Regulation crowdfunding, a new set of rules from the U.S. Securities and Exchange Commission that allows private companies to raise as much as $1 million in a year without an expensive registration, has dramatically expanded the number of people eligible to participate in broadly marketed private financings—from the small percentage of Americans who qualify as “accredited investors” to virtually the entire U.S. population. The new regulation, which took effect May 16, 2016, offers startups and other businesses a new means to raise growth capital. It also means a new wave of financial intermediaries focused on equity crowdfunding transactions can finally open for business.
Even though Congress mandated the new rules when it passed the Jumpstart Our Business Startups (JOBS) Act of 2012, the SEC delayed implementing them for more than four years. It took time to balance disclosure flexibility for issuers against investor protections such as investment limitations and requirements on crowdfunding intermediaries.
Regulation Crowdfunding
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