Will the increased limit in Regulation CF to $5 million have any impact on the venture capital industry?

In the short run, probably not too much. In the longer term, I hope so. There's too much attention on #VCs and how they fuel innovators. Moving forward, at $5 million per raise (per YEAR), Reg CF crowdfunding is poised to fuel more start-ups, be more efficient, and be more founder-friendly than VC investors. 

Don't get me wrong, if you are on the inside track with a VC, stay in that club. They like to pick winners (ie. bet on their friends) and it's not too hard to check the boxes that will free up capital. But for the other 99.95% of founding teams, it's time to take a careful look at crowdfunding. Not rewards or donation based crowdfunding - this isn't a bake sale - but regulated investment crowdfunding. VCs may still co-invest with your crowd -- and the smart ones will start seeing a crowd-raise as market validation. After all, most VCs are just taking the crowd's money through their LP structure anyway. Now the crowd can cut out the middleman.  

Some stats relevant to VCs and startups that every founder show know: 

1. 77% of small businesses rely on personal savings for their initial funds.
2. A third of small businesses start with less than $5,000.
3. The average small business requires about $10,000 of startup capital.
4. Only 0.05% of startups raise venture capital.
5. The average seed round is $2.2 million.
6. The median company running a seed funding round is 3 years old.
7. Of startups that raised seed rounds, 1% reached unicorn status of $1B+ valuation.
8. Startups with two co-founders rather than one raise 30% more capital.

(Source: https://www.fundera.com stats from 2020). 

Given that the average VC seed round is $2.2 million and that the cap on Regulation CF is $5 million PER YEAR, will a founding team want to spend their time chasing lots of VCs trying to get $2.2 million or does it make sense to convince a broad group of strategic investors / early customer adopters to invest early and continue investing as the company hits key milestones? I’m putting my bet on the crowd over VCs. Every prospective customer you get to invest has the potential to serve three objectives:

1. investment capital;  

2. revenue; and 

3. as an enthusiastic "ambassador" or marketing champion of your company.  

Today, VCs are somewhat spoiled with no shortage of quality deal flow – so as the compelling value proposition of crowdfunding becomes better known, VCs will need to differentiate and compete for the same early-stage deals. This is going to change their primary function from being filter bubbles (I’m sure many would argue with this characterization of their role) to providing something value-added, beyond just the capital, to founding teams.   

Crowdfunding won’t take off overnight because there’s still a lot of issuer and investor education that needs to first happen [see the Crowdfunding Professional Association’s (CfPA) and the Crowdfunding Ecosystem for experts, events, and companies that can help with knowledge resources] but in the long run, I expect we’ll all see crowdfunding as the leading method for early phase capital formation and VCs will have to adjust.