It’s being called a game changer, a BFD with the chance to give startups and small businesses what they need to grow.
Instead of cool tech, T-shirts or backing something because you believe in it, equity crowdfunding allows people to buy shares and invest in companies, and last Friday the Securities and Exchange Commission (SEC) made Reg. A+ legal in the United States.
- Reg A+ removes the requirement that investors be accredited, or have more than $1 million in assets.
- Investors can only buy up to 10 percent of their net income in stock.
- Companies raising money under new rules can sell up to $50 million in securities in a 12-month period.
- The accredited investor rule has been in effect since the Great Depression era of 1930s.
- The JOBS Act that makes all this possible was passed and signed into law in 2012 but the SEC was in charge of implementation, a process that took some time.
So what does it all mean to journalism and media in the United States?
We don’t really know yet. It’s only been a week. Follow this space to see things develop, but here are a few interesting takes on the impact of equity crowdfunding that have been offered so far.
1. Ramona Ortega is a part of the Latino Startup Alliance and founder of Mi Dinero Mi Futuro. She believes Reg. A+ will be a big deal, especially for minority and women-owned businesses, she told TechCrunch.
2. If you have been a longtime reader of Through the Cracks then you remember Gimlet Media’s venture into equity crowdfunding. They raised $200,000 in two hours with equity crowdfunding. Well they raised the money on the equity crowdfunding platform Quire (formerly Alphaworks), who broke down the whole history of equity crowdfunding in a three-part series on Medium.
3. If the entire idea of equity crowdfunding grabs your interest, you may want to check out this FAQ from the SEC.
4. A lot of people are bullish about the future of equity crowdfunding but some people who spoke with the LA Times believe the amount of paperwork necessary to file may be a deterrent to some companies.