Crowdfunding is developing quickly for startup business fundraising, and traditional legal rules, especially securities laws, continue to change or bend to accommodate the desire for expedited fund raising from “the Crowd.” At Startup Sessions on December 4th, you can hear from experts about how these rules and new funding paths could create an opportunity or a wrong turn for your business.
Crowdfunding has become an important tool for entrepreneurs trying to fund ventures that offer too much risk or too little return for traditional investors. Entrepreneurs around the globe raised $2.7 billion through crowdfunding in 2012, using online tools like Kickstarter and Indiegogo to pool a large number of tiny contributions and investments. But for many startups, regulations have limited crowdfunding’s potential.
Under current SEC rules, accredited investors (those with net worth over $1 million or incomes over $200,000) get a pass to buy stock in start-ups. The rest of the world settles for receiving products or T-Shirts.
Many online market places are developing quickly to provide crowdfunding for accredited investors, and new SEC rules became effective September 23, 2013 to allow “general solicitation” (advertising) for soliciting accredited investors.
On October 23, the SEC unveiled their proposed crowdfunding rules that would make non-accredited investors eligible to buy stock from startups online. The potential to tap a huge new pool of investors has drawn a lot of interest from tech companies and entrepreneurs. The proposed rules are part of the Jumpstart Our Business Startups (JOBS) act which is intended to spur small business growth.
On December 4th, partners from Katten Muchin Rosenmen LLP will lead a discussion on crowdfunding and the new rules and answer questions from Chicago businesses as part of Startup Sessions, an event for entrepreneurs at the Gleacher Center. Click here to register for Startup Sessions.
