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Scott Shackford on Oculus Rift vs. SEC Regulations

Reason Staff | 5.17.2014 10:00 AM

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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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