The global startup landscape is growing. Every day, innovative ideas meet advanced technologies and newer business models are conceived. However, a capital investment is what makes a business flourish. While the global VC funding continues to grow, there is still a significant amount of unmet demands, resulting in a major gap in investments. Several alternative forms of investments are filling these gap areas. While ICOs – which are one of the forms of alternative investments – have been the talk of the business world in the past couple of years, it is equity crowdfunding which needs to be talked about more.
Equity crowdfunding enables businesses to receive investments from a large group of accredited/unaccredited investors in return for the ownership of a small piece of that business. While the equity crowdfunding landscape across countries varies based on the regulations, the US is one of the most interesting markets in this space – courtesy regulations.
The 2012 JOBS Act in the US opened up the gates by allowing interstate equity crowdfunding in the US by enabling companies to use crowdfunding to issue securities. Since then, two major regulations regarding crowdfunding – Reg A+ & Reg CF – have come into effect. While Reg A+ enables companies to raise up to $50 million in equity crowdfunding over a period of 12 months, Reg CF allows them to offer and sell up to $1 million of securities to accredited & unaccredited investors through crowdfunding.
Since their launch in 2015, both Reg A+ and Reg CF has seen a growing traction, with companies are looking to make the most of the funding opportunities opened up by these regulations. The year 2017, in particular, saw 636 companies filing forms to conduct
