BizTech Law Blog

Crowdfunding May be on the Way

On November 3, 2011, the U.S. House of Representatives passed a bill that would create a new exemption from registration under the securities laws for what has come to be known as "crowdfunding."  The crowdfunding exemption would: 

• Allow a company to raise up to $1 million within a 12 month period ($2 million if it has audited financial statements)
• Limit the amount a single person can invest within a 12 month period to the lesser of $10,000 or 10% of the investor's annual income
• Impose certain requirements on the company or the intermediary raising the money.

This proposed law is tailor made to allow the use of social media to solicit investors.  It will still require working with a lawyer to satisfy all of the requirements, but will greatly expand the opportunity to raise money in smaller amounts from more people.  The bill is now headed to the U.S. Senate.  President Obama has expressed support for the bill.

Please contact me if you have questions regarding crowdfunding.

Categories: Crowdfunding, Venture Capital/Funding