SEC allows regular Americans to become venture capitalists via equity crowdfunding.

Startups can now raise up to $50 million by selling stock online to anyone, opening the door for Internet-based equity crowdfunding platforms to begin operation.

The Securities and Exchange Commission voted unanimously on Wednesday to adopt rules that permit startups to raise money from the vast majority of Americans, including provisions that allow for deals to be made over the Internet.

Previously, only individuals with more than $1 million in net worth or income of at least $200,000 for each of the last two years — so called “accredited investors” — could easily invest in startups. Some websites already offer the chance to invest in startups online, but prospective investors had to be accredited and subject to more stringent regulations.

“This is overwhelmingly good news, as it opens up a new path for small private companies to raise money directly from their communities, customers, and followers, and a new way for members of the general public to invest in startups, local companies, and new kinds of investment without being ‘accredited investors,'” said David Pricco, editor of CrowdExpert.com in an email to Mashable.

Just how many people might be interested in dropping money on a startup is the subject of some debate, but the World Bank projects that the worldwide equity crowdfunding market will hit $93 billion by 2025. Crowdfunding investment platforms are now active in countries around the world.

Read the whole story by Jason Abbruzzese on Mashable.

One thought on “SEC allows regular Americans to become venture capitalists via equity crowdfunding.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s