With the recent emergence of Crowdfunding legislation in May, there are already updates and changes on the horizon. This raises the question of whether or not to participate in the crowdfunding game. To make an informed decision, it’s important to compare the current rules and regulations with what is expected in the near future. Let’s determine whether to hold back, make a move, or fully commit!
Currently, the crowdfunding system is fresh, innovative, and promising in terms of financial opportunities. However, there are limitations in place. While it does expand the avenues for companies to raise funds without relying on a small group of investors with substantial capital, there are caps on both the amount that can be crowdfunded and the number of investors involved. Companies are currently limited to raising $1 million, while investors can only contribute up to $2,000 each. Furthermore, companies can only have a maximum of 500 investors, which limits diversity in investment. Although crowdfunding is functional in the current U.S. market, it may be best to exercise caution and hold off for now.
Looking ahead, two bills passed by the House FSC, the “Fix Crowdfunding Act” and the “Supporting America’s Innovators Act,” are expected to bring significant changes to the crowdfunding landscape. These bills aim to reduce reporting requirements for startups and allow unaccredited investors to collectively invest in Special Purposes Vehicles. While these are positive developments, it might be prudent to wait for further advancements in regulation crowdfunding in the U.S. before fully committing.
Read more: “The Crowdfunding Landscape Is Evolving: Should Entrepreneurs Be Worried?” Entrepreneur 8/9/16