Crowdfunding has emerged as a better and promising an alternative to raising funds over the years. The field of crowdfunding has seen many revolutionary changes and the newest addition to this list is the recent crowdfunding new rules. These crowd funding new rules have changed the way in which the crowdfunding world works. The crowd funding new rules will now allow small and new businesses an opportunity to sell their shares in return for the investments by the contributors.
The crowdfunding new rules also give a small company an opportunity to raise up to $1 million from small and average investors. As per the previous rules, this opportunity was only given to wealthy investors and these crowd funding new rules can now help to kick start many new startups.
What are the benefits of the crowdfunding new rules?
The JOBS Act was signed by Barack Obama in the year 2012 and after four years of careful considerations, the crowdfunding new rules were passed by Securities and Exchange Commission. These crowdfunding new rules have now gone into effect and it has come with two important changes. The first important change which the crowd funding new rules have brought is giving the opportunity to ordinary and small investors with an income of less than $200,000 a year to invest up to $2000 in companies.
This opportunity was reserved only for big and wealthy investors also known as accredited investors. With the passing of these crowd funding new rules, it has become easier for the unaccredited investors to invest in different companies.
The second change in the crowdfunding new rules offers a change for the small companies or startups. The companies having their campaign set up on various crowdfunding platforms can now offer stakes in their business in return for the contributions by the investors. Earlier, small companies and startups were restricted to deliver goods, certificates or other merchandises in return for the contributions, but with the advent of crowdfunding new rules, companies can share the stakes of their business with the investors.
Even though these crowdfunding new rules have provided some new changes to the way crowdfunding is done, these crowd funding new rules do impose some threats. The complexity, as well as, the recentness of the whole process might prove to be intimidating for some individuals. The crowdfunding new rules were passed to ensure the growth of startups and small companies and now the prime concern is that whether this seed capital will be able to help the small companies and startups.
According to various studies, the major problem any small company or startups face is scaling and one of the major reason for their failure is not capital but scaling. It is now difficult to say that whether providing more capital through the crowdfunding new rules will ensure the success of startups.
Though these crowdfunding new rules won’t do any bad for the small companies or startups, but it is difficult to say whether these crowdfunding new rules will become a boon for them or not. Also, to boost up the growth or small companies and startups, many more changes are required in the rules than just increasing the capital.
