May 16th, 2016 marked the launch of equity crowdfunding. Like any new opportunity, Title III saw its fair share of critics and promoters. Instead of arguing about something that hadn't actually started, we decided to wait and look at what the numbers said.
If you’re a tech enthusiast interested in options for supporting startups, you might be trying to discern the difference between Kickstarter or Indiegogo and equity crowdfunding. Traditional equity crowdfunding sites facilitate the ability for “backers” to donate money to campaigns in exchange for perks, like sample products or tee shirts. Platforms using Regulation CF facilitate the sale of a form of equity in private companies to investors.
Raise money directly from customers to create evangelists and diversify your sources of capital.
- Raise money from 230 million American adults thanks to new regulations.
- Access the most diverse pools of capital ever available.
- Create evangelists while maintaining control of your business.
The biggest concerns about equity crowdfunding revolve around cap table management, red tape, and perception.
With Reg CF, companies will be able to raise up to $1 million from the crowd within a 12 month period, and they will be required to follow certain regulations dealing with transparency and reporting. FlashFunders has streamlined the process to make compliance easy and simple.
For the first time, in almost a century, anyone can invest in private companies. With the public stock market prices at an all-time high and bond yields historically low, startups offer an exciting new way to diversify your investment portfolio.
- Companies used to create much of their value after selling shares on the public stock market.
- Because of technology and new regulations, companies can now raise most of the capital they need from private investors. They don’t have as immediate of a need as they once did.
- New rules in effect May 16, 2016 allow anyone over the age of 18 to purchase shares in private companies.
As 2016 begins and 2015 ends, I wanted to jot down a few thoughts about where VCs have been over the last year and the questions that might be answered over the next year.
After months of anticipation, the SEC has finally opened up registration for online platforms that intend to legally solicit offerings through equity crowdfunding (Regulation CF). For the first time in 80 years, all Americans will have equal access to invest in private companies.
After years of ongoing regulatory debate, this morning at 8:00 AM PST the SEC has finally approved Title III of the JOBS Act in a 3:1 vote. Today marks a monumental time for the crowdfunding industry as access to venture as an asset class has opened up for non-accredited investors.
While there are still many factors to marinate on within our company internally, we’ve outlined the newly enacted Title III regulations accompanied by our initial reactions:
The 2012 JOBS Act and upcoming Title III enactment has and will further impact the early-stage startup capital raising process, as well as broaden investor access to early-stage investment opportunities. In Vincent Bradley's article "The Dangers (and Rewards) of Investing in a Startup" published by The Street, he examines the various risks and benefits that come with these new regulations.