Equity crowdfunding is really popular right now because in 2012 the Jobs Act was signed, which legalized crowdfunding in the US. The acronym stands for “Jumpstart Our Business Startups” Act. Much of the act has yet to go into effect, but in the meantime, you can currently crowdfund with accredited investors until Title 3 is initiated. Take note that before you can get investors, you need to have a Private Placement Offering, or a Private Placement Memorandum.
Title 2 of the Jobs Act
- Also known as “Crowdfunding For Accredited Investors,” Title 2 of the Jobs Act created a new type of Private Placement Offering that allows you to tell everyone you’re trying to raise money. This may seem obvious, but prior to this act, you had to have established business relations with your investors, and these investors had to be accredited. With Title 2, you now get to publicize your investment opportunity to the world at large.
Title 3 of the Jobs Act
- Will enable crowdfunding for everyone. Any entrepreneur will be allowed to raise up to $1 million from anyone, regardless if they are accredited or not. This act has not yet been initiated, but once it is, it will be a major game changer.
Keep an eye on this act to see when you will be able to take full advantage of equity crowdfunding, which is sure to create many new opportunities for entrepreneurs everywhere.
Karla De Leon, Co-Founder and President of Wazgo.com, highlights steps needed in order to land equity investors.