Crowdfunding a New Path to Wealth: Paul Lovejoy’s Leap Year Portfolio and the Fight for Investor Access
Paul Lovejoy, founder of Stakeholder Enterprise, shared his bold vision for democratizing wealth creation. His ambitious “Leap Year Portfolio” experiment—making 366 crowd-based investments in 366 days—offers a compelling case for rethinking how retail investors can access opportunities traditionally reserved for the elite.
Joined by ICAN co-founder Nick Morgan, chief legal and policy advisor Mark Hiraide, and co-host Dara Albright, Lovejoy unpacked the systemic barriers in capital markets and championed the transformative potential of crowdfunding under the JOBS Act.
How Regulatory Overreach Favors Large Incumbents
Lovejoy’s critique of the current financial system is rooted in history. He argues that the U.S. capital markets, shaped by regulations following the 1929 stock market crash, have inadvertently entrenched wealth inequality.
“Government regulators have been rubber-stamping corporate greed for almost a hundred years,” Lovejoy stated, pointing to the Securities and Exchange Commission’s (SEC) role in creating a system that favors large corporations.
The SEC, established to protect investors, imposed costly listing requirements that effectively locked small businesses and community organizations out of public markets. Only well-funded companies, often backed by concentrated wealth from the mercantilist era, could afford to go public.
This structure, Lovejoy contends, has funneled retail investors’ money—through 401(k)s and mutual funds—into a shrinking pool of publicly traded companies, now down to roughly 3,500 from over 8,000 before 2000.
Institutional investors dominate this landscape, controlling markets and limiting diversification.
“Our system was designed to concentrate wealth, restrict access, and benefit a powerful few at the expense of everyone else,” Lovejoy said.
He sees this not only as unjust but as a threat to democracy, where concentrated economic power can manipulate policy and suppress innovation.
The JOBS Act: A Step Toward Open Markets
Lovejoy views the JOBS Act, enacted in 2012, as a game-changer. By introducing exemptions like Regulation Crowdfunding (Reg CF) and Regulation A (Reg A), the Act allows smaller companies and startups to raise capital from the public, bypassing traditional Wall Street gatekeepers.
“This is the first time capitalism is actually being practiced,” Lovejoy declared, emphasizing that digital platforms and the internet have democratized access to investment opportunities.
These tools enable everyday investors to fund small businesses, real estate projects, and innovative startups—opportunities previously reserved for accredited investors with high net worth or income.
However, Lovejoy argues that regulatory barriers still hinder this progress.
The accredited investor definition, which limits certain private offerings to individuals with a net worth of $1 million (excluding home equity) or an annual income of $200,000, is a significant obstacle.
“I’m not a fan of restricting access to anybody,” Lovejoy said.
He advocates for eliminating these restrictions, proposing instead a warning label on platforms like Regulation D (Reg D) offerings to alert investors of higher risks due to lighter regulations.
In 2024, Reg D filings outnumbered Reg A and Reg CF combined by a staggering margin—32,000 to 652—highlighting the vast opportunity gap for retail investors.
The Leap Year Portfolio: A Case Study in Diversification
Lovejoy’s Leap Year Portfolio is a testament to the power of crowdfunding to create diversified, accessible investment strategies.
Over 366 days in 2024, he invested $11,552 across various platforms, averaging $31.52 per investment. His portfolio included 50% income-focused assets (like short-term real estate loans), 30% equity in startups, and 20% balanced investments, primarily real estate.
This approach, he argues, offers a market-based solution to investor protection through diversification.
“We’re talking tiny eggs in 366 baskets,” he said, noting that low minimum investment requirements—sometimes as little as $10—make this strategy viable for retail investors.
One standout platform, Groundfloor, enabled Lovejoy to invest in 432 short-term real estate loans, with only two defaults, which still yielded a 2% gain due to favorable lien positions.
Similarly, he invested in small business loans through platforms with $10 and $100 minimums, losing just $7 and $87, respectively, on defaulted loans.
“This is investor protection right here,” Lovejoy emphasized, arguing that diversification, not restrictive regulations, mitigates risk.
He also highlighted an equity investment in Invicta Water, a startup removing PFAS (forever chemicals) from water, which has since secured a patent and demonstrated promising results in a pilot project.
Lovejoy’s portfolio generated $1,220 in cash flow in its first year, growing to $1,930 over 15 months, with the flexibility to reinvest or withdraw funds without triggering taxable events.
This liquidity, combined with the potential upside of early-stage equity investments, contrasts sharply with the rigidity of traditional 401(k)s and mutual funds, which often lack true diversification.
As Dara Albright noted, only about 250 of the roughly 4,000 public companies have significant trading volume, and mutual funds typically hold the same 50-100 stocks, leaving investors exposed to concentrated risk.
Regulatory Roadblocks and Proposed Reforms
Despite the promise of crowdfunding, Lovejoy identified several regulatory barriers that hinder retail investors.
The “Regulation A pause,” a mandatory SEC review period, disrupts dollar-cost averaging strategies and delays investment opportunities.
Lovejoy cited Roots, a real estate investment trust with a 17% historical return, which was stalled by this process.
“You’re not protecting investors,” he said, calling for streamlined reviews.
Similarly, Reg CF’s investment caps—often limiting individuals to a few thousand dollars—undermine diversification efforts. “You’re not protecting anybody,” Lovejoy argued, advocating for their removal to allow investors to spread risk across multiple opportunities.
Lovejoy also emphasized the ease of due diligence in crowdfunding. Platforms like Yelp and Google Reviews provide transparent insights into small businesses, making it accessible even for non-sophisticated investors.
“You don’t have to be sophisticated to do this,” he said, debunking the myth that retail investors lack the expertise to navigate private markets.
A Call for Broader Access
By expanding access to private markets and reducing regulatory barriers, Lovejoy says retail investors can build diversified portfolios that rival institutional strategies. However, challenges remain, including the lack of infrastructure to aggregate data across crowdfunding platforms. Lovejoy is optimistic that market solutions will emerge, and he’s considering developing tools to address this gap.
As Mark Hiraide noted, the shift toward private offerings under Reg D highlights the need to rethink the definition of an accredited investor.
Lovejoy’s hope is to empower everyday investors, ensuring they can participate in the wealth-building opportunities of the 21st century. His Leap Year Portfolio demonstrates that small, diversified investments can yield meaningful returns while supporting innovative startups and local businesses.
Looking Ahead
Lovejoy’s enthusiasm for crowdfunding is infectious, offering what he calls a roadmap for retail investors to break free from Wall Street’s constraints. His call to action—streamline regulations, expand access, and prioritize diversification—is an attempt to create a more inclusive capital market. Lovejoy’s work serves as a powerful reminder that the future of investing lies in empowering individuals to take control of their financial destinies.
Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs. He was previously a partner in the Investigations and White Collar Defense Group at Paul Hastings law firm. Morgan previously served as Senior Trial Counsel in the SEC’s Division of Enforcement. Capital Ideas is a series created by Morgan and Dara Albright.