Information about Equity Crowdfunding
JOBS Act regulation
The Jumpstart Our Business Startups Act (JOBS Act) was passed with bipartisan support by Congress and signed into law in April 2012. The JOBS Act enables businesses to solicit funding from the general public. Although only Accredited Investors are allowed to invest at the moment, on 30 October 2015 the US Securities and Exchange Commission (SEC) adopted final rules to permit companies to offer and sell securities through crowdfunding including to non-accredited investors, who have historically been excluded from this process.
Equity Crowdfunding
Equity crowdfunding is the offering of securities in a business or entity to a group of people for investment. Because equity crowdfunding involves investment into a commercial enterprise or individual entity, it is often subject to securities and financial regulation. Equity crowdfunding may be also referred to as investment crowdfunding and crowd investing.
Accredited Investors
An accredited investor is someone who meets the standards set by the US Securities and Exchange Commission, which allow them to invest in certain private securities offerings.
In general, you are accredited if you are:
- An individual with annual income over USD 200K (individually) for each of the last two years and an expectation of the same this year; or
- An individual with annual income over USD 300K (with spouse) for each of the last two years and an expectation of the same this year; or
- An individual with net assets over USD 1 million (including spouse's assets), excluding the primary residence; or
- An institution with over USD 5 million in assets, such as a venture fund or a trust.
Please see the SEC's website for the full definition.
Accreditation verification
If you are accredited based on income, you will need to provide documentation of income for the past two years. This can be in the form of tax returns, W-2s, or other official documents.
If you are accredited based on assets, you can provide recent brokerage statements clearly showing your name, the date, and the value of your account(s). We will also pull your credit report and deduct any non-mortgage debts (as long as the mortgage does not exceed the value of the mortgaged property) from the value of your assets to arrive at net assets.
You can also provide a recent letter from a reviewer like a CPA, attorney, investment advisor, or investment broker.
Non-accredited Investors
On 30 October 2015 the Securities and Exchange Commission adopted final rules to permit companies to offer and sell securities through crowdfunding. The adopted crowdfunding rules and forms will be effective 180 days after they are published in the Federal Register.
The rules allow for non-accredited individual investors, over a 12-month period, to invest in the aggregate across all crowdfunding offerings up to:
- USD 2,000 or 5% of the lesser of your annual income or net worth for if you are earning less than USD 100K per year; or
- 10% of the lesser of your annual income or net worth if you are earning more than USD 100K per year.
During the 12-month period, the aggregate amount of securities sold to a non-accredited investor through all crowdfunding offerings may not exceed USD 100K.
Non-US users
We welcome users from all around the globe and are currently active on five continents. Individuals outside (or inside) the U.S. should consult a tax attorney if concerned about potential tax implications. You need to meet US accreditation standards even if you are not in the US. The regulations governing general solicitation require evidence of accreditation from all investors.