2013-10-25 06:07:23
A new step for the SEC
Entrepreneurs in the United States are one step closer to being able to raise
capital from just about anyone via online investment platforms.
On Wednesday, the US Securities and Exchange Commission proposed new rules
that, if approved will allow individuals to buy into start-ups through
crowdfunding portals. As it stands, entrepreneurs can only sell stakes in their
start-ups to investors who are accredited - that is, they meet certain
standards such as at least a $1 million net worth and have a high annual
income.
Just before the SEC vote, SEC Commissioner Michael Piwowar told the Washington
Post that crowdfunding allows small firms to "access capital from sources that
were previously unavailable" while giving "all investors, not just so-called
accredited investors, the opportunity to invest in entrepreneurs and their
ideas at an earlier stage than ever before."
With more opportunities to invest come new ways for people to raise money - and
also new fears about fraud. Here's a look at what you need to know to make the
most of crowdfunding - and to protect yourself.