Reports on Equity Crowdfunding

By: cfaille,

Though Title III of the Jumpstart Our Business Startups Act legalized equity crowdfunding, final regulations on this point remain unissued. A recent Celent report gets granular on Title III of the Act, where this liberating language is to be found, and gets granular as well as on the proposed regulations.

Title II of the JOBS Act has probably received more attention than Title III, though readers of AllAboutAlpha have heard from Jenny Kassan, one of the original petitioners whose idea led to Title III.


It was Title II that lifted the general solicitation ban for issuers offering private securities by way of rule 506(c).

A Query About MS Word

By the way, does anyone know an easy way of modifying MS Word so that I can type 506(c) without seeing the (c) instantly transform into the copyright sign?

I take your point, Microsoft. Some people often do make reference to copyright ©, and for them this is probably a feature, not a bug. Still, I hardly ever allude to copyrights © whereas I often need to refer to legislative or regulatory sections in which the lower cap letter “c” appears within parentheses. So for me, it is a bug that in order to do so I have to type (c/), then go back and remove the slash. That always works but, still, having to do so is a nuisance.

Let me crowdsource this problem to our readers: is there an easy once-and-forever solution that will turn off the quick transition from (c) to ©?

Titles II and III

Having gotten that off my chest, I return to the Celent report. Title II, as I was saying, lists a ban that was a given in the world of private offerings for a long time, a ban on solicitations. Thus, it opens the way for some crowdsourcing, at least with regard to accredited investors. The regulations under that mandate have been in effect since September 2013.

Title III, on the other hand, seems in some respects a more radical change from the preceding legal structure. It allows equity crowdfunding for all investor classes and types. It does not do so, though, for every offering. An issuer can use Title III only to raise up to $1 million in any rolling 12-month period. [A caveat to the caveat, the issuer can concurrently raise money through Reg D, which is not counted against this limit.]

There is also a maximum limit per investor. If an investor’s income and net worth are both below $100,000, that investor may not invest through a Title III issuance more than the higher of $2,000 or 5% of that investor’s income or net worth in a 12-month period. On the other hand, if either the net worth or income is above that threshold, the investor may ante up more than those amounts. There will still be a limit: the higher of $100,000 or 10% of investor income or net worth.

Moderate Degree of Disruption

One key, in the analysis that Isabella Fonseca has now done for Celent, is that issuers within this $1 million limit can draw upon any class of investor under Title III.

Another key point: The offering must be conducted online through a platform conducted by a particular intermediary.

So what’s the bottom line? Can we expect a major “disruption of the mass market segment”? Fonseca asks this question and answers it somewhat equivocally.

Anyone who hopes to create an online platform that can act as an intermediary for investors and startups under Title III will have to recognize that the regulations have not been finalized, and that they’re likely to turn out “both ambiguous and stringent, creating a heavy regulatory burden.”

Celent expects that existing online platforms – already in place to service accredited investors under Title II, will expand once the final rules have been issued , adding services for Title III investors. This report discusses the opportunities both for wealth manages and for technology providers.

Again, what’s the bottom line? Fonseca answers as follows, “Given the high regulatory burden and availability of other methods of raising capital, we are unlikely to see major disruption among venture capital businesses. Rather, opportunity will be found in previously underserved segments.”

The regulatory burden will create an opportunity for technology providers, who can support regulatory and compliance workflow for issuers.

The best bet for wealth managers is probably to partner with funding portals “and provide online social communities … regular investor verification support, or … mutual fund-like products of start-up offerings.”

Tags: , , ,


This RSS feed URL is deprecated, please update. New URLs can be found in the footers at [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back onlineTechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Hatreo [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

New York TimesCrowdfunding Giant Indiegogo Opens Platform to ICOsCoindesk (press release) (blog)The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services around the blockchain funding model. The first sale is for the Fan-Contr [...]

Financial TimesCrowdfunding a mission to save capitalism from itselfFinancial TimesJeff Lynn is on a mission to save capitalism from itself at a time when millions feel locked out, and unable to foresee themselves better off than their parents. His answer: to democratise capital. That [...]

VentureBeatAtaribox preorders and crowdfunding campaign open on December ...VentureBeatAtari will start taking preorders for its Ataribox game console starting December 14. The New York company will also start its crowdfunding campaign on Indiegogo at that time.Ataribox Preorders And [...]

Crowdfunding For French CastlesNPRYou too can own a French chateau, in part, anyway. Romain Delaume, CEO of Dartagnans, tells NPR's Scott Simon about a crowdfunding effort underway to preserve La Mothe-Chandeniers. SCOTT SIMON, HOST: What if I told you that for about $60, you cou [...]

DeeperBlue.comCrowdfunding Campaign Underway To Establish Freediving Lanzarote DestinationDeeperBlue.comFreediving Champion Marianna Krupnitskaya has set up a crowdfunding page to help her set up an amazing freediving destination in the Canary Islands. The Freediving Lanzarote project [...]

CurbedHistoric French chateau now has 13000 owners from crowdfundingCurbedThe Chateau de la Mothe-Chandeniers has had many owners since its construction in the 13th century. Now more so than ever. Over 13,000 strangers have recently banded together to save the fairytale home—which fea [...]

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 |