9 Ways the New SEC Crowdfunding Rules Will Affect Your Business

By Scott Gerber,@scottgerber,

The new SEC crowdfunding rules could be a game-changer for your business, but there’s a lot work to be done on your end before you can reap the benefits.

Nine entrepreneurs from YEC did their research on the new SEC crowdfunding rules.

From accessing more captial to utilizing new forms of marketing, here’s how they plan to leverage the rules for their business once they take effect in May.

Read through this list if you’re having trouble making sense of the new regulations.

Related Article: Does Crowdfunding for Startups Actually Work?

1. Increased Brand Loyalty

The new crowdfunding rules will tap directly into the hearts of consumers. It’s no secret that brands can earn emotional capital from its customers. This is going to to take that to the next level. Let’s say you use a lot of batteries. Which are you going to buy — the ones at Walmart or the ones you own a little stock in? –Brendon Schenecker, Travel Vegas

2. Access to Capital With Relaxed Regulatory Requirements

Startups can now access capital markets (to raise up to $1M annually) that used to be only available to public companies, and they can do this without filing audited financials which are expensive for small businesses. Under the new SEC rules, companies that raise less than $500,000 will only need to provide financial statements certified by their own financial officers. Companies that raise more than $500,000 (for the first time) will need to get their financial statements reviewed by an outside accounting firm but are not required to provide audited financials. – Vishal Shah, NoPaperForms

3. Increased Innovation and Technology

For a startup, money means resources, and resources mean innovation. These rules will allow small companies to get the resources they require to innovate at a much faster rate and allow new technology to be created at an even faster pace. The consumers or the masses will be able to decide which brands or technologies deserve to grow faster. Even crazy ideas will find supporters. – Duran Inci, Optimum7

Related Article: What Is Regulated Crowdfunding and Why Is There So Much Confusion?

4. Improved Exposure

A tremendous benefit of a successful crowdfunding campaign is the exposure that will accompany it. For one, the media loves to showcase “the little guy that made it.” Likewise, your investors are going to be championing your company like crazy. The crowdfunding platform itself will be bragging of your success, and so on. So while the capital injection in itself is of great help, the extra exposure and subsequent sales you’ll generate from a successful crowdfunding campaign can at times be even better. – Nicolas Gremion,Free-eBooks.net

5. Increased Role for Customers

Most startups understand the value of a customer and will do anything to make them happy. The new crowdfunding rules take this to a whole new level now that unaccredited investors will be able to participate in private financings. With some companies already showing you can raise tens of millions in capital from crowdfunding, it’s an exciting time to be a customer of a startup. – Fan Bi, Blank Label

6. Proliferation of Vertical-Specific Crowdfunding Platforms

The new SEC crowdfunding rules will increase demand for small, vertical-specific crowdfunding platforms as individual investors who don’t have time to sift through a large amount of startups to decide where to invest their money. For startups, this means that being tightly niched will be a huge advantage. For example, real estate, women in tech or the environment are all potential sectors of interest. If there’s a specific platform for each of those interests, it’ll be a huge draw for both individuals and startups who need cash. – Dave Nevogt, Hubstaff.com

7. New Forms of Marketing

The ability to raise money from a different, less formal investor base will allow the startup to find investors who can serve as their marketing base. A few startups tried to tie social media influence towards owning shares — most recently Jet, which gave the top ten referrers shares in the Company. This went viral and created a lot of publicity around the launch. Startups will be able to replicate that model, but put those who actually stand to gain from the Company’s growth in a position to exert their social media and marketing influence to help the company launch successfully. – Aron Schoenfeld, TanZ Group

8. Spreading Out the Risk

Most startup entrepreneurs bootstrap using their own personal money, credit cards, home equity lines of credit and personal IOU’s from friends and family. Indeed, “bootstrapping” has become almost a right of passage as an entrepreneur, but such a practice concentrates all of the risk with the entrepreneur. If the company doesn’t work out, the entrepreneur may need to declare bankruptcy and suffer blemished personal credit. The most exciting thing about the new SEC crowdfunding rules is that the entrepreneur will no longer need to assume all risk to start a new venture. – Obinna Ekezie, Wakanow.com

Related Article: Inside Equity Crowdfunding: The Quire Difference

9. Democratizing Fundraising

The new crowdfunding rules will now truly help democratize fundraising and investing, thus helping crowdfunding establish itself as an alternative source of financing. Since the passing of the JOBS Act three years ago, crowdfunding has been validated as a new form of financing. The recent rules will help further streamline this form of fundraising and democratize it for the masses. – Sohin ShahSohinShah.com

 

Scott Gerber is the founder of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Gerber is also a serial entrepreneur, regular TV commentator and author of the book Never Get a “Real” Job.

Tags: , , , , , , , , , ,

HEADLINE NEWS

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

ForbesReal Estate Crowdfunding: 3 Trends to Watch in 2017ForbesReal estate crowdfunding continues to be a dynamic and ever-evolving industry, growing to an estimated $3.5 billion in 2016. By 2025, the crowdfunding industry as a whole is anticipated to be valued at more than $300 billi [...]

Entrepreneur3 Secret Weapons to Make Your Crowdfunding Campaign a Resounding SuccessEntrepreneurCrowdfunding sites like IndieGogo and Kickstarter popped up to provide a solution, by offering perks to early adopters of technology and products in exchange for funding, and by 2015 the cr [...]

Crowdfund InsiderGridShare Targets Renewable Energy Crowdfunding under Reg CF, Plans International ExpansionCrowdfund InsiderGridshare is one of the newest Reg CF crowdfunding platforms to receive regulatory approval. While the number of Reg CF portals is growing, Gridshare is the fir [...]

LiliputingCrowdfunding means Netbooks don't have to be cool (or popular) to ...LiliputingThe GPD Pocket is a notebook with a 7 inch, 1920 x 1200 pixel display, a quad-core Intel Atom Cherry Trail x7-z8700 processor, 8GB of RAM, and 128GB of ...and more » [...]

Android Authority (blog)Crowdfunding project of the week: Professor Einstein robot is the coolest digital assistantAndroid Authority (blog)It's time to dive into the crowdfunding world to find you another featured campaign. In this article series we aim to highlight the hottest p [...]

The Australian Financial ReviewSlow-clap for ScoMo's dodo; equity crowdfunding legislation that is already extinctThe Australian Financial ReviewThe key problem with the proposed framework for the equity crowdfunding bill is it effectively locks out 99 per cent of small businesse [...]

EntrepreneurHow to Make a Crowdfunding Video People Actually WatchEntrepreneurTo draw serious interest from prospective investors, you must spend time and resources in fine-tuning your message.and more » [...]

TrustedReviewsZTE's smartphone crowdfunding campaign went really badlyTrustedReviewsZTE has prematurely ended a crowdfunding campaign that was designed to bring the vision of the brand's fans to life. Unfortunately, it seems fans had other ideas. The company had been hoping [...]

Courier MailCrowd-funding to light up festivalCourier MailWynnum Manly Events Incorporated is crowd-funding $25,000 for this year's festival, expected to be held on June 17. Group president David Saunders said they decided to crowd-fund the event because in the past it had been t [...]

CFB Finance

Syml
Lst Val
+/- Val
+/- %

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

CrowdFund Beat Media

The 4th Annual Crowdfunding USA Conference & Workshop ln.is/lnkd.in/nugJz

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 |