An Overview of Equity Crowdfunding and Private Offerings

I recently presented an overview of equity crowdfunding and private offerings to the New Jersey Economic Development Authority’s Commercialization Center for Innovative Technologies.

I discussed basic securities law and the many options available to businesses to raise funds.

If you would like a copy of my Powerpoint “slides,” please fill out the fields below.

— Alan N. Walter

Booyah! SEC Issues Final Crowdfunding Rules

64Px - 011CrowdfundingAt long last, the SEC has adopted final rules to allow companies to sell securities through equity crowdfunding. If all goes as expected, the rules will go into effect on January 29, 2016.

The highlights:

  •  A company could raise up to $1 million is a 12-month period.
  • Individual investors with annual income or net worth under $100,000 could invest the greater of $2,000 or 5 percent of the lesser of their annual income or net worth.
  • Individual investors with both annual income and net worth over $100,000 could invest 10 percent of the lesser of their annual income or net worth.
  • The maximum amount an investor can acquire over a 12-month period is $100,000.
  • Securities purchased via crowdfunding would need to be held for a year.
  • Funding portals would need to register with the SEC and become a member of a national securities association.
  • Crowdfunding companies must disclose certain information to investors, the SEC, funding portals and other facilitating intermediaries.

I’ll post more after a full review of the final rule.

— Alan N. Walter

Equity Crowdfunding Delayed to January 2016

64Px - 011CrowdfundingLet’s see if I have this right:

The JOBS Act became law in April 2012. Included as Title III of the Act was equity crowdfunding, a way for small and medium-sized to 64Px - 011raise money quicker and cheaper than traditional methods. A need that Congress desired to have satisfied in a timely manner.

Congress gave the SEC nine months to implement Title III equity crowdfunding.

Time passed.

Eighteen months after the JOBS Act was enacted, in October 2013, the SEC proposed rules for crowdfunding. The deadline for gathering comments from the public would have expired in February 2014.

More time passed.

The SEC has now scheduled its final stage for crowdfunding rules for October 2015. Presumably, implementation would follow about three months thereafter in January 2016, only three years after the law required.

Now, it may be that we shouldn’t take the SEC seriously, that it has simply given itself wiggle room. We’ll see.

As more time passes.

– Alan N. Walter

SEC’s Proposed Crowdfunding Rules: An Overview

64Px - 011Crowdfunding— Alan N. Walter —

The Securities and Exchange Commission (SEC) has finally proposed rules under the JOBS Act to allow companies to sell securities through the vehicle of crowdfunding. Comments on the proposed rules can be submitted in writing or on the SEC site through February 3, 2014.

I present for your edification (and enjoyment?) an overview (and partial cribbing) of the 585 page proposal. Needless to say, this writeup will, by necessity, not reflect all of the nuances of the proposed rules.


Crowdfunding is a source of capital that allows an individual or entity to raise funds through small individual contributions from a large number of people. Individuals interested in the crowdfunding campaign can share information about the project, cause, idea or business with each other and decide whether to fund the campaign based on the collective wisdom of the crowd.

A number of sites, such as Kickstarter and Indiegogo, currently allow funds to be raised through crowdfunding. In return for contributions, these sites give donors tokens of esteem, but not any equity in the project that funds are being raised for.

The federal JOBS Act, and the proposed rules under the Act, would change that. It would allow equity to be raised and securities to be sold through crowdfunding.

Click through below to see some of the details of the proposed rules.

Read moreSEC’s Proposed Crowdfunding Rules: An Overview

Crowdfunding: Not Ready for Prime Time

Alan N. Walter –

64Px - 011CrowdfundingWhat Crowdfunding Is:

Crowdfunding is the raising of capital or money by a company by the selling of small amounts of itself to lots of investors.

The JOBS Act:

Crowdfunding advocates were encouraged by the enactment of the Jumpstart Our Business Startups Act (the JOBS Act), in 2012. The alleged purpose of the JOBS Act was to
revigorate the US economy by encouraging the investment of capital in US companies. The Act accomplishes – or will accomplish – several things:

  • increasing the number of shareholders a company can have before needing to register with the Securities and Exchange Commission (SEC)
  • providing new exemptions from having to register a security offering with the SEC, including a new exemption for crowdfunding
  • reducing the required amounts of disclosures and regulations for certain
  • removing the general ban on advertising and general solicitation with respect to certain private placement of securities

Read moreCrowdfunding: Not Ready for Prime Time