Equity Crowdfunding Ruling from the
SEC to help Small Business
In the works since June but now
released last week from the SEC, makes equity crowdfunding a reality
for U.S. small businesses. To date, only accredited investors could
invest in equity positions of these companies. Non-accredited
investors will now be able to invest $2,000 or 5% of their annual
income, in a 12 month period. Additionally, non-accredited investors
will be limited to $100,000 of securities through crowdfunding.
A maximum of $1,000,000 in a 12 month
period limits these small companies but does open up to a larger
investment base. The new SEC rules also remove the audit requirement
that was originally in acted. That past requirement often added
$25-$50 k in upfront cost to raise funds.
We believe that this one provision
alone could become the very life-blood to the already expanding
url/domain industry. Domain owners and developers will no longer
need to sell their domain assets to raise working capital. They
could now incorporate around a portfolio of domains/websites, and
sell an equity position in that asset, while still continuing to
hold a majority ownership position.
The new ruling is part of the SEC JOBS
Act, a law designed to make it easier for startups and small
businesses to raise capital from a wide range of potential
investors. This new ruling will go into effect in ninety-days!