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On Friday, October 31, 2015, the SEC issued final rules under Title III of the JOBS Act of 2012, covering what it calls "Regulation Crowdfunding,” for non-accredited investors. It has been a 3 and ½ year wait. The rules under Title III permit you to raise $1 million per annum, per project. For each project, you must provide information about what your business is and what you intend to do with the money; brief bios of the officers, directors, and anyone else who owns more than 20 percent of the company; and full disclosure of your company's financial condition with financial statements, if any. Under Title II, start-ups and small businesses already are successfully making a Rule 506(b or Rule 506(c offering, without many of the limitations of regulation crowdfunding -- but with sales limited to accredited investors. Under Title III, if a non-accredited investors has annual income or net worth less than $100,000, they can only invest $2,000 a year or 5 percent of income or net worth, whichever is less. If their income or net worth exceeds $100,000, they can invest up to 10 percent of whichever is less. However, they can invest in more than one such investment in any 12-month period. If a company wants to sell its Title III or regulation crowdfunding shares through a funding portal, it must provide information about the risks of investing and the portal also has to provide certain information. (There is also ambiguous language about portals having to "take certain measures to reduce the risk of fraud.")Title III will be a little or no interest to Silicon Valley or the VC world, but it will create a huge market for main street investors. Crowdfunding is already expected to exceed venture capital funding, at $34 billion, in 2016. A huge pool of new investors will lead to even further growth as venture capital moves online.Regulation crowdfunding will allow almost everyone to invest in startups and growing companies, opening up new capital for early stage companies. “It’s great for everyday people who have been shut out from investing to date,” said one small investor. The growing number of new state crowdfunding platforms for non-accredited investors may have prompted the SEC to finish something it was asked to do some time ago. Contact Douglas Slain for more information. LinkedIn: http://linkedin.com/in/douglasslainTwitter: https://twitter.com/exemptofferingsCrowdfunding licenses: http://www.sanfranciscofunding.com Blog: http://www.privateplacementadvisors.com/apps/blogEmail: [email protected]
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On Friday, October 31, 2015, the SEC issued final rules under Title III of the JOBS Act of 2012, covering what it calls "Regulation Crowdfunding,” for non-accredited investors. It has been a 3 and ½ year wait.
The rules under Title III permit you to raise $1 million per annum, per project. For each project, you must provide information about what your business is and what you intend to do with the money; brief bios of the officers, directors, and anyone else who owns more than 20 percent of the company; and full disclosure of your company's financial condition with financial statements, if any.
Under Title II, start-ups and small businesses already are successfully making a Rule 506(b or Rule 506(c offering, without many of the limitations of regulation crowdfunding -- but with sales limited to accredited investors.
Under Title III, if a non-accredited investors has annual income or net worth less than $100,000, they can only invest $2,000 a year or 5 percent of income or net worth, whichever is less. If their income or net worth exceeds $100,000, they can invest up to 10 percent of whichever is less. However, they can invest in more than one such investment in any 12-month period.
If a company wants to sell its Title III or regulation crowdfunding shares through a funding portal, it must provide information about the risks of investing and the portal also has to provide certain information. (There is also ambiguous language about portals having to "take certain measures to reduce the risk of fraud.")
Title III will be a little or no interest to Silicon Valley or the VC world, but it will create a huge market for main street investors. Crowdfunding is already expected to exceed venture capital funding, at $34 billion, in 2016. A huge pool of new investors will lead to even further growth as venture capital moves online.
Regulation crowdfunding will allow almost everyone to invest in startups and growing companies, opening up new capital for early stage companies. “It’s great for everyday people who have been shut out from investing to date,” said one small investor.
The growing number of new state crowdfunding platforms for non-accredited investors may have prompted the SEC to finish something it was asked to do some time ago.
Contact Douglas Slain for more information.
LinkedIn: http://linkedin.com/in/douglasslainTwitter: https://twitter.com/exemptofferingsCrowdfunding licenses: http://www.sanfranciscofunding.com Blog: http://www.privateplacementadvisors.com/apps/blogEmail: [email protected]
