On May 16th 2016, the Title III of the JOBS (Jumpstart Our Business Startups) Act became a reality in the US. To reiterate this piece of legislature enables everyone to privately invest in startups online, and in the past I’d done my bit to allay some of the fears around Equity Crowdfunding.
DreamFunded, a Silicon-Valley based private tech stock market is now capitlising the recent changes in regulation. After releases its 7-Key Principles of Equity Crowdfunding, the team’s now preparing for USA’s first-ever Live Equity Crowdfunding Event:
You can witness this historic activity on July 7th on DreamFunded CEO Manny Fernandes Facebook page. The event will start off with an Investor Education seminar followed by the live crowdfunding event. Startups keen on raising upto $1 million can apply here. #exciting
Title III of the JOBS Act has been approved by the Securities and Exchange Commission (SEC), paving the way for legalisation of crowdfunding in USA.
Now anyone can invest into startups and small businesses, 5% if their annual incomes or net worth’s less than $100K and up to $2K or 10% if greater, via an online platform. These online platforms will need to follow necessary regulations as mandated by the new laws and can begin operating by late January 2016.
Other countries where Equity Crowdfunding are legal include: Australia, Belgium, Canada, Finland, France, Germany, Ireland, Italy, Malaysia, New Zealand, Spain, Sweden, Switzerland and UK.
The journey to the legalisation of crowdfunding in the USA has been a long one, and comes years after the US Senate and President Obama passed the JOBS Act. In fact 3 years ago through the GrowVC blog I’d shared this graphic post ‘Is Crowdfunding Safe Enough For Investors?..’ – now it’s finally time to see some real action.
Expect to see more countries, including those from the growth, and more populous, regions of the world to follow suit and legalise this form of crowdfunding. Reach out to us if you need any information on crowdsourcing and crowdfunding, always happy to help.
At any given point, 1000s of campaigns are pursued across 100s of crowdfunding platforms. From micro-financing, donation-reward crowdfunding to equity-based ones, a range of projects & from across locations are communicated via social media. Here’s a look at the diverse range of tweets in 1 hour-
From the above select tweets on crowdfunding spanning just one hour, one is intrigued by diverse range of projects. From causes such as therapy grants for autistic children and students relying on crowdfunding to fund their studies to bringing transparency in lotteries and a local say in real-estate development – crowdfunding is leveraged for a diverse set of initiatives.
Then there are differences in funding amounts, from relatively small goals with family and friends contributing to massive funding projects like the space sim game that has attracted $31 million and counting from over 300 funders. Along with conventional projects there are also unique campaigns, one like the interactive augmented reality app, after the developer, inspired by Nikola Tesla, was keen to bring the famous scientist back to life through this project.
The one hour of tweet shares in crowdfunding have also seen campaigns based on real-life incidents – be it the recent Typhoon Haiyan in Philippines (a project here to crowdfund researchers to study the incident and work on better disaster management for the future) to anti-nuclear film based on Fukushima nuclear aftermath. While still on Asia, which is arguably among the most diverse of regions – there are analysis on why crowdfunding is slow in picking up across SE Asia and China, and on another on why it makes real sense for the Middle-East – a culture which prefers equity over debt funding.
In this short duration, Twitter has also seen crowdfunding communication in multiple languages, including in Spanish, French, Italian, Japanese and Romanian. On the midnight of December 01-02nd skimming through my Twitter feed in India, little did I expect such variance in crowdfunding tweets and in such a short span of time. This seems to be an indicator of the global phenomenon of crowdfunding, and how one can expect an assortment of many more stories via the crowdfunding route.
This Month, it’s a year since President Obama signed the landmark JOBS (Jumpstart Our Business Startups) Act, one of the bills that’s set to introduce Equity Crowdfunding. This legislative changes will allowing any member of the public to invest in startups, currently possible only through a regulated IPO (Initial Public Offering) process. The new piece of legislation is expected to be used as a model for the rest of the world as well.
The US Securities Exchange Commission (SEC) was to have had the regulations in place by end December 2012, the stipulated 270 days since the passing of the bill last April. Now way past the deadline the SEC still continues to deliberate on the regulations, leading to some citing SEC could possibly overdo the legislation in its conservative approach – which defeats the purpose of the bill. However recent developments, especially the SEC’s ‘No-Action’ letter to a couple of firms have showed its keenness to easy regulation and enable funding from a larger pool. Here’s what the letter would mean:
So with Equity Crowdfunding expected to boom later this year, it’s time to look at what Crowdfunding thought-leaders have in mind. Many will be in Boston at the Thomson Reuters’ Innovative Investing Symposium 2013, an event part of the JOBS Act first anniversary. Among those present there will be promoters of Equity Crowdfunding legislations across the world, including those from Italy – which could ace the US with its legislative changes and implementation. We shall keep more than an eye on these and various other crowdfunding developments across the world. Feel free to reach out.