The New Crowdfunding Rules…
It’s the ultimate disruptive force. Quickly bridging the divide, crowd funding is linking average investors to investments once though only attainable by the wealthy elite.
At one time – according to the U.S. Securities and Exchange Commission (SEC) – investors must have had annual income of $200,000 per individual and $300,000 per couple, or a net worth of more than $1 million.
But that’s no longer the case.
Under the new rules, investors with annual income or net worth of less than $100,000 will be allowed to invest up to five percent of their yearly income or net worth, or $2,000 if that is greater, according to Forbes.
Those with higher incomes can invest a maximum 10 percent.
The new rules also allow companies to raises as much as $1 million annually through crowd funding efforts.
That’s a pretty big deal.
Typically, startups require venture capitalists, bankers, and other accredited investors. But that, too, is no longer the case. Now startups can turn to the crowd.
Compliance with the new rules is key, though… unless of course, you like being hounded by U.S. regulators. One of the necessities is full disclosure. That requires that business disclose any and all facts that would impact an investor’s decision to invest in it in the first place.
More information on exactly what’s required of companies can be found here.
Aside from how exciting this may all sound, all investors must also be well aware of the underlying risks to this investment approach.