Dara Albright

Dara Albright Media

dsa@daraalbright.com
URL: daraalbright.com | Twitter: @tothestoics

June 9, 2016
The Honorable Patrick McHenry
U.S. House of Representatives
Washington, DC 20515
Dear Representative McHenry:
As one of the earliest pioneers in the crowdfinance movement, I am writing to express my strong support for H.R.
4855, the Fix Crowdfunding Act of 2016.
Although viewed as a novel financing method that utilizes modern technology to marry the peoples capital with
innovation, crowdfinance is as old as America and is governed by the very same tenets of liberty that led to her
founding 230 years ago. Granting its citizens the freedom to invent and to profit from one anothers inventions is
what enabled America to transform from a vast farmland into the greatest economic superpower in the history of
the world. It is what provided upward mobility for generations of Americans. It is what helped create a thriving
middle class. And it is what fueled some of mankinds most significant innovations.
Crowdfinance is rooted in American accomplishments, and it is the key to ensuring prosperity for future
generations.
By augmenting the existing crowdfund law, H.R. 4855 will not only boost innovation by enabling entrepreneurs to
more readily and affordably access greater amounts of capital, H.R. 4855 can actually play a critical role in
mitigating investment loss. Most importantly, H.R. 4855 will help the U.S. tackle two imminent national
emergencies: a retirement crisis and a burgeoning wealth gap.
Highlighted below are less obvious ways that H.R. 4855 will benefit the U.S. economy in years to come.
Giving issuers the ability to test the waters by soliciting non-binding indications of interest from potential
investors prior to commencing an offering can be an effective way to weed out inferior business models or
products - before investors cut checks. Like rewards-based crowdfunding, testing the waters can be invaluable in
gauging demand for both a companys stock as well as its products. Companies that fail to generate interest during
this test-period have an opportunity to go back and perfect their product, business model or financing before
proceeding. Or, if need be, they can cancel the offering altogether saving investors from financing a flawed
company. Ideally, stronger companies that have survived the testing stage will move forward with their
financing. As more and more companies are bred in this manner, H.R. 4855 can ensure the production of more
proficient businesses leading to a much more productive economy.
H.R. 4855 alleviates capital risk by encouraging two critical types of diversification: investment diversification as
well as investor-base diversification.
No one would argue that startup investing isnt highly risky. But a lot of that risk can be offset through
diversification. No financial advisor would ever recommend someone putting all of his money into one asset class,
let alone, one stock. By spreading ones crowd-investment capital across multiple investments, there is much
greater chance of generating a respectable return.
By opening unaccredited crowdfunding to fund structures, H.R. 4855 will trigger the emergence of new funds
chartered to allocate capital across multiple businesses or assets. This will provide smaller investors with a much

greater opportunity to diversify their crowdfund holdings by investing in a basket of companies as opposed to
hanging their hopes onto just one.
Issuers also benefit from diversification. Crowdfinance gives an issuer an opportunity to build a large, impassioned
and well-diversified investor base. As crowdfinanced offerings ultimately make their way to the public markets or
begin trading on venture exchanges, their crowd-investor foundation will prove vital to ensuring that their
companies remain more appropriately valued based on their fundamentals not on the mood swings of a
handful of mega-investors.
Trading too far away from fundamentals is one of the most troublesome flaws in todays public equity markets.
One order for a thinly-traded small cap from Fidelity could make or break a market maker. Yet, the financial impact
from crowd-investor Jane Doe deciding she needs to sell her 300 shares to pay for a root canal is insignificant.
Institutional holders currently possess way too much influence over a stock price. By democratizing and
diversifying investor bases, stocks will be more inclined to return to trading on fundamentals bringing confidence
back into the public markets.
Finally, H.R. 4855 democratizes the investing landscape by giving even the tiniest of investors the ability to access
alternative growth products and build diversified retirement portfolios. While researching a white paper
highlighting the monumental impact of tax-deferred micro alternative investing, we uncovered a staggering
correlation between Americas retirement system and its national wealth gap. It appears that Americas wealth
disparity began to spike just as the IRA and 401k started replacing defined benefit plans. This was also the same
timeframe that American investors were separated by financial stature and divided into two distinct classes:
accredited and non-accredited. As depicted in the chart below, unless and until all citizens are granted equal access
to investment products and the same opportunities to build well-diversified retirement portfolios, Americas
wealth disparity will continue to rise.

By fostering tax-deferred micro alternative investing, H.R. 4855 can help reverse Americas mounting wealth gap.
Thank you for your leadership and tireless efforts in democratizing U.S. financial markets. I look forward to seeing
this legislation pass with strong bi-partisan support.
Sincerely,

Dara Albright