What does the new SEC rules mean for Crowdfunding in the States?

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What does the new SEC rules mean for Crowdfunding in the States?

On May 15, 2016, Posted by , In Compliance,Legal,startups,Tech,USA, By ,,,,,,,,, , With Comments Off on What does the new SEC rules mean for Crowdfunding in the States?

New Crowdfunding Rules

New crowdfunding rules taking effect on Monday will let anyone invest in startups, where startups raising money through online crowdfunding portals will be able to sell shares to people regardless of their wealth or income so long as the founders have submitted annual financial reports to the Securities and Exchange Commission (SEC). In exchange, companies can raise up to US$1 million.

This overrides the previous SEC requirement that investors backing private companies be “accredited,” with income of at least $200,000 a year and have a net worth of $1 million or more (excluding their home).

What does this mean for US Crowdfunding?

Startups may still be hesitant to take up the new funding option due to the costs to register and submitting the annual results to be too high, considering the US$1 million limit that appears to be rather low. However, the move may be appealing for existing crowdfunding platforms and new incumbents to add equity investing to their offering.

 

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