Crowdfunding

Август 6, 2022

Содержание

2. What is Crowdfunding? Crowdfunding is an online money-raising strategy that began as a way for the
3. What is Crowdfunding? The concept has recently been promoted as a way of assisting small businesses
4. What is Crowdfunding? Traditionally, investment opportunities are offered by professionals, such as broker-dealer firms and investment
5. What is Crowdfunding? Through crowdfunding, individuals are able to invest in entrepreneurial start-ups through an intermediary,
6. What is a Funding Portal? A funding portal is a website, also called a “platform,” that
7. How Crowdfunding Works Today . . . Mary’s small business sells goat cheese made from her
8. How Crowdfunding Works Coming Soon . . . New legislation has directed the SEC to write
9. Why Investors Should be Cautious About Crowdfunding Crowdfunding investments cannot be offered legally until the SEC
10. Issuers using funding portals to raise money may be inexperienced. Their track records maybe unproven, unsubstantiated
11. Because state regulators are not allowed to review crowdfunding issuers or their offerings, full and complete
12. Investors may have limited legal ability to take action against the issuer should the investment not
13. Crowdfunding investments are mostly illiquid and investors must be prepared to hold their investments indefinitely. It
14. Funding portals must be registered with the Securities and Exchange Commission (SEC), belong to a self-regulating
15. Crowdfunding portals claiming an accreditation or “seal of approval” from a standards program or board may
16. Bottom Line for Investors It pays to be skeptical of investment opportunities you learn about through
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What is Crowdfunding?
Crowdfunding is an online money-raising strategy that began as a

way for the public to donate small amounts of money, often through social networking websites, to help artists, musicians, filmmakers and other creative people finance their projects.

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What is Crowdfunding?
The concept has recently been promoted as a way of

assisting small businesses and start-ups looking for investment capital to help get their business ventures off the ground.
Congress recently passed the JOBS Act, which directs the Securities and Exchange Commission (SEC) to create rules exempting crowdfunding from the securities registration laws.

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What is Crowdfunding?
Traditionally, investment opportunities are offered by professionals, such as broker-dealer

firms and investment advisers, who must recommend investments that are based on their clients’ investment objectives and levels of sophistication.

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What is Crowdfunding?
Through crowdfunding, individuals are able to invest in entrepreneurial start-ups

through an intermediary, such as a broker-dealer or a “funding portal.”
By law, “funding portals” are not allowed to provide investment advice.

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What is a Funding Portal?
A funding portal is a website, also

called a “platform,” that advertises the investment opportunities and facilitates the payment from the investor to the issuer.
Some portals advertise a variety of investment opportunities on one website, allowing the investor to select one or more projects in which to invest.

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How Crowdfunding Works
Today . . .
Mary’s small business sells goat

cheese made from her special pygmy goats.
To keep her business afloat or to help it grow, Mary can turn to the Internet to seek online donations from the public who contribute small amounts of money and expect nothing in return.
Mary usually sends a sample of her cheese as a thank you for the donation; large donors might even get a cheese named in their honor.

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How Crowdfunding Works
Coming Soon . . .
New legislation has directed

the SEC to write rules that will change how Mary can raise money online.
Once the rules are written, Mary will be able to use the Internet to raise up to $1 million each year by selling investments in her company to thousands of investors.
Because Mary will be issuing shares in her company in exchange for investment capital, her supporters are no longer donors; they become investors and will expect a financial return for their investment.

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Why Investors Should be Cautious About Crowdfunding
Crowdfunding investments cannot be offered legally

until the SEC adopts rules to permit them.
Beware of crowdfunding offerings that seek investments immediately.
All investments have risk, but small business investments have even greater risk than normal. About 50 percent of all small businesses fail within the first five years.

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Issuers using funding portals to raise money may be inexperienced. Their track

records maybe unproven, unsubstantiated or outright fraudulent.
The information about the investment is limited to what is provided through the funding portal. Investors may need to rely on their own research to determine the issuer’s track record.