Sometime early next year, the Securities and Exchange Commission is expected to propose rules that would pave the way for “equity crowdfunding,” harnessing the groupthink of social media as a tool for capital investment.
Small public companies (those with revenues of less than $5 million) could be able to raise up to $1 million using this approach to sell stock or promote revenue-based financing. Even ahead of those regulations, however—foisted upon the SEC by the JOBS Act—some companies are trying to get ahead of the crowdfunding race, through a careful parsing of Regulation D exemptions and state securities laws and adapting the “reward” based model already in use.
