There Is More To Crowdfunding Than the JOBS Act


Until the SEC finalizes rules to implement the JOBS Act, private fundraising, i.e. of rounds of financing without registering securities with the SEC, is restricted to accredited investors with a net worth of $1 million or $200,000 in annual income. Interestingly enough, only four percent of dollars raised by companies in 2012 involved investments in exchange for equity in a company.

In recent years, other types of fundraising have been gaining enormous momentum.  They are donation/pledge, rewards or lending based. According to a recent report by Massolution, contributors across the world pledged $2.7 billion in more than a million campaigns in 2012, an 81 percent increase from 2011. Since Kickstarter’s launch in 2009, more than 4 million people have pledged over $609 million to projects ranging from an Oscar-nominated film to a bus stop in Georgia.

Here is a run-down of the most common types of crowdfunding:

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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