Traditionally, aspiring entrepreneurs looking for easy, low cost access to capital to fund their start-up businesses had limited means. Recently, sites such as Kickstarter and GoFundMe provided a platform, but the most companies could offer in exchange for a cash investment was a first look to the particualr product or other creative reward, each of which, however was not stock.
Recognizing in part that access to the capital markets should not be limited to the domain of the few, and in view of the democratizing effect the Internet has had with respect to reaching prospective investors, the Jumpstart Our Business Startups Act (JOBS Act) was enacted in April 2012. One of the most anticipated parts of the JOBS Act was the rules pertaining to crowdfunding.
Business & Financial Services Shareholders, Robert Anderson and Monica Vir recently authored an article for the New Jersey Law Journal in which they provide an overview of the SEC’s allowance for smaller early-stage companies and start-up businesses to raise money by selling securities to non-accredited investors through qualified intermediaries, more commonly known as crowdfunding.
You can read a copy of their article here.