As Crowdfunding Takes Off, SEC Greenlights AngelList’s Investment Platform

The Securities and Exchange Commission is making way for a number of startups and online investment platforms to enable startups to crowdsource investment. Early last week, Y Combinator-backed FundersClub received notice from the SEC that the agency would not pursue action against its crowdfunding platform. But it wasn’t alone: a few days later, AngelList received a similar letter from the SEC. [hat tip to Danielle Morrill]

The regulatory response came after AngelList requested its own assurance from the SEC that the agency wouldn’t pursue enforcement action against its investment platform, AngelList Invest.

In its letter to the agency, AngelList noted that it was going to form a limited liability corporation that would serve as investment advisors, and would operate a platform through which accredited investors would be able to put money into startups. Like other crowdfunding investment platforms that are popping up, under AngelList’s plan, the company would introduce individual investment vehicles for each portfolio company that its users invested in.

According to the filing, AngelList Advisors would determine whether to create an investment vehicle for particular startups, then negotiate the terms of the investment for the larger pool. It would also exercise all voting rights for the investment vehicle and decide on whether it should distribute cash and marketable securities to investors, subject to any lock-up agreements or similar restrictions.

Already, AngelList is being used to help raise funds for some companies and funds, through its investing tool. Open only to accredited investors, the tool lets users put as little as $1,000 each into startup companies that it’s created an investment vehicle for.

The whole idea is to allow a larger number of individual investors to make small investments in interesting startups, but to do so in a way that reduces the friction of most funding rounds today. Under current SEC rules, startups can’t advertise or announce that they’re raising funding, which means that investors might not even know that they can put money into a certain company. And, in a sense, to increase the efficiency with which startups can get funded.

According to a filing from the SEC last week, AngelList has gotten the green light to operate this online investment platform. You can read the full letter here, but it all comes down to this paragraph:

“Based on the facts and representations set forth in your letter, and without necessarily agreeing with your conclusions and analysis, the Staff will not recommend enforcement action against AngelList, AngelList Advisors or any Lead Angel to the Commission under Section 15(a) of the Exchange Act, ifthe parties engage in the activities described herein without registering as a broker or dealer in accordance with Section 15(b) ofthe Exchange Act.”

With both AngelList and FundersClub receiving the blessings of the SEC, we can expect more platforms for crowdfunding investment in startups to take off. A few weeks ago, for instance, another Y Combinator-backed startup called WeFunder launched with its own crowdfunding platform for startup investing.

These letters are also being sent in the wake of the passage of the JOBS Act, which is expected to go into effect by the end of the year. That act will make it easier for non-accredited investors to make investments in non-public companies, while also enabling startups to publicize that they are raising funds.

We’ve requested comment from AngeList and will update when we hear back.

Source: TechCrunch – RYAN LAWLER


AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

WTTV CBS4IndyCrowdfunding effort to save Dorothy's iconic ruby red slippers from 'Wizard of Oz' raises $300000WTTV CBS4IndyThe Smithsonian has launched a campaign on Kickstarter aimed at raising $300,000 to preserve the ruby red slippers worn by Judy Garland in the belo [...]

Crowdfund InsiderMassive Rule 147 Amendments May Be On The Horizon Impacting ...Crowdfund InsiderAlmost a year ago, the SEC proposed certain amendments to the current Rule 147 which were intended to help foster, and increase the viability of, Intrastat.and more » [...]

Mountain XpressFaces in the crowd: WNC crowdfunding initatives | Mountain XpressMountain XpressEach week, Xpress highlights notable WNC crowdsourcing initiatives that may inspire readers to become new faces in the crowd. This week features a feature ...and more » [...]

MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

Android Authority (blog)Crowdfunding project of the week: Remix IO is an Android 4K set-top ...Android Authority (blog)The 'Crowdfunding project of the week' series is where we highlight some of the hottest campaigns from sites like Kickstarter and Indiegogo. There's pl [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

WestwordProgressive-Rock Band Marillion Pioneered CrowdfundingWestwordThat was the beginning of crowdfunding for us — and for every band, really.” When it came time for the recording and release of the followup to the 1999 record, Kelly and the band realized that one of [...]

BBC NewsNHS trust 'relies' on crowdfunding to equip wardBBC NewsAn NHS trust has launched a crowdfunding appeal to buy equipment for a new hospital unit because "it cannot get started without donations". The Royal National Orthopaedic Hospital (RNOH) in Stanmore, n [...]

CFB Finance

Press Release

CrowdFund Beat News


Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |