Crowdfunding & The JOBS Act: A New Potential Source of Funding for Startups
Individuals and aspiring startups have used "Non-Equity Crowdfunding", exploiting sites like Kickstarter and Indiegogo to obtain small contributions from many individuals. The "backers" receive a coupon, movie ticket, or product in return. However, the landscape is about to change. By passing the JOBS Act last year, Congress authorized Equity Crowdfunding, whereby entrepreneurs will soon be able to sell equity in their startups to everyday people. The JOBS Act also required the SEC to eliminate the prohibition on using "general solicitation" when all purchasers of the securities are "accredited investors" and the issuer takes reasonable steps to verify that the purchasers are accredited investors. Come and learn about opportunities, as well as drawbacks, related to Equity Crowdfunding, the general solicitation rule, and the SEC's proposed regulations.