SEC Approves Equity Crowdfunding Rules

As we predicted on October 22, this Friday, October 30, 2015, the US Securities and Exchange Commission (SEC) voted 3 to 1 to allow small companies to raise up to $1 million online.
By: Creative Investment Research, Inc.
 
 
The JOBS Act: Crowdfunding for Small Businesses and Startups
The JOBS Act: Crowdfunding for Small Businesses and Startups
 
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Industry:
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Location:
Washington - District of Columbia - US

WASHINGTON - Oct. 30, 2015 - PRLog -- Small firms and startups can now obtain ownership, or equity investments from anyone, regardless of their location, net worth or wealth, thereby giving small investors a chance to own what may be the next Facebook or Google (or not).

As described in The JOBS Act: Crowdfunding for Small Businesses and Startups, avalable on Amazon at http://www.amazon.com/The-JOBS-Act-Crowdfunding-Businesses/dp/143024755X, small businesses and startups will be able to raise up to $1 million in equity (or debt) funding online via what are called Crowdfunding Platforms―online communities and websites. Imagine an eBay-like site that allows you to post your idea for a commercial venture online and then allows investors to purchase equity shares or stakes in it.

More likely, this means the day care center or restaurant down the street can now offer ownership stakes, or shares of stock, to their most supportive customers and clients. We think this is great news for women and Black-owned firms, which tend to be small and capital starved. (As described in the book, Title VII of the JOBS Act requires the SEC to reach out to minority, women and veteran firms to notify them of this new wat to obtain equity funding.)

The SEC also approved rules making it easier for companies to sell stock in small or startup companies to potential investors residing in the state in which the startup (or small firm) is located. This is another potentially beneficial capital raising option for women and Black owned firms, which tend to be hyper-local.

The new rules are not without drawbacks, however. Crowdfunding platforms will be allowed to accept stock in lieu of payment for capital raising services provided, so small firms will have to watch out for crowdfunding platforms that charge, say, 50% of your stock in exchange for helping you get funded. Given the lack of brokerage firm ethics we saw in the years leading up to the financial crisis, this is serious issue, but the potential for good far outweighs the downside.

Raising equity, or selling ownership shares, is a very difficult and complicated task, mainly because of the convoluted rules governing how you can do so. Today's SEC action makes it a little easier to get the capital needed to launch (or enlarge) your firm.

For more, please see: the Top 50 Crowdfunding Campaigns:http://www.amazon.com/Top-50-Crowdfunding-Campaigns-Successful-ebook/dp/B00RKK4NL0/

Our crowdfunding class. https://www.udemy.com/how-to-crowdfund/

Schedule a time/date to meet:
https://nationalcrowdfundingservices.acuityscheduling.com/schedule.php

SEC to implement JOBS Act Title III this month: https://www.linkedin.com/pulse/sec-poised-implement-title-iii-jobs-act-cunningham-am-mba?trk=pulse_spock-articles

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William Michael Cunningham
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Tags:crowdfunding, JOBS Act
Industry:Business
Location:Washington - District of Columbia - United States
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Page Updated Last on: Oct 31, 2015



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