Tag Archives: U.S. Securities and Exchange Commission (SEC)

Crowdfunding 101

“Crowdfunding” offers an option to startups and small businesses to raise capital, although it is a greatly misunderstood and misused term. It refers to the pooling of money from a crowd for the funding of a project or venture, whether utilizing a donation model, reward model, royalty model, debt model or equity model. Securities laws apply when equity or debt securities are offered. In regard to crowdfunding, Congress amended the Securities Act to allow for an exemption from the registration of such securities if the issuer complies with certain rules and restrictions. To implement this amendment, federal crowdfunding rules were …