings. Why else would it take a novel’s worth of prose to give
companies permission to sell stakes to small donors? 

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