SEC-Approved Crowdfunding Is Open for Business


The United States Securities and Exchange Commission (SEC) took another big step toward letting individuals invest in private companies through equity crowdfunding. The SEC has opened up a new form allowing crowdfunding platforms to register as official “funding portals” for entrepreneurs to raise up to $1 million per year.

Approved last October, Title III of the Jumpstart Our Business Start-Ups (JOBS) Act and Regulation A+ (RegA+) go into effect on May 16, allowing small to midsize businesses (SMBs) to put forth equity crowdfunding offerings through these accredited funding portals. The regulations are designed to kick off a business crowdfunding revolution, giving middle-class investors sanctioned marketplaces to seek out potential ventures, and businesses too small for an IPO but priced out of the start-up and venture capital scene access to much-needed funding streams.

RegA+ allows non-accredited investors—individuals with less than $1 million in net worth or $200,000 per year in income—to invest in companies through equity crowdfunding platforms. RegA+ also expands upon Title III with two funding tiers, giving midsize companies in need of significant capital for their business plan the opportunity to raise a maximum of either $20 million or $50 million in an annual offering.

Several RegA+ crowdfunding platforms are already entering the market, and one, StartEngine, announced it has already filed with the SEC as a funding portal. StartEngine also stated it will apply to become a member of the Financial Industry Regulatory Authority (FINRA) when registration opens to equity crowdfunding platforms this month.

By the time the regulations go into effect in May, there will likely be several approved RegA+ funding platforms for investors to choose from, including Digital Offering, Manhattan Street Capital, and SeedInvest. Traditional reward-based crowdfunding platforms have thus far remained silent on the regulations.

Popular crowdfunding sites such as Kickstarter and Indiegogo facilitate donation-based crowdfunding with “perks” rather than backers investing capital and buying shares in a campaign. Wading into the Title III and RegA+ market would require a major change in policies. While Kickstarter is beginning to add additional advisement and supply chain services for entrepreneurs, particularly aroundhardware campaigns, it’s a far cry from implementing a full-on, investor-based crowdfunding model. Title III and RegA+ are opening entirely new business funding avenues and wider investment opportunities, but in the process they’re making the concept of crowdfunding a lot more complicated.

View original article here:,2817,2498679,00.asp

Ready to start learning about exciting companies?

Sign up to discover the latest emerging growth companies using Regulation A+!

Click here to sign up