Crowdfunding is one way for some new, ground-floor startups to find investors, and the cash they need to get off the ground.
Thing is, crowdrunding has been restricted to accredited investors that have a net worth of $1 million, or an annual income of $200,000.
At least, that was the rule up until yesterday…
Here’s what happened: the SEC approved a rule change for III of the JOBS Act, making it possible for organizations to raise up to $1 million annually through crowdfunding, without having to put it through the Securities Exchange Commission.
The point of this was to allow non-accredited investors the same investing opportunities as companies with a higher net-worth.
Once the rule takes effect, anyone can invest in startups through crowdfunding. Title III will allow access to a vastly larger amount of investors.
Basically, this makes a new asset class that has nothing to do with the stock market, effectively opening a huge window of opportunity for massive profit in other areas.
More opportunities for more people — seems like a good choice overall.
But although there are more opportunities in theory, there are still limits.
For example, under Title III, individual investments are limited to 5 or 10 percent of the investors gross annual income, based on their net-worth.
Also, investment opportunities are capped at $1 million total per year. For an industry like real estate, limits like that could be a hindrance.
And while there have been talks of raising the cap to $5 million, it’s way too early to tell what the final decision will be regarding that particular issue. Small businesses and startup companies often do not require a vast amount of money to keep their profits on the rise, so that $1 million limit will be plenty of capital for them.
As it stands now, the Title III is set to take effect near the end of this coming January.
I’m currently penning a new Energy & Capital report that will explain what this new ruling means for you, and how you can take advantage crowdfunding going forward. If you’re not already a subscriber, I strongly recommend you sign up in the box below to ensure you receive this report, which will be available to you absolutely free of charge.
To continue reading…
Click here to read the Forbes article.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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