Crowdfunding is an innovative and cooperative way of raising money. By accepting smaller amounts of funds from a group of people, entrepreneurs and project owners are able to access capital that was previously unavailable to them. Also, crowdfunding is usually a better value than money raised from banks, venture capital firms, and other traditional channels.
Generally, equity-based crowdfunding is only permitted in the US if the investor is a high net worth individual (“accredited investor”), or the investor does not receive any equity interest in the company or venture (“donors”).
But the face of crowdfunding is changing...
Generally, equity-based crowdfunding is only permitted in the US if the Issuer has filed with the SEC for an exemption from the securities laws.