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Small investors could be permitted to invest in startups online under new U.S. Securities and Exchange Commission (SEC) rules:
America's financial watchdog says anyone with spare cash will be able to buy a slice of a startup online without having to fill out mountains of paperwork.
Until now, if you fancied plowing some of your savings into a fledgling biz — say a trendy but privately held San Francisco tech startup — there are all sorts of requirements and red tape you must overcome, all pretty much put in place after the 1929 US stock market crash.
Under new rules from the SEC, a startup can raise $1m a year by selling stock in itself to investors, although the individual amounts will be regulated. Those with an annual income of up to $100,000 can spend either $2,000 a year or five per cent of their net worth in startups, or 10 per cent if they make more than a hundred grand.
"There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need," said SEC chairwoman Mary Jo White. "With these rules, the Commission has completed all of the major rulemaking mandated under the JOBS Act."
From the SEC release:
The new crowdfunding rules and forms will be effective 180 days after they are published in the Federal Register. The forms enabling funding portals to register with the Commission will be effective Jan. 29, 2016. [...] The SEC is seeking public comment on the proposed rule amendments for a 60-day period following their publication in the Federal Register.
(Score: 0) by Anonymous Coward on Monday November 02 2015, @02:51PM
SEC rules allow a fool and their money to be parted, now with less paperwork. That said, I greatly prefer this to kickstarter.
The kickstarter model:
"If you pay for us to make this , we will give you a single copy. If you pay for 3 copies, we will also give you a special hat."
The way it should work:
"If you pay for us to make this , you will be an investor in the thing, entitled to a percentage of its worth based on the percentage you have purchased."
Under both situations, if you pay for a worthless thing, you get no-thing. The whole concept of "accredited investor" is crap. The Government is telling its citizens where they can and cannot spend their money. You are worth $300K and want to invest $50K in your friends software shop so he can try to make the next Angry Birds? Sorry, you are not legally allowed to.
(Score: 2) by MichaelDavidCrawford on Monday November 02 2015, @10:14PM
Suppose someone who earned $100k/year wanted to invest in silly hats. That's OK!
He just can't invest in startups.
I can see the point of certification if one qualified by passing some manner of professional exam. Like do you even know what it means to "Buy Puts" or to "Go Long"? Even some people who qualify due to their wealth don't have a clue how to sensibly invest.
Yes I Have No Bananas. [gofundme.com]