US Crowdfunding Takes Major Step Forward: Let’s Get This Right for Investors

US Crowdfunding Takes Major Step Forward: Let’s Get This Right for Investors

Crowdfunding — the new capital-raising mechanism mandated by the Jumpstart Our Business Startups Act (JOBS Act) through contributions using the Internet — has come one step closer to becoming a reality in the United States. Through regulations proposed by the US Securities and Exchange Commission (SEC) , smaller issuers and startup companies could soon raise up to $US 1 million in a 12-month period without having to comply with the requirements of registered securities offerings.

Safeguarding the Investor While Supporting the Startup

Crowdfunding is intended to allow issuers with early stage ideas and ventures to gain funding from investors who are able to communicate with each other through the Internet and thus vet the project before committing to invest. Participating issuers would be required to meet various requirements and provide a range of disclosures to potential investors, including information about their business plans, financial condition, and intended use of proceeds. Interested investors would be limited to the amount they could invest, based on annual income or net worth.

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