Senator Scott Brown addresses the audience at WeFunder's crowdfunding forum

Remember at the end of January when we reported that a petition to legalize “crowdfunding” by startup WeFunder had attracted over 900 signatures in just days? Well WeFunder hasn’t let up in its push.

More than 2,500 people have signed the petition to date, and today at MassChallenge the company hosted a forum on the issue which included remarks by Senator Scott Brown and Congressman Patrick McHenry, as well as a panel including Tim Rowe of the Cambridge Innovation Center, Amy Cortese of Locavesting, Bill Sahlman, a professor at Harvard Business School, and Akhil Nigam, president of MassChallenge, moderated by Jeff Howe of Wired magazine.

The discussion was underscored by an assumption mostly unfamiliar to policy conversations these days: that a bill to legalize crowdfunding stands a decent chance of passing Congress, despite a hyper-partisan, gridlocked environment.

Following a tour of MassChallenge, Brown kicked off the event, introduced by WeFunder’s Mike Norman. Brown is the sponsor of a bill in the Senate to legalize crowdfunding, and emphasized that crowdfunding legislation had passed the House in rare bipartisan form.

“When is the last time you heard that – something passing in the House with over 400 votes?” he asked the audience.

Following Brown’s remarks, the panel dug into many of the potential issues surrounding crowdfunding including fraud, transparency, impact on entrepreneurs, and more. (For more on the issues surrounding crowdfunding, try this piece.)

“You have to differentiate between fraud and failure,” said Sahlman, saying that the U.S. had prospered in part because it allowed entrepreneurs to fail. “If you don’t have failure you don’t have success.”

The panel was generally optimistic about limiting fraud, citing eBay’s success doing so for peer-to-peer purchasing. But Sahlman was less optimistic about returns to investors.

“I’m not optimistic over whether people are going to get rich,” he said.

The panel addressed potential issues and objections to crowdfunding

But Rowe noted that investors interested in crowdfunding may have motivations that go beyond returns and are more akin to giving to nonprofits. Cortese agreed and suggested that crowdfunding would enable community members to invest in local businesses, a practice that exists today in a legal gray area.

I pressed the panel on this question, asking why, if most investors would lose money, and motivations were as much social as financial, we needed to allow the crowd to invest for equity, rather than just donate to companies or projects as they do on platforms like Kickstarter.

“It’s about recycling that capital back again,” said Nigam, pointing out that equity would allow for more investments over time as some investors funnel returns back into new ventures. Rowe put his answer in terms of risk profiles that investors will accept for different purposes.

“We’re willing to take a lot more risk on our neighbor or friend because they’re our neighbor or friend,” he said.

Sahlman emphasized the concept of ownership, rather than the trading mentality, calling it “an important psychological element.”

Congressman McHenry took questions by video

The panel was joined via video conferencing by Congressman McHenry, who explained his bill and answered questions from the crowd.

As the event concluded, Rowe noted that he is headed to D.C. today to testify before the Senate Banking Committee on the issue, and encouraged the audience to take a copy of his draft testimony and provide feedback.

The event was a testament to the startup community’s interest in this legislation, notable given that politics in my experience is often something the startup world prefers to ignore. In his opening remarks, WeFunder’s Mike Norman described the advocacy process they’ve undertaken thus far, grown out of a simple online petition.

“Because of its success we were down in D.C. just a few weeks later meeting with the White House,” he said. “It was really an affirmation of our belief that the startup communtiy needed to have more of a voice at that table.”