crowdfunding

The Securities and Exchange Commission (SEC) recently published statutorily-required five-year inflation adjustments for various limits placed on crowdfunding, and the increases are substantial.

The Securities and Exchange Commission (SEC) recently published a final rule clarifying acceptable communications during “demo days” and expanding the accessibility of crowdfunding, among other changes. The new rule establishes guidelines to make “demo day” activities exempt from general solicitation requirements. Exempt events must be sponsored by institutions of higher education, nonprofits, incubators, accelerators, local governments or, added in response to SSTI’s letter on the proposed rule, state governments or state/local instrumentalities. The rules provide guidance on the types of communication allowed during the events and limits on compensation for hosting the event, but, unfortunately, the SEC opted not to include any of the clarifications requested by SSTI and other commenters.

The U.S. Securities and Exchange Commission is implementing a rule that relaxes restrictions on crowdfunding through next February, according to a Federal Register notice published today. The net result of the temporary rule is to accelerate the timeline for a company to access capital through crowdfunding, at the expense of some public access and investor information.

The U.S. Securities and Exchange Commission is accepting public comments regarding their proposed changes to exempt offerings regulations. These modifications, originally announced last month, aim to streamline and expand the fundraising abilities for businesses while still qualifying as exempt from the SEC’s registration requirements. These changes include the separation of “demo days” from the general solicitation category, providing a new outlet for companies to advertise to potential investors.

The U.S. Securities and Exchange Commission (SEC) recently proposed rule changes that aim to make fundraising easier for new companies, including by expanding crowdfunding’s applicability and allowing for “demo day” communications. The changes target three particular methods of exemptions: Regulation A, Rule 504 of Regulation D, and Regulation Crowdfunding.

A Securities Exchange Commission (SEC) report contains over 20 recommendations for the SEC to consider that would improve small business capital formation. The report, released in April, stems from the 36th annual Government-Business Forum on Small Business Capital Formation – a daylong event held late last year. Its recommendations include issues related to the definition of accredited investors; rules changes that would increase the number of Regulation A+ and Regulation Crowdfunding offerings; and, a revised regulatory regime (based upon the European regulatory regime) to improve peer-to-peer lending.

Startups and small businesses raised $30 million during the first year of equity crowdfunding (also known as regulation crowdfunding or Reg CF) with an average of $289,000 raised in a successful campaign, according to a recent report published by the Small Business Administration’s (SBA) Office of Advocacy. While equity crowdfunding hasn’t been the game changer that it was touted to be by many of its advocates, several studies indicate that the first year plus shows promising findings for this new source of startup capital authorized by the Jumpstart Our Business Startups Act (JOBS Act).

On May 16 of last year, the Securities and Exchange Commission (SEC) finally allowed both accredited and non-accredited investors to engage in regulation crowdfunding. Under the new SEC rules, startups and other private companies could offer equity in return for capital to help support business growth. As of May 2017, total contributions under the regulation crowdfunding into startups and small businesses are over the $40 million mark with an average investment of $833 per investor. Using data from the Crowdfund Capital Advisors, Catherine Yushina from Crowdfund Insider highlighted several data points about the first year of regulation crowdfunding:

Venture development organizations are reaching into new territory for funding partners and finding success in innovative models. Two new funds, the San Diego Tech & Life Science Investor Syndicate and Rev1 Fund I in Columbus, OH, have recently opened with less traditional funding sources, testing the waters of crowdfunding and heavy corporate backing, respectively.  The San Diego fund, launched by CONNECT, allows anyone wanting to invest $1,000 the opportunity to participate alongside more experienced lead investors. Rev1 Fund I gathered significant backing from community corporate powerhouses located in Columbus, such as Nationwide, Cardinal Health, and Worthington Industries. It also has the backing of institutions like Ohio State University and the Columbus Foundation, as well as government backing from Ohio Third Frontier. The funding models present two ends of the spectrum of defining community involvement for venture development organizations.

After over four years of “anxious waiting,” equity crowdfunding is now legal across the U.S. allowing non-accredited investors to make equity investment in startups through a registered online portal. With the adoption of the final rules for Title III of the Jumpstart Our Business Startups (JOBS) Act, the U.S. Securities and Exchange Commission (SEC) will allow startups to raise up to $1 million over a 12-month period through public solicitation without having to register its securities. To help investors and startups understand the new rules, the SEC’s Division of Corporation Finance also released a new set of Regulation Crowdfunding Compliance and Disclosure Interpretations (C&DIs) addressing, among other topics: public communications; investment limitations; and, balance sheet disclosures. In an article for PitchBook, George Gaprindashvili also provides an overview that highlights key aspects of the new regulations for each  stakeholder group impacted by the equity crowdfunding – potential investors, startups, and crowdfunding platform.