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.