Equity CrowdFunding for the Masses

Photo courtesy of Shutterstock.

Photo courtesy of Shutterstock.

By NerdWallet, Kickstarter is crowdfunding with training wheels. Now the sourcing of capital is getting turbocharged with equity crowdfunding for businesses: the Securities and Exchange Commission’s newly authorized and democratized angel investing program.Who can invest?
For now, the table stakes are not penny ante: you’ve got to be an accredited investor, meaning you’re flush with a $200,000 annual income or a net worth of a million bucks. But once you’re at the table, an easy minimum, usually around $5,000, can allow you to buy in to exotic startups in virtually any field. A flying car is one notable example. There are many others, like organic Icelandic yogurt and wine on tap.
Soon, perhaps before the end of this summer — though additional delays wouldn’t be a surprise, the SEC will throw open the doors to “Title III” (PDF) equity crowdfunding, allowing the average investor a seat at the table. That’s when the real fun will begin.
The process of New Age angel investing will involve three parties:
The issuer — The guys in the garage. They’ve got a business idea — maybe it’s the next Twitter or Amazon — and they need capital to build-out prototypes or programming. Or, perhaps for marketing or manpower. They will need to produce an offering document and financial statements in order to raise a maximum of $1 million within a 12-month period.
Funding portals — Think of these intermediaries as being similar to the broker-dealer of the traditional stock world. They will list the offerings, promote the promise of the product or service. and sell the equity shares. This will be, for the most part, an online transaction — and there are expected to be numerous players. Some platforms have already launched, with offerings targeted strictly to accredited investors until the SEC waves the green flag for the masses.
Investors — That’s you and me. Investors will be able to get a share of their favorite startup for as little as $50 to $100. There is quite a bit of handwringing in the media that enthusiastic Grandmas and Grandpas will be betting the subsidized farm — and nextgen’s inheritance — on a startup manufacturing 1.21 gigawatt flux capacitors. It won’t be that bad. The SEC has issued rules that investors with an annual income or a net worth below $100,000 can only invest up to $2,000 or 5% of their annual income or net worth, whichever is higher. Investors over that income/net worth watermark can put up to 10% stake, no more. So it can’t be nearly as bad as what Grams and Gramps lost on the Munder NetNet fund back in the early ’00s.

Read more: http://www.nasdaq.com/article/equity-crowdfunding-for-the-masses-cm319674#ixzz2r7vd9TB0

Tags: , , ,


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 [...]

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 [...]

Baltimore SunHarford still opposes crowdfunding sites for school donationsBaltimore SunRaising money through online crowdfunding sites is an ideal way for teachers to find the funds to purchase classroom materials and should be restored, the head of the Harford County teachers' u [...]

FortuneDreamHost Sets Up Crowdfunding Page to Aid Trump Government FightFortuneThe Los Angeles-based web host DreamHost, which is fighting the Department of Justice over its attempt to seize records of visitors to an anti-Donald Trump website, has launched a crowdfunding campaign to a [...]

DualShockersBounty Battle Rolls out the White Carpet with Successful Crowdfunding CampaignDualShockersWhen we last checked in with the indie-obsessed fighting game, Bounty Battle, it was halfway through its $30,000 crowdfunding goal. Now with 3 days left to go, it's surpassed thi [...]

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 [...]

GeekZing Smart Light Passes Crowdfunding Goal With Flying Colors ...GeekAt age 31, I still prefer to keep a light on in the hallway, illuminating my way to the bathroom in the middle of the night. (God forbid I step on the creeping cat—or ...and more » [...]

Business.comYou Oversold Your Crowdfunding Campaign – Now What?Business.comIf you've oversold, there's no way to go back in time and prevent it. Your next step should be to streamline what you can control. Crowdfunding can be an unpredictable, exciting experience. But reachi [...]

LITTLE GUIDANCE FROM IRS ON TAXING CROWDFUNDING CONTRIBUTIONSBloomberg BNAWhether it's a musician raising money to produce an album, an inventor with a great idea, or a family in distress that needs help, crowdfunding through platforms such as Indiegogo and Kickstarter has become [...]

ForbesWhat Works In Equity Crowdfunding -- Insights From ResearchForbesAs we have recently celebrated the fourth anniversary of the signing of the JOBS Act into law, it is a good time to take stock of the effect that the legislature had on equity crowdfunding in the United States. It [...]

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 |