Equity CrowdFunding Rules: 15 Things Every Entrepreneur Needs to Know


BY Kiran Lingam Equity crowdfunding promises to open up a new financing source for thousands of capital starved businesses around the country. Many entrepreneurs are wondering what this means for them and don’t have time to digest the complex 585 page rule proposal.

For those entrepreneurs without large amounts of spare time or excess legal budgets, here is a quick list of items that you should be aware of now:

1)      It’s not legal yet.  The rules can still change. The proposed rules were released on October 23, 2013 and are currently in a 90 day comment period. The absolutely earliest that equity crowdfunding in the US could become legal is in the Spring of 2014, but more likely it will be Fall or Winter 2014.

2)      Up to $1,000,000 in Financing. Private companies may soon be able to raise up to $1M in a 12 month period from an unlimited number of investors in small amounts (as low as $50 or $100 each).

3)      Individual Investor Limits. Each investor will have a cap on the amount they can crowdfund in a year, generally between $2,000 – $5,000 for those with income and net worth below $100,000.

4)      Investor Self-CertificationUnlike Rule 506(c) of Reg D, Investors will be able to self-certify their income, net worth and previous crowdfunding investments. So no worrying about checking investor tax returns or brokerage statements.

5)      Everyone can participate. No longer will early access to the next Facebook or Instagram be limited to the 1%. Unaccredited investors will be able to participate in your financing up to the individual investment limits.

6)      Simultaneous Reg D Offerings. You will be able to run simultaneous Reg D and crowdfunding offerings. This means that you can do a standard offering with accredited investors and use the crowdfunding offering solely for unaccredited investors.

7)      Limited Advertising. You will be able to broadly distribute notices (a “Notice”) announcing your offering and including how much you are raising and directing people to your online platform. All other communications about your offering (i.e. about how great your company is) must take place on the internet platform for everyone to see.

8)      Communications Disclosure. All communications by the company or anyone being compensated by the Company about the offering must include a disclosure about the relationship or compensation being paid. Companies may pay third parties to promote the offering on the platform (or with a compliant Notice) with proper disclosure.

9)      Internet Funding Portal Required. All crowdfunding offerings must be conducted via an internet platform and all communications will be publicly viewable on the platform.

10)   Cap Table Issues / No Shareholder Limit. You may end up with hundreds or thousands of shareholders on your cap table. While crowdfunded securities will not count towards your 2,000 shareholder limit, this can be scary for future investors. Unfortunately, the JOBS Act does not allow traditional holding companies, but other solutions are in the works.

– See more at: http://www.equities.com/editors-desk/crowdfunding/equity-crowdfunding-rules-15-things-every-entrepreneur-needs-to-know-now#sthash.sSKp2Maw.gR3LVdTa.dpuf


ForbesThe Ultimate Pre-Launch Crowdfunding ChecklistForbesCrowdfunding is not limited to the platform where you launch your campaign. Instead, it has become a valuable way to transform your idea into a mainstream business. In order to head in that direction, you must execute a number [...]

The AustralianIgniteme heats up crowdfundingThe Australian“The only other comparable film that raised money through crowdfunding would be Crocodile Dundee, but not all funding came from the crowd.” Mr Morello said the idea behind the platform was relatively simple — giving new and bud [...]

DVS Gaming (registration) (blog)Crowdfunding: How Does it Help Indie Developers?DVS Gaming (registration) (blog)2012 is when crowdfunding really blew up, prior to 2012 the average amount of money devs would receive could range from 10k-100k. By today's standards, that's stil [...]

The MemoCrowdfunding has become a 'monster' argues its greatest criticThe MemoBrown has become a thorn in the side of this blossoming industry, even more so as it's clear his blog is now even read by regulators at the Financial Conduct Authority. The Memo sat down with [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

LivemintFinding the right balance on crowdfundingLivemintSecurities market regulator Sebi (Securities and Exchange Board of India) has been trying to get a handle on digital platform-based crowdfunding since at least 2014, when it issued a cautiously positive consultation paper. It fl [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

Australian Brews NewsBrewery crowdfunding effective overall: PozibleAustralian Brews NewsEquity crowdfunding by breweries overseas has been effective overall, despite some high profile failures, according to Pozible. The largest reward-based crowdfunding platform in the Asia Pacific, [...]

FortuneUncensored Social Network Gab Raises $1 Million in Crowdfunding CampaignFortuneA crowdfunding campaign for Gab, a Twitter-like social network that touts its commitment to freedom of speech, surpassed $1 million yesterday. The company claims it is politically neutral and committ [...]

Crowdfund InsiderIsraeli Crowdfunding Platform ExitValley Self Crowdfunds, Plans UK ExpansionCrowdfund InsiderThe digital platform to book parking anywhere raised $2 million – a portion of that, $270,000, reportedly came from ExitValley. To date the self-crowdfunding offer has raised [...]

CFB Finance


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

Press Release

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 |