Course 1.Basics of Equity Crowdfunding
What is Equity Crowdfunding?
Equity crowdfunding is the online offering of private company securities to a group of people for investment. Equity crowdfunding involves investment into a commercial enterprise, it is subject to securities and financial regulation.
What is the difference between Reward-based Crowdfunding and Equity Crowdfunding?
Rewards-based crowdfunding is where contributions are exchanged for current or future goods or services. Funders in a rewards-based crowdfunding campaign do not obtain any ownership or rights to a project, nor do they become creditors to the project.
In equity crowdfunding, funders are acting as investors to invest money in a business and receive various types of ownership interests in the business.
What is Jumpstart Our Business Startups (JOBS) Act?
On April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The JOBS Act is a law intended to encourage funding of United States small businesses by easing various securities regulations.
What is Title III of the JOBS Act?
On October 30, 2015, the Securities and Exchange Commission (the “SEC”) adopted final rules under Title III of the Jumpstart Our Business Startups (“JOBS”) Act. Title III of the JOBS Act is a federal exemption under the Securities Act of 1933 (the “Securities Act”) that will permit securities-based crowdfunding by private companies without registering the offering with the SEC. The final rules, Regulation Crowdfunding, also permit individuals to invest in securities-based crowdfunding transactions subject to certain investment limits.
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